Growing Industry Keeping Search Firms Busy
April 30, 2014 | Real Estate Alert
Business is once again booming for executive-search firms as more commercial real estate companies have switched into expansion mode.
Recruiters across the country are seeing substantial growth in assignments to place professionals in jobs at every level, spanning all facets of the industry. An annual review by Real Estate Alert identified 47 search firms specializing in the commercial real estate sector.
“We are busier right now than we have ever been in 13 years,” said Kent Elliott, a co-founder and principal of RETS Associates. In the first quarter of this year, he said, the firm posted a 11.5% increase in searches from the same period last year.
After several years of limiting their hiring largely to filling vacancies, real estate companies are expanding existing platforms and adding new teams. Search firms are being tapped not only for one-off assignments, but for multiple hires. “We are seeing a higher degree of team build-outs,” said Anthony LoPinto, global sector leader of real estate at executive recruiter Korn/Ferry International.
With investment activity continuing to rise, “It is absolutely critical that companies position themselves by really building a strong team,” said Gregory Shultz, founder of Newbridge Search. “Competition is only going to increase in terms of investment opportunities, and having the best people on board is going to define your competitive advantage.”
The sharpest increase in demand, recruiters say, is for development professionals. Following a long hiatus during the downturn, construction increased rapidly in the last year or so in primary and secondary markets. Companies that had allowed their development teams to dwindle, or let them go entirely, are now staffing up.
But the consensus is that job growth is strong across all sectors of the industry. “All of the pieces are moving, which is really positive,” said Sun-Sun De Swaan of Glocap Search.
And hiring extends from the executive level to middle and lower management positions where the ranks had thinned. “Firms are more willing to fill out those spaces,” said Chris Papa, a managing director at executive-search firm Bachrach Group.
A major driver is the influx of capital into real estate, as low interest rates depress returns on many other investments. “Where are individuals, family offices, sovereign wealth funds going to put their money?” said Steven Littman, managing partner at Rhodes Associates, noting that foreign investors increasingly see real estate in the U.S. as a safe haven with strong returns.
Increasing competition for properties has generated demand for acquisitions professionals capable of sourcing off-market deals. “They’re putting more boots on the ground to get those one-off deals,” said William Ferguson, co-chief executive of FPL Advisory, parent company of executive search firm Ferguson Partners. Meanwhile, U.S. investors are increasingly looking to place capital overseas, resulting in a push to build out global teams, Ferguson added.
As they look to add staff, companies can no longer choose from a large pool of unemployed professionals. With the revival of the industry over the past few years, many of those pros have found new jobs or are working independently. “Everybody is back doing something productive, so it’s not easy to get them,” said Robert Baron, president of BCGI Executive Real Estate. “You have to talk them out of what they are doing now.”
That prompts employers to turn to search firms, which are better able to approach and sort through a wide field of candidates and to fill multiple positions at once. “Firms are saying, let’s go get the best and the brightest. Help us be thoughtful in how to get it,” said Scott Estill, a partner and co-leader of the real estate sector for the Americas at Heidrick & Struggles.