NEWPORT BEACH, CA—A “forest for the trees” mentality, in addition to seeking yield for investors, is causing firms based in other markets to expand to the West Coast, creating more demand for talent in a tight market, RETS Associates principal Kent Elliott tells GlobeSt.com. Elliott says that there are a lot of out-of-region and foreign companies that are moving to California and the West Coast in general to open new offices and take advantage of the strong market fundamentals here. Naturally, this is having an impact on the hiring landscape. We spoke with Elliott about that impact and what it means for CRE professionals.

GlobeSt.com: What are you noticing about real estate companies with footprints in other markets—both domestically and internationally—expanding to the West Coast?

Elliott: They're seeking a broader geography in which to place their capital in order to achieve the yield requirements that they're seeking. Take a New York-based company that feels like they're in the forest in New York but can see a vision for a property in Downtown L.A. that the local players inside the forest can't see. If that property will achieve the yield requirements of a New York firm, they'll go after it. These could be acquisitions of existing assets, ground-up development or redevelopment opportunities. With that, some of them are then setting up shop here so that they can take that initial investment and expand upon their footprint in that geographical area.

GlobeSt.com: What impact is this trend having on hiring?

Elliott: It's having a strong impact on hiring because you're adding more hiring demand into the market. There's one more player or 10 that are hiring, so the talent challenges we're facing are now compounded even more. Say you have 10 new players in L.A., and three of them are hiring a VP of development. Those candidates have to come from somewhere, so they will come from that depleting inventory of VP of development. There's more competition for that talent. It's not without risk, of course, because if you're the last man in, are you first out? It makes recruitment process more challenging.

GlobeSt.com: What types of positions and companies are most affected by this trend?

Elliott: These are not small companies. They may be private companies. Duke Realty has come and gone in the SoCal market, and they're hiring right now. This is not a small, five-person company in Dallas looking to set up shop, but more mid- to large-sized companies looking to set up shop. Smaller firms don't have the capital to make a statement like that. The positions include asset management, construction, development and financial analysts.

GlobeSt.com: What else should our readers know about this trend?

Elliott: A couple of weeks ago, unemployment was at 4.8%—that's macro-level stuff. We've been saying for a while that CRE unemployment is at 2%, and some markets are below 2% if not negative, which compounds the problem, if you view it as such. Employers, when they're looking to hire, need to offer somebody a compelling package if they're looking to move. Compensation is one of the top three components. If you look at the risk, it can drive up compensation there and can force employers to have to step up to the table above and beyond what they thought would be necessary. Compensation continues to increase.

GlobeSt.com: What are you noticing about real estate companies with footprints in other markets—both domestically and internationally—expanding to the West Coast?

GlobeSt.com: What impact is this trend having on hiring?

GlobeSt.com: What types of positions and companies are most affected by this trend?

GlobeSt.com: What else should our readers know about this trend?

Instant Insights /

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