Last fall Dan Gaylord moved his family 1,500 miles across the country from Southern California to Austin, Texas, for a change of lifestyle, and then secured a position with Principal Financial Group, where he originated small-balance loans for the commercial and multifamily sectors. Five and a half months later, the 25-year finance veteran was out of a job. The commercial mortgage-backed securities market had seized up.
Unemployment plagued Gaylord for the next six months. “There's a lot of people with very deep resumes that are out of jobs right now,” says Gaylord, who finally landed a position in September with Arbor Commercial Mortgage as a Fannie Mae DUS lender.
As jobs are lost and hiring slows throughout the commercial real estate industry, 2009 could prove to be a difficult year for job seekers, including seasoned pros like Gaylord. Through the first nine months of 2008, 111,201 financial job cuts were announced, according to Chicago-based outplacement firm Challenger, Gray & Christmas.
Although a cadre of real estate pros may well head to the beach for a prolonged nap under the sun, Tony LoPinto, CEO of job search firm Equinox Partners in New York, says retiring baby boomers will create a void among real estate professionals. “If anything, now might be the time to hire some of that talent and prepare for the rebound.”
Some savvy employers are using the downturn to increase bench strength. For example, Ken Fazio, vice president and national sales manager for Arbor Commercial Mortgage, says his firm has already overshot its hiring quota in an effort to recruit talent and expand into new markets. “More people in the business who normally would never have been looking for jobs are out there looking now,” he says. “It's an excellent opportunity.”
Other firms are considering commission-only scenarios in which an employee draws a modest base salary and then counts on his skills to bring home the bacon in the form of a percentage of sales or revenue, says Craig Patterson, president of Cref Executive Search in Austin.
More time off
During normal times, job seekers can expect their employment search to take up to six months, LoPinto says. That process has now been extended up to a year. “In today's environment, I would argue that if you're a finance person or in investment banking, if you're not one of the top players, it's going to be a very long time,” he adds.
The SelectLeaders/Cornell Job Barometer, an annual assessment of commercial real estate job postings, reveals that industry executives have postponed hiring in late 2008. In fact, job postings mined from eight industry job boards plummeted from 1,085 in June to just 591 in August 2008. SelectLeaders.com is an online job network.
“The commercial real estate market for most of the spring '08 really lagged behind what was happening in the industry,” says Dr. David Funk, co-author of the study and director of the Cornell Program for Real Estate. “In other words, opportunities remained throughout the spring despite the fact that transaction volume had fallen off the table.”
Silver lining
In general, salaries will be flat and incentive compensation will fall dramatically over the next year or two, according to LoPinto. Recently, Equinox Partners conducted a salary survey of 217 commercial real estate executives. This year, only 33% of senior executives surveyed said real estate salaries would increase in 2009 compared with 58% the previous year. A hefty 35% said salaries would decrease next year compared with just 2% in the last survey.
The Cornell report shows some signs of optimism. The biggest winner of all commercial real estate sectors was multifamily. In fact, 38% of the jobs posted were in the apartment industry. Job applicants are likely to have the most luck finding positions in areas that are able to wring value out of existing assets. Those disciplines include asset management, property management and accounting.
Against the tough odds, it would certainly be easy for job seekers to camp out at the family beach house. But maybe they should take the advice of someone who's been there and come out on the other side. “Part of the time you want to beat yourself up,” Gaylord cautions, “but that's the last thing you want to do. You just have to keep forging forward and find a way to get back on your feet.”
Sibley Fleming is managing editor and green building editor of National Real Estate Investor. She is also the author of seven books. She can be reached at [email protected].