The real estate industry faces a tough new challenge: how to develop talented leaders to replace the architects who transformed it from a local transactions business into an alternative investment of interest to the world's largest institutions. With the industry undergoing globalization and attracting continually increasing investor appetite, it must find ways to attract the kind of creative, entrepreneurial executives on whom success will depend in this evolving environment.

It is no secret that the industry has not been attracting the volume of top talent that it once did. In the 1980s, when the business was booming, the industry recruited at the top business schools and attracted talent eager to seize the abundant opportunities that real estate offered.

Following the real estate downturn in the 1990s, the industry's reputation suffered. Enrollment in college real estate programs declined. Requirements for transparency appeared to bureaucratize the way the industry operated. Entrepreneurial types who had been the lifeblood of the business were turned off by what they saw as a stagnant industry. They flocked instead to consulting and private equity firms.

A New Beginning

Now the recruiting landscape has changed and institutional investors are bullish on real estate opportunities. Nevertheless, there is no guarantee that entrepreneurial talent will return to the industry in great numbers. The industry has to make it happen. How? By acting aggressively on several recruiting fronts at once:

1. Strengthen ties with the academic world — Signs of renewed academic interest in real estate are everywhere. At the University of Wisconsin, one of the most widely recognized real estate programs, the number of undergraduate real estate majors doubled from 1997 to 1998, and by 2004 had almost tripled.

   Smart companies will establish ties with such programs that go beyond the occasional recruiting trip. In July, for example, the Johns Hopkins School of Professional Studies in Business and Education announced that it had received a donation of $5.85 million from a prominent real estate investment company.

   The donation will launch a full-time master's degree program to complement the school's existing part-time real estate curriculum. Short of donating millions, there are many other effective ways to reach into academe — scholarships, endowed chairs, internship programs, visiting lectureships and speaking engagements.

2. Recruit from similar businesses — For real estate operating companies, highly talented people with valuable skills can be found in business-to-consumer industries such as airlines, hospitality and retail. They understand investing in assets with high fixed costs and multiple locations — challenges that resemble those presented by the real estate inventory.

3. Recruit from businesses farther afield — For the real estate services companies, talent may be found in business-to-business industries such as consulting, systems integration and professional services that depend on making high-level sales to the executive suite.

4. Recruit from around the world and around the corner — Operating globally still requires acting locally. That means seeking people familiar with the cultures and the business climate in which your company does business. Thriving in a multicultural environment requires a diverse leadership and opens up another talent pool that will complement a company culturally and intellectually.

5. Spread the message that entrepreneurialism is back — Opportunities are exploding internationally — most notably in India, China and Latin America — and domestically. Ernst & Young estimates that of $100 billion of real estate buying power in new funds and offerings, some $60 billion is likely to be used in offshore acquisitions.

At the same time, foreign investment in the U.S. has created new opportunities here. In 2003, according to the Association of Foreign Investors in Real Estate, offshore investment in the U.S. real estate market increased 59% over 2002. Tell talented people about these expanding opportunities — through public relations, corporate communications and industry associations. And trumpet the successes through effective marketing and media coverage.

Ahead of the Curve

Some companies have begun to catch on. A number of private equity real estate firms have been leaders in attracting global talent. They also have successfully recruited top talent from other non-real estate operating firms and from management consulting.

Global service providers also have reached into other industries for leaders. Across the industry, momentum is building. By tapping the opportunities presented from rising enrollment at real estate schools, smart companies will attract new talent that will energize the industry.

Lynn Cherney is a partner with Heidrick & Struggle International, Inc., a provider of senior-level executive search and leadership development services.