When the commercial real estate market turns and new development picks up, some companies may be hard-pressed to find the development professionals they need with up-to-date skills and experience. This is according to Thomas G. Williams, senior managing director, Specialty Consulting Inc., Pittsburgh, Pa., a real estate and construction search firm.
He said that owner/developers, whether they are a REIT or a private company, have been doing very little hiring outside of property management in the past several years. In the case of an owner/developer, since they are not building new projects, particularly on a speculative basis, there is very little need for them to increase the level of staff that they have in development or construction.
Therein lies a big problem down the road. Williams estimated that of all the development professionals who were laid off in recent years, about one-third reinvented themselves servicing workout positions, another third went into brokerage or consultancies, and the final third simply left the real estate industry.
“When the market turns around, there will be big demand for development people, but there will also be a dearth of seasoned professionals. The best of the best are still employed and they may or may not consider another opportunity with another player. Other development people will come back into the business, but they will be two to three years behind on the skill curve. Companies will either have to settle for that or try to lure people from other firms,” said Williams.
Williams said that 2010 was significantly better than 2009 on the hiring front and will get better from here. “We believe that 2011 will be flat to up by 15-20 percent. The banks are holding back the market by not completely facing their loan problems. The bankers’ effort to ‘extend and pretend’ continued through 2010. In 2011, banks should begin to aggressively take back properties. This will create the environment for entrepreneurs to go out and start a new business buying, rehabbing and selling properties. The third and fourth quarters of 2011 and 2012 will be the beginning of the next up-cycle in commercial real estate.”
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