Real estate employment dynamics are shaped by employment activity and trends, but they can be difficult to understand. To help streamline the concept, SelectLeaders has introduced a Commercial Real Estate Employment cycle that identifies seven real estate market stages that correspond to distinct hiring activity, as well as five employer mindsets that evolve during a full CRE employment cycle.
Specific job functions, such as development, asset management and acquisitions experience, experience peak hiring demand based on stages in the cycle. “Our decade-long research into CRE employment activity has revealed a clear connection between employers’ mindsets, the span of their expectations in new hires, and the nature of jobs they post based on where we are in the cycle,” said Dr. David Funk, managing editor for the SelectLeaders Job Barometer.
Toward the top of the cycle, employers tend to hire for niche job functions in specific sectors, such as a multifamily acquisitions specialist, whereas at the retrenchment and recovery stages hires are expected to fulfill multiple job functions across more than one sector.
The pace of hiring and the nature of the job postings that are predominate now signals that the industry is in the Cautious Optimism stage of the CRE Employment Cycle, and current activity could indicate slow growth and stability rather than a transition into retrenchment.
Not surprisingly, a close correlation exists between increasing job offers and compensation as the market cycle moves from recovery to boom, while at the same time the employer mindset evolves from that of cheerleader to recruiter to poacher during the up cycle. Notably, new applicants to commercial real estate – that all-important pipeline of talent – drops dramatically during the retrenchment through recovery stages, and such swings in new entrants can create talent gaps that endure for years.
Certain jobs remain mainstays of commercial real estate hiring even though they will fluctuate in relative terms during market cycles. Finance/investment, property management, asset management, and brokerage/sales were the top four CRE job opportunities during 2016; however, applications traditionally do not match job opportunities. Since 2006, tracking the mismatch between jobs and applications reveals that finance/investment and acquisitions jobs historically receive the greatest applicant demand. Acquisitions positions represent 5 percent of all CRE job opportunities, yet receive over 10 percent of all applications submitted.
Where does the supply/demand ratio favor the job seekers? Property management, legal/transactions, and corporate real estate are relatively welcoming, and if you have interest in insurance/risk management, please apply.
This is the second in a two-part series of a CRE employment outlook. Read the first part to explore if a reduction in CRE jobs is hinting at uncertainty.
Susan M. Phillips is the CEO of SelectLeaders, LLC, which powers the career centers for 12 premier real estate industry associations (whose members control or direct 90 percent of commercial real estate) and offers unequalled access to the real estate community.