Opportunity Zones Spur Talent Crunch
Commercial real estate hiring remains steady after hitting a two-and-a-half year high in January 2019, driven by an unexpected upswing in acquisitions and development jobs that are driving a 25% increase in 2019 CRE hiring, according to the SelectLeaders Job Barometer.
Strong acquisition and development hiring now represent two out of the top five commercial real estate job postings on the SelectLeaders job board, even though these two categories typically characterize the emergence from a down real estate cycle, not activity at the cusp of the longest economic expansion in history.
The 2017 Tax Cuts and Jobs Act established 8,700 Opportunity Zones across the U.S. that provide a tax-advantaged destination for an estimated $2 trillion in unrealized capital gains held by U.S. investors and corporations, and has spurred acquisition and development activity. Acquisitions jobs jumped past property management into the third place for the most CRE jobs available, following positions in finance/investment and asset/portfolio management, while development jobs were fifth.
“A challenging market characterized by plentiful capital and hard-to-find value put a premium on acquisition talent, and now Opportunity Zone investment fervor has added even greater importance on building acquisition teams that identify opportunities with geographic specificity,” said David Funk, managing editor of the Job Barometer. The ”addition to basis” investment requirement for Opportunity Zone funds also insures a substantial amount of renovation, development and redevelopment activity, and, according to Funk, SelectLeaders is already seeing the related hiring activity show up in its development jobs.
“The amount of capital available at this point in the cycle has made finding opportunities extremely challenging and put a premium on building out acquisition team talent and depth,” said Funk. “Development hiring is way up in high-growth cities, and employers are also actively hiring as part of their Opportunity Zone investment activity.”
SelectLeaders’ research shows that the first four months of 2019 found job seekers much less picky and more aggressive in their pursuit of job opportunities, with particular surges in applications for specific job functions where candidates are looking to advance their careers and indicating that talent is looking to take the next step or move to growing companies at what many perceive to be the top of the market.
CRE must compete for talent in a sub-4% unemployment environment when the quantity of new entrants to the real estate field is relatively inelastic. “Given the high search activity of job openings, employers are right to be concerned about retention,” said Funk, adding that traditional pipelines for labor, such as career changers and university programs, historically have not responded to periods of strong career opportunities in real estate. “Despite tremendous opportunities both at entry level and on up, university real estate program graduation numbers continue at static, if not declining, numbers,” he said.
Job seekers today are selective in their applications, yet comparing job openings to applications reveals a continuing mismatch and resulting probability of outcomes. Acquisitions jobs represent 9% of all commercial real estate job opportunities, yet receive 26% of all CRE applications submitted. Property management, meanwhile, constitutes just under 9% of all jobs yet receives just 2% of all applications. “The mismatch we observe illustrates that there are clearly roads into the real estate industry that provide much higher likelihood of getting hired than others,” said Funk.
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.
