ACQUISITIONS AND DEVELOPMENT JOBS DRIVE 25% INCREASE IN 2019 CRE HIRING
Opportunity Zones Spur Talent Crunch
NEW YORK, NY. –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. Strong acquisition and development hiring typically characterizes coming out of a down real estate cycle, not at the cusp of the longest economic expansion in history, yet now represent two out of the top five commercial real estate job postings. “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 David Funk, managing editor of the Job Barometer, adding “development hiring is way up in high-growth cities, and employers are also actively hiring as part of their opportunity zone investment activity.”
“Commercial real estate job postings through Q1 2019 are up 25% over the same period last year in the SelectLeaders Job Barometer index, said Susan Phillips, CEO of SelectLeaders, adding January 2019 reinforces the “January Effect.” The annual budget process in commercial real estate historically results in job postings peaking in January. “January hiring has been a clear cycle in our data going back over a decade, and has implications for both employers and job seekers in understanding talent supply and demand in our industry,” Funk noted.
Graph 1: US & Commercial Real Estate Jobs 2007 to Present
The 2017 Tax Cuts and Jobs Act established 8,700 Opportunity Zones across the US that provide a tax advantaged destination for an estimated $2 trillion in unrealized capital gains held by US investors and corporations, which has spurred acquisition and development activity. Acquisitions jobs jumped past property management into 3rd most CRE jobs available after positions in Finance/Investment and Asset/Portfolio Management, while Development jobs were fifth.
Graph 2: Job Postings by Field
“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 Funk. The ‘addition to basis’ investment requirement for opportunity zone funds also insures a substantial amount of renovation, development, and redevelopment activity, noted Funk, adding “We are already seeing the related hiring activity show up in our development jobs.”
Graph 3: Job Views 2008 to Present
Robust job opportunities in commercial real estate is belied by a continuing decline in job seekers since 2014, which underscores the ‘war for talent’ that many are experiencing in the industry. The SelectLeaders Competitive Hiring index finds that real estate employment has returned to an intensively competitive seller’s market last seen in 2008.
A manifestation of the seller’s market in CRE is the selectivity, or Pickiness Factor, found in job candidates’ behavior. Views of job postings were near an all-time high in 2018, while total applications were back to 2007 levels, indicating that job seekers were actively looking yet very selective in their job applications.
Graph 4: Job Views per Application 2007 to Present
The first four months of 2019, however, find job seekers much less picky and more aggressive in their pursuit of job opportunities. “We are seeing a surge in applications in specific job functions where candidates are looking to advance their careers,” said Phillips, adding 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. During the first four months of 2019 job seekers viewed 23 jobs for each application submitted, roughly half what was observed in 2018. The growth in highly popular jobs such as acquisitions and development is a large part of the explanation.
CRE must compete for talent in a sub-4% unemployment environment when 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,” said Funk.
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.
Graph 5: Job Postings vs. Applications vs Views 2019 Q1