The phone rings constantly at Joseph Cahoon’s office at Southern Methodist University in Dallas. The director of the Folsom Institute for Real Estate at SMU’s Cox School of Business says the calls come from commercial real estate executives nationwide who need mid-level analysts with several years of experience. “Those don’t exist,” Cahoon says. “If they did stay in the market, they’re highly valued, have risen in their own firms, and they aren’t trying to make lateral moves.”
Welcome to the new recruiting wars in commercial real estate in Dallas-Fort Worth.
A combination of factors, including the region’s roaring economic growth and robust corporate deal-making, are creating challenges for those charged with attracting and retaining industry professionals. “The demand from [corporate] mergers, acquisitions, and split-offs in North Texas continues to increase,” says Jeff Staubach, president of the South Central region at JLL. “They’re all putting new square footage on the market. With more square footage, the industry needs additional analysts, leasing agents, and capital markets professionals to buy or lease the spaces.”
Part of today’s talent gap stems from economic downturns of days past. Take the most recent recession, the storm clouds for which began appearing in late 2007. “Young talent will always be attracted to the hot industry, and during that time, it wasn’t commercial real estate,” says Blair Oden, senior managing director, occupier services, at CBRE. “From 2008 to 2010, we weren’t hiring anyone out of college. In fact, we weren’t hiring many people at all.”
The lack of jobs nationwide in CRE at the time meant that recent college graduates of that era largely went into other fields. The same phenomenon happened in North Texas after the technology bust that started in 2000, following regional economic issues that surfaced in the 1980s. These generational voids in commercial real estate manifest themselves when the field heats up, such as it did starting in DFW in the 2011-2012 time frame. One of these voids is why, for instance, executives call Cahoon looking for analysts with experience levels that college graduates of the Great Recession would now have—if only they had gone into commercial real estate.
Mega-mergers and consolidation within the industry has also heated up the competition for talent. In 2006, CBRE acquired Trammell Crow Co. Two years later, JLL acquired tenant-rep powerhouse The Staubach Co. And just last year, Cushman & Wakefield merged with DTZ (which prior to that had acquired Cassidy Turley). All three were high-impact deals in the Dallas-Fort Worth market.
For now at least, industry executives say their businesses have not seen a significant impact from the shallow talent pool. “Most of the vacancies are at the junior level, such as analysts,” Staubach says. “There definitely aren’t as many 40-year-old brokers in the office. But we haven’t noticed any sort of negative impact or issues in recruiting the type of talent we need to service our clients.”
MILLENNIALS WILL MATTER
Experts warn, however, that demographic shifts will soon create bigger headaches for recruiting in CRE. A recent report in Area Development Magazine noted that more than 75 million baby boomers will be 55 or older in a few years, and that there simply are not enough younger workers to replace them. As a result, the article warned, power in the employment relationship will shift from boss to employee, and growing companies that need to add employees will have to steal their rivals’ personnel.
So here’s the good news: seeing opportunities in the field, millennials are flocking to commercial real estate. Enrollment in SMU’s real estate classes is way up, and, according to research from E Smith Realty Partners, the number of commercial real estate brokers in North Texas increased 18.1 percent between 2010 and 2015, from 6,816 to 7,453 brokers.
But these are a new kind of real estate professionals—millennials, who lead their lives much differently than their parents have, according to Susan Arledge, managing director at E Smith Realty. Car sales, for instance, have declined 30 percent in that age group, Arledge points out. As of 2010, 26 percent did not even have a driver’s license, she says. This means employers will need to ensure they place their offices in settings close to where millennial employees live.
And they’ll have to make other changes, too, says Cahoon at SMU. “Millennials are getting married later, starting families later, moving more often and changing jobs more often,” he says. “The key phrases you hear among the people I work with are the ‘search for mentorship’ and ‘team-building.’ The emphasis for a lot of firms is to really create that environment.”
It’s an opportunity that can give real estate firms a recruiting edge, Arledge says. “One of the drivers behind the firm is our culture, which emphasizes teamwork, collaboration, fielding the best staff, and rewarding the overall team for its effort,” she says. “Our mantra is, ‘demand excellence.’”
The war for talent has given those in commercial real estate an inside look at what many of their clients are experiencing today. After all, it’s a battle in which growing companies across the country are actively engaged. Fortunately, as proven by the numerous corporate relocations and expansions the region has seen in the past couple of years, commercial real estate executives in Dallas-Fort Worth have a distinct home-field advantage.
GIRDING FOR BATTLE
The latest talent war has yet to take a big bite out of the operations or finances of commercial real estate firms. But that could soon change, as the looming retirements of millions of baby boomers will exacerbate an employee shortage, experts say.
Here are some tips on what commercial real estate firms can do now to prepare:
- Learn About Millennials: As Susan Arledge, managing director at E Smith Realty Partners, points out, Forbes has reported this generation overwhelmingly prefers a collaborative work culture and flexible schedules.
- Embrace Students: Joseph Cahoon, director of SMU’s Folsom Institute for Real Estate, says mentorship programs, panel discussions, and lunch-and-learns can get employers in touch with people doing undergraduate and graduate studies. And strong internship programs can provide low-risk ways to see who might be a fit for full-time work, he says.
- Build a Strong Culture: JLL emphasizes work-life balance because the company knows its staffers have commitments outside their jobs, according to South Central Region President Jeff Staubach. CBRE cultivates a “collaborative, transparent team environment,” says Blair Oden, the company’s senior managing director of occupier services.