The real estate world has been turned upside down in the past two years. The collapse of the subprime mortgage industry and the implosion of the housing market sparked a financial firestorm that’s engulfed the world. The recession and drying up of credit, which has long been the lifeblood of the real estate, has caused development, sales, lending and many other businesses practically to grind to a halt. Tens of thousands of jobs have been cut by banks, service companies, real estate investment trusts and other real estate companies. One joke circulating in the brokerage business goes like this: “Brokers are too dumb to know that they’re unemployed.”
Arguably the world’s second oldest profession, real estate encompasses a wide range of jobs and skill sets. Property development alone requires developers, construction companies, architects, project managers and a wide range of other professions. There are also huge businesses in selling, financing, leasing and operating office buildings, hotels, shopping centers, warehouses, rental apartment buildings and other investment property. In the decade before the recession hit, thousands of jobs were created as real estate became a more desirable asset class for pension funds and other institutional investors and Wall Street has devised new ways of converting real estate debt into securities.
WHERE THE ACTION IS
But not all real estate sectors are quiet when it comes to hiring. One glimmer of activity is in the commercial real estate sector known as asset management. With demand for space falling and buildings coming precariously close to defaulting on debt, property owners are doing everything they can to increase revenue and cut costs. For some real estate companies, that has meant replacing top management. Numerous other owners and service companies, meanwhile, have put a new emphasis on their employees that operate and lease properties. “We’ve probably initiated four searches in the past 45 days for relatively senior asset management profiles,” says Anthony LoPinto, chief executive of Equinox Partners, an executive search firm that specializes in real estate. “Owners are working their portfolios more aggressively.”
The demand for asset managers will likely intensify in coming months if, as expected, banks and other lenders begin taking over billions of dollars worth of distressed commercial real estate assets. They’ll need executives to manage, lease, operate and eventually dispose of properties and bad loans. While lenders will likely try to transform existing staff into asset managers, executives who had been skilled in lending and sales may not necessarily have all the necessary skill sets.
Asset traditionally hasn’t been the most glamorous specialty in real estate. The most desirable—and lucrative—jobs typically have been in sales, finance and development. But skills and experience gained from running buildings can be invaluable in all real estate fields, including the most prestigious.
Executives who are successful at individual properties often are promoted into other disciplines. Entry level asset management jobs typically involve running just one building. The next step is being responsible for a portfolio of properties. Executives who are successful at that can move into finance, deal making and other corporate areas. “There is some mobility if you’re talented,” says William Ferguson, chief executive of Ferguson Partners Ltd., a global executive recruiting consultant focused on real estate.
It’s not just property owners that are looking for asset managers. A number of corporations and other owners have looked to outsource property management jobs to real estate service companies like Jones Lang LaSalle and CB Richard Ellis Group Inc. As a result some of these service companies have begun to staff up in asset management. For example, CB Richard Ellis has eliminated 1,500 jobs, but it has added staff to its corporate services division, which runs facilities for major corporations. “We have 32 new corporate services accounts,” says Steve Iaco, a spokesman for the company.
GETTING THE JOB
Great asset managers are those with a wide range of skills. Each commercial property, after all, is essentially a separate business. The manager running that building must compete with other properties in attracting tenants through advertising, marketing and strong operations. He or she must be skilled at deal making in negotiating leases with tenants. And they also have to be good at retaining tenants through customer service, whether that means making sure the halls are properly cleaned or whether the building should install a gym or daycare center. “If a lease is coming due, you need to go out of your way to communicate with tenants and sometimes cut them a better deal,” says Ferguson.
Different asset classes require different skills. Shopping centers, for example, need asset managers who have good instincts for such things as choosing the best mix of retailers for a property. Managers of office property need a good feel for what types of businesses are expanding in a region.
Executive recruiters say that real estate companies these days particularly like to see asset managers with finance experience. With so many properties in danger of defaulting on debt, it helps if asset managers have a good grasp of cash flow, debt covenants, balance sheets and other critical matters, they say. “You can always find someone who knows how to work the boiler room,” says LoPinto. “It’s harder to bring financial acumen to the table.”