Thank you for sharing!

Your article was successfully shared with the contacts you provided.

In commercial real estate and elsewhere, people are happy that 2008 is behind them. During one of the most chaotic years ever, the economy nose-dived, commercial real estate deals disappeared, jobs were eliminated faster than ever, and the credit crunch/financial crisis basically stopped everything else. But with bleak projections for 2009, what will the employment picture look like in the commercial real estate sector?

Despite the uncertain economy, there are talented executives exploring new opportunities. Many strong executives can see their present employers’ chances for continued success or even survival, so they’re the ones most willing to consider changing jobs. “Mid-level executives are reluctant to move from good companies and that makes recruiting more challenging,” says Steve Schrenzel, managing director of The Governance Group, a leading international executive search firm based in Summit. “At the C-suite and more senior level, they are somewhat more willing to consider moving for new challenges. Our role is to persuade these executives to consider a sensible move.

“Looking ahead, we’ll definitely see a talent replacement period. Many commercial real estate companies can use these difficult economic times to their benefit by recognizing that this may be the best time to enhance their organizational DNA,” Schrenzel continues.

Employment areas that should see some slight job improvement this year are property management and ones associated with green. Specifically, owners can enhance building effectiveness by hiring property managers with in-depth business, property management, client service, security and engineering skills, as well as LEED certifications or significant LEED knowledge.

“There’s been an increasing demand for LEED educated employees,” says Bob Gandel, managing director, The Governance Group. “It’s not only companies driving it; government is also pushing the movement. It will continue to be a significant issue in recruiting from construction to facilities management. Companies want LEED knowledgeable people who can integrate environmental systems with energy and security systems in order to improve building effectiveness.”

As for commercial real estate brokers, brokerage revenues fell in 2008 and are projected to continue dropping this year, meaning ongoing turmoil. First and foremost, sub-performing and less experienced brokers–four years and under–will be part of the downsizing. Once that occurs, and other expenses are eliminated or reduced, then it comes down to extremely tough decisions over valuable contributors.

“The simple decisions are the underperformers or the ones who were not working out in the prior robust environment,” explains Schrenzel. “What we’re seeing now is the de-layering of companies where very strong human capital is part of the downsizing. Rather than cut individuals, companies are eliminating entire levels, such as vice presidents. While this obviously saves money, in my opinion, it’s not always the best course of action because it leaves many organizations weak in management development. The very strategic companies are tightening their belts, while simultaneously retaining their best employees and managers to ensure that they aren’t playing catch up when the market turns around.”

Another expected trend will be “by-choice” departures where many executives leave on their own to start a business, enjoy some ‘rest and relaxation,’ or just get out of the commercial real estate industry. The true entrepreneurs will transfer their management and decision-making skills into other sectors with their own businesses, and many will migrate to real estate consulting. In each major downturn there are also those who never return to the commercial real estate sector.

“Many commercial real estate professionals have done very well for themselves during the past three to five years, giving them the financial flexibility to depart the industry on their terms,” states Gandel. “Rather than stay in stressful and uncertain situations, they’re moving forward with their professional careers or ‘retiring’ to enjoy their successes from the past few years.”

While those people are in the minority, the 2009 commercial real estate industry will continue undergoing changes, like the rest of the business world. However, there is some bright light at the end of this recessionary tunnel. As Schrenzel notes, “Despite the difficult business and economic climate in commercial real estate locally and globally, commercial real estate employers that develop a very strong people strategy tied directly to their business goals and objectives will be the ones that succeed. I’ve never seen a time with more highly skilled people in worrisome situations, and I think this is the best time since 1987 to seek and hire high performing senior executives for critical roles, succession positions and for new business opportunities in commercial real estate.”

Steve Schrenzel and Bob Gandel co-manage The Governance Group, a leading global executive search firm that excels at human capital management. For more information, call The Governance Group at 908-277-1800 or visit www.governancegroup.com. The views expressed in this article are the authors’ own.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.