Home News CRE Roles On The Chopping Block? How The Downturn May Shift Real Estate Job Market

CRE Roles On The Chopping Block? How The Downturn May Shift Real Estate Job Market

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A recent series of high-profile layoffs by international brokerage firms, including a “global transformation” in JLL, Avison Young Layoffs cut with CBRE — Announced $300 million worth of cost savings focused on headcount — As the economy continues to stagnate, anxiety ripples across the CRE industry.

But this particular slowdown — Urban Land Institute figures estimate annual transaction volume at $600 billion in both 2022 and 2023, far below the record $855 billion set in 2021. — coming at a time when office usage has changed dramatically, increasing investment and deployment in technology across industries, hitting some jobs harder and impacting the overall CRE job market. may have long-term effects on

A severe recession or recession leaves a lasting imprint on the job market. The round seems poised to push technology to the fore and jeopardize jobs that can be replicated with automated processes and contract workers.

Massive job cuts may be over, but commercial real estate hiring may have stagnated for years.

“The real estate industry is clearly moving towards automated solutions, with some companies moving faster than others; offshoring; greater use of independent consultants and temporary workers; third-party vendors. Using CEL & Associates’ Christopher Lee, who conducts a highly regarded national salary survey of commercial real estate firms: “Layoffs and downsizing activities will continue in the second quarter of 2023. The next six to nine months are going to be very difficult from a sales and growth perspective.”

Deal volume may not return to 2021 levels until at least the second or third quarter of 2023, Lee said. During this period of recession and suspension, he sees layoffs mainly concentrated in office leasing, accounting and administration, last-in-first-out hiring, investment sales, finance and some project management positions. .

JLL’s recent work style surveyasked more than 1,000 global CRE leaders and concluded that the next few years will be an important transition point. Businesses need to “double their investment in intelligent technology,” says the study.

There are already clear signs that the changes in operations during the pandemic have changed the way many companies calculate their labor. For example, in property managementThe focus is on technologies that make repair, operations and programming more effective and labor intensive, including remote viewing, digital platforms and apps for tenants.

Historically, CRE boom-bust cycles have seen managerial and assistant hiring rise and fall with transaction volume, as has traditionally been reluctant to invest in technology relative to other industries. means that Allison Weiss, CEO and founder of CRE Recruiting, says investing in long-term planning, sustainable hiring, and automation are often ignored in favor of rapid hiring and firing when necessary. said. That seems to be happening as the 2021 peak has replaced this year’s decline in activity.

“Large companies refer to these roles as ‘cost savers,’” says Weiss. “As the volume of transactions goes down, we don’t need more transaction coordinators, we need fewer assistants, we need fewer marketers, we need fewer recruiters because we can bring new people into the business. Front-line teams who are affiliated with brokers but are not really brokers see their role as more compromised.”

Weiss said these job cuts could sometimes lead to offshoring. Berkadia has a team of international financial analystssaid Weiss.

But that doesn’t mean that senior and managerial positions are safer than frontline and support staff. These are the moments when middle management can be cut, and Weiss believes that companies can use the “recession” excuse to skip bonuses or lower pay raises.

Other analysts don’t think the situation is that dire. Bullpen CEO Tyler Kastelberg, which offers a platform that connects CRE freelancers with job opportunities, says he’s not convinced the market has bottomed out yet. Hiring has been slow and the brokerage and lending sectors are slowing, but he doesn’t expect any more major layoffs. The company has been relatively lean since 2008. CBRE has let his workers back many of his offices likely to be replaced by contractors, he said.

Anita Kramer, senior vice president of ULI’s Real Estate Economics and Capital Markets Center, said there will be cuts, but more like a pause than a long-term decline. She said companies are starting to look ahead strategically and plan for the recovery. Very noisy.

“The strength of the multifamily sector is still there, the industrial sector is still there, and retail has always had big pockets of retail stores in the right places,” she said. A lot of people have plans.”

The winners, of course, are those in sectors and services that generate revenue and show great potential. Layoffs are likely to be far fewer in leadership positions that produce leaders in the multi-family housing sector, value development initiators, talent management, asset and property management, and executive leadership, Lee said.

Recent layoff announcements signal a shift to roles focused on analytics, consulting and recurring revenue streams. CBRE CEO Bob Sulentic said in a statement:the firm’s focus on “corporate and regional facility management, investment management” and other “cyclically resilient advisory lines of business”; Part of an industry-wide shift towards a more full-service offering.

And despite or because of the expected disruptions, retaining talent, especially those involved in deals and revenue, becomes even more important. Lee actually predicts that compensation will “rise dramatically.”

“It is critical for any real estate company entering this time of turmoil and uncertainty to have a strong talent management plan in place,” he said. “In the real estate industry, nothing gets done without talent.”

Weiss said that if the recession lasts longer and employers have more influence, employers tired of overpaying in a competitive labor market will see the recent wage increases fall short. He argues that it’s easy to imagine a world that begins to prune.

Again, this goes back to the challenge of utilizing technology as a labor-saving device. It has the potential to make existing employees more efficient and reduce costs, especially in markets where the challenge of filling vacant roles still remains. But there is always the possibility of losing your job. As the roles and responsibilities of novices become more and more automated, some of the key entry-level jobs to gain a foothold in CRE are ditched.

“If you then offshore a financial analyst role, a brokerage assistant role or a coordinator role, you are cutting a very important stepping stone for people who want to enter the industry and learn the business,” he said. says Weiss.

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