Business Management Management Strategies
Sept 15, 2008
With tough economic times comes an even tougher employment market, and commercial real estate is one of the industries that has been hit harder than some others. CPN associate editor Amanda Marsh spoke with Robert Baron, president of American Real Estate Executive Search Co., about what kind of job market senior level executives are facing, where to find opportunities and what to expect in the future.
CPN: What kind of hiring environment is a commercial real estate executive facing in today’s economy?
Baron: The credit crunch and the re-pricing of risk means two things many real estate professionals rely on no longer exist. Growth has stopped because tenants and their bankers have become more cautious about making long-term decisions about new stores, new offices and new production facilities. Transactions have almost stopped because bid prices are lower than they were 18 months ago, so recent buyers cannot sell at a profit and all owners are reluctant to sell for less than the prices they could have seen at the top of the market. Any real estate position that resulted from new development or asset sales is at risk of being eliminated in the current environment.
CPN: Who is hiring now?
Baron: Companies that own real estate still seek to operate their properties at a profit and in a slowing economy the challenge of value-creation and operations is more important than ever. As a result, leasing and property managers remain critical positions and while this part of the market is not heavily expanding, when a vacancy exists, it must be filled. There are also some positions that exist as a direct result of the current crisis. Loan workouts and restructures are necessary and manpower to negotiate them is required on both the borrower and lender side of the fence. Many investment pools have been raised to target distressed assets (both equity and debt) and as assets begin to trade, this will become an important source of demand for real estate professionals.
CPN: And which companies are letting go?
Baron: Wall Street firms continue to shed jobs in the real estate debt, equity and advisory areas. Part of this is a direct result of real estate problems and part of it is a result of “pain-sharing” due to problems in non-real estate areas of these firms.
Service providers who were dependent on transactions for their main activity (lawyers, lenders, mortgage bankers, acquisitions specialists, title insurance firms, due diligence firms) are still right-sizing their businesses to cope with the reduced volumes.
CPN: What kind of executives are companies seeking nowadays? Who’s getting swept up, and who’s being left behind?
Baron: “Real” real estate professionals are “in” and financial manipulators are “out.” In tough times it is important to understand the real estate fundamentals—what separates good real estate from bad and how to create and maintain value. The pure financial geniuses who relied on multiple layers of leverage in order to get their yield are out of fashion at this point in the cycle. As Warren E. Buffett would say, “You only find out who is swimming naked when the tide goes out.”
CPN: What advice do you have for executives who have been let go and are currently in the hiring pool?
Baron: Employers hire employees to make a company money, save money or provide the employer with a better quality of life. Do not leave it up to the employer to read through your experience, translate that into skills and then figure out how to deploy those skills for their own advantage. Connect the dots for employers. Turn your resume into a marketing pitch that clearly shows the types of situations in which your professional skills can add value to their company.
CPN: What is your outlook for the commercial real estate executive job market?
Baron: The job market will follow the transactions. The transactions will return when investors start re-deploying debt and equity capital in real estate with the optimism that comes from the expectation of making a profit and the urgency of acting fast on a deal before someone else seizes the opportunity. This has always been a cyclical market and the long upswing caused even experienced investors to forget that.
With tough economic times comes an even tougher employment market, and commercial real estate is one of the industries that has been hit harder than some others. CPN associate editor Amanda Marsh spoke with Robert Baron, president of American Real Estate Executive Search Co., about what kind of job market senior level executives are facing, where to find opportunities and what to expect in the future.
CPN: What kind of hiring environment is a commercial real estate executive facing in today’s economy?
Baron: The credit crunch and the re-pricing of risk means two things many real estate professionals rely on no longer exist. Growth has stopped because tenants and their bankers have become more cautious about making long-term decisions about new stores, new offices and new production facilities. Transactions have almost stopped because bid prices are lower than they were 18 months ago, so recent buyers cannot sell at a profit and all owners are reluctant to sell for less than the prices they could have seen at the top of the market. Any real estate position that resulted from new development or asset sales is at risk of being eliminated in the current environment.
CPN: Who is hiring now?
Baron: Companies that own real estate still seek to operate their properties at a profit and in a slowing economy the challenge of value-creation and operations is more important than ever. As a result, leasing and property managers remain critical positions and while this part of the market is not heavily expanding, when a vacancy exists, it must be filled. There are also some positions that exist as a direct result of the current crisis. Loan workouts and restructures are necessary and manpower to negotiate them is required on both the borrower and lender side of the fence. Many investment pools have been raised to target distressed assets (both equity and debt) and as assets begin to trade, this will become an important source of demand for real estate professionals.
CPN: And which companies are letting go?
Baron: Wall Street firms continue to shed jobs in the real estate debt, equity and advisory areas. Part of this is a direct result of real estate problems and part of it is a result of “pain-sharing” due to problems in non-real estate areas of these firms.
Service providers who were dependent on transactions for their main activity (lawyers, lenders, mortgage bankers, acquisitions specialists, title insurance firms, due diligence firms) are still right-sizing their businesses to cope with the reduced volumes.
CPN: What kind of executives are companies seeking nowadays? Who’s getting swept up, and who’s being left behind?
Baron: “Real” real estate professionals are “in” and financial manipulators are “out.” In tough times it is important to understand the real estate fundamentals—what separates good real estate from bad and how to create and maintain value. The pure financial geniuses who relied on multiple layers of leverage in order to get their yield are out of fashion at this point in the cycle. As Warren E. Buffett would say, “You only find out who is swimming naked when the tide goes out.”
CPN: What advice do you have for executives who have been let go and are currently in the hiring pool?
Baron: Employers hire employees to make a company money, save money or provide the employer with a better quality of life. Do not leave it up to the employer to read through your experience, translate that into skills and then figure out how to deploy those skills for their own advantage. Connect the dots for employers. Turn your resume into a marketing pitch that clearly shows the types of situations in which your professional skills can add value to their company.
CPN: What is your outlook for the commercial real estate executive job market?
Baron: The job market will follow the transactions. The transactions will return when investors start re-deploying debt and equity capital in real estate with the optimism that comes from the expectation of making a profit and the urgency of acting fast on a deal before someone else seizes the opportunity. This has always been a cyclical market and the long upswing caused even experienced investors to forget that.
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