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NEW YORK, NY—Acquisition positions in commercial real estate now represent 9% of all CRE job postings, according to the latest SelectLeaders Job Barometer report, while development job opportunities are taking 7% of all openings, well above the historic average of 4%.
These numbers are surprising given where we are in the cycle: classic real estate employment theory suggests that a decade into an economic expansion acquisitions and development job postings should be in decline and property management jobs on the increase. Instead, for this survey, acquisitions jobs have jumped past property management openings as the third most job posting after openings in finance/investment and asset and portfolio management.
Opportunity Zones Drive Hiring
The debut of Opportunity Zones may have helped turned this model on its head, suggests Dr. David Funk, managing editor of the Job Barometer. He notes that that if even a fraction of the $2 trillion in unrealized gains available to Opportunity Zones are invested it is enough to influence real estate hiring.
"Equity chasing real estate deals combined with attractive debt pricing exacerbates the challenge in finding opportunities, which has added pressure to building out acquisition team talent and depth," he says, adding that robust hiring of development talent underscores the rush to get in on Opportunity Zone projects before the end of 2019. "We will see whether hiring in acquisitions and development continue into 2020 as the benefits from Opportunity Zones tapers off," Funk says in prepared remarks.
A Seller's Market for Talent
The overall dynamics of the US employment market is also influencing hiring trends in CRE—namely industry employment has shifted to a peak seller's market. "Commercial real estate job seekers in Q3 2019 were the most selective on record, and in response employers are expanding their recruiting strategies," says SelectLeaders CEO Susan Phillips. "We dubbed jobs seekers selectivity in their job applications in this economy as 'The Pickiness Factor' which rose to new levels during the summer of 2019 as real estate opportunities spiked."
California, Texas and New York
The report also found that half of all commercial real estate jobs are found in just three states—California, New York, and Texas—with the strongest demand coming from applicants in New York. New York represented 18% of all job postings in Q3 2019 yet 35% of all applications came from job seekers in the Empire state.
Tech-fueled new growth cities like Austin, Texas also have high appeal, Phillips said. In the first four months of 2019 even The Pickiness Factor waned for highly popular jobs such as acquisitions and development.
Looking to 2020's Election Cycle
Funk expects to see similar trends in 2020. "We expect job postings to increase in January—the January effect—and remain relatively unchanged year over year," he tells GlobeSt.com.
That said, he also predicts that next year there will be some minor pull back in jobs related to Opportunity Zones, "but the abundance of capital and a declining interest rate environment should pick up the slack."
To state the obvious, one notable event in 2020 will be the US presidential elections, which, if 2016 was any guide, will have an effect on CRE hiring, Phillips tells GlobeSt.com.
In 2016, hiring started out strong, but the closer it got to the election hiring decreased dramatically. "It took a few weeks for employers to process the election results, but then hiring soared as if making up for lost time," she tells GlobeSt.com.
She expects a similar scenario in 2020. "The stock market and the real estate job market thrive on certainty. While an election year probably will have greater ups and downs, we expect more of the same."
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
