2016 Correction Looms, Says Job Barometer

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NEW YORK CITY—Job opportunities in US commercial real estate are now at an eight-year peak but early warning signs are cautioning that a potentially abrupt pull back is around the corner. That is according to the latest SelectLeaders Job Barometer report. According to the report, while 2015 witnessed the largest number of overall US jobs in history, commercial real estate jobs largely mirrored the roller coaster jobs ride from the highs of late 2007, depths of 2009, and full cycle rebound by 2015. The uptick in hiring in January belies a softening in employer’s ramp up to the spring hiring season, however. “The consistent growth in commercial real estate job opportunities since 2009 is impressive and new entrants as well as seasoned professionals have found a receptive job market through the start of 2016,” notes David Funk , managing editor for the SelectLeaders Job Barometer. Funk adds that “some of our leading indicator analyses are flashing red that a slowdown in commercial real estate hiring is imminent—how severe will be the question.” Commercial real estate job postings and other data tracked by the SelectLeaders Job Barometer have proven to be a reliable leading indicator of the overall job market as well as exhibit more immediate sensitivity to market conditions. The Job Barometer experienced a steep fall in commercial real estate job opportunities through the spring and summer of 2007, and anticipated the global financial crisis six months in advance. “Commercial real estate tends to be out ahead of the overall job market, and SelectLeaders data indicates real estate firms will tap the brakes on eight years of aggressive hiring expansion in reaction to the volatility in the stock market and “wild cards’ globally,” explains Susan Phillips , CEO of SelectLeaders . “The hope is a correction will ward off a recession.” January 2016, though, represented the best January on record for overall commercial real estate postings with the number of postings in January 2016 up 6.1% over opportunities listed in January 2015. However, the 2016 SelectLeaders Network Hiring Trends survey found 69% of hiring decision-makers planning to stay the same or reduce their hiring in the coming year. But more troubling was the survey sentiment, the firm says. Survey comments reinforced the cautionary tone with quotables as “we are in the 9th inning,” “everything is increasingly fragile,” and “uncertainty and volatility are the watchwords.” While commercial real estate job opportunities have been up across the board since the trough of 2008 applicant interest has differed greatly based on the job function and sector, and 2015 was no exception. SelectLeaders has been tracking the mis-match between job opportunities and applicant interests since 2006, and the preference gap has been consistent except for the depths of the global financial crisis 2008-2011. Currently, the percentage of all applicants who apply to acquisitions and asset/portfolio jobs far outpace the openings in those areas, while property and project management job openings find far fewer applicants that are selective even when they do apply. Asset/ portfolio management and development/ project management were the highest ranked positions by job function receiving 12.1% and 8.1% of all applications, respectively. Conversely, property management constituted 15% of all commercial real estate job openings in 2015 with development/ project management comprising 12% of all opportunities. An imbalance between applicants and commercial real estate opportunities has been exacerbated by the dearth of traditional entry analyst positions available in the industry from 2009 through 2012, the report says. “Almost no analysts were hired for a four year stretch, resulting in healthy compensation growth for analyst positions requiring three to five years of experience since the pipeline was disrupted,” says Phillips. A preference gap exists when it comes to real estate sectors as well, with applicants preferring office and expressing the least interest in opportunities within single-family real estate, the report says. The office sector was the most popular among applicants in 2015 garnering 4.3% of all applications with only 7.5% of all opportunities. Multifamily had the second most job opportunities and ranked third in terms of applications. The singlefamily sector represented 8.9% openings but only 4.6% of applications. Small shares of the applicant pool were drawn to positions in government- related real estate (2.6%), affordable housing (2.4%), healthcare real estate (1.1%), and green/ sustainable real estate (0.9%). Other areas included mixed use and non-sector specific openings, the report says. But investments continues to provide the most opportunities by real estate business field with corporate real estate and advisory/consulting comprising the 2nd and 3rd most job openings. Investment and corporate real estate both increased their share of job postings from 2014 while advisory/consulting fell slightly. In terms of location, California led among states with 25% of all commercial real estate job postings in 2015. New York followed with 18.5% of all postings while Texas held down 3rd place with 9.1%.