The COVID-19 pandemic forced many senior and executive leaders out of commercial real estate firms. Some retired, or they set off in search of new opportunities to try to scale their activities or settle into specialized, niche markets. Executive and senior-level talent is capturing attention again, but for different reasons. 

Elongated investment timelines, market uncertainty, increased internal scrutiny, and company expansion and diversification are all contributing to firms scaling their leadership ranks in order to meet the demands of an evolving market and position themselves for future growth. 

The number of people employed in the private sector in the U.S. is at an all time high, but job openings in the sector are at a five-year low, an indication of the competitiveness of the job market. Many CRE hiring managers are seeking seasoned, versatile leaders who can help their companies be nimble and capitalize on opportunities in a crowded market flush with capital ready to be selectively deployed; firms are also carefully eyeing ascending, developed talent within their organizational charts.

Interest from employers is real, and they are being selective despite the relative strength of the talent pipeline. Keller Augusta recently engaged in a search for a Chief Accounting Officer in San Francisco for a multifamily owner and operator, and we also just underwent a search for a Chief Financial Officer for a prominent, privately-held real estate investment firm based in Dallas.

We have also seen activity from family office investment shops that are seeking executive-level real estate professionals to continue to drive their strategy; these investors have been all the rage as they’ve built out their CRE platforms and carved out their places in the market over the last few years. Keller Augusta was recently tapped by three separate private single family offices, each located in Texas, Florida and Boston, for three executive searches for development, operations, and finance and capital markets functions, respectively. 

This year will continue to be one where the CRE market searches for stability amid economic and geopolitical uncertainty and firms aggressively position themselves to be ready for what the market will present next. It's important for companies to be proactive in selecting the right leaders to help shepherd their respective operations.

Accelerated Succession Planning Due to Market Uncertainty 

The nuances of corporate succession planning are complex, and every firm should take it seriously and be organized in this practice to safeguard against business disruptions. 

Succession planning is normal in the course of business, as companies are always phasing out leadership at various levels, but it’s become increasingly prevalent as the commercial property sector looks ahead at what could be a turbulent race to a new business cycle. The pandemic upended a strong run of real estate performance, and we’ve since been in recovery; the outlook for the next stages of expansion and increased supply is promising, but murky. This potentially protracted downturn and recovery period has forced many CRE firms and their older, senior leaders to expedite succession planning conversations.

Leaders in the latter portions of their careers, who may not have a clear view of their future on the other side of this CRE recovery, are thinking through how much change they can continue to effectuate and whether they have the patience to wait for a market upswing. And their respective firms are gameplanning around who can take on the responsibility of ushering them into and through the next business cycle. 

Expansion and Diversification is Driving a Need for Seasoned Leadership

Institutional real estate investment firms have continued to attract global capital, which has led many companies to form new investment verticals and business lines or pursue M&A options to scale their operations and expand their footprints.  

As a result, even as succession planning conversations heat up, firms are looking to reinforce their leadership ranks with veteran real estate professionals, who are capable of building out new investment platforms or business lines and executing on those strategies to capitalize on an expanding market.

Whether it’s equity groups diving headlong into the credit world, hedge funds looking seriously at real estate investment, or industrial investors eyeing opportunities in “tough tech” or data, many of these types of firms are aggressively prioritizing the experienced, sector-specific talent they need to build out and staff their businesses and shape how these platforms scale.

Firms are Evaluating Leadership Talent Differently Today

The last commercial real estate business cycle was underpinned by extraordinarily cheap debt, a friendly or lenient financing market, and an abundance of capital and deal-making opportunities. The sector was hot, running like a robust, well-oiled machine, and the CRE job market reflected that dynamic.

Many seasoned CRE professionals might agree that the best learning experiences can come from downturns or recessionary scenarios, when discipline, loyalty and strong business relationships win out. Interest has grown among many commercial real estate firms in seeking and hiring, or elevating, leaders who are more experienced or display a level of cycle maturity. 

This CRE downturn and recovery has shown a light on some senior talent within firms who have proven to be more effective under better market conditions. The greater scrutiny on performance has pushed some companies to shift gears in how they evaluate production and success, and that has bled into the recruitment space, where there is a clear desire to bring in people who have the track record and relationships to weather a downturn, meet business goals and drive a turnaround to successfully position the company for success in the aftermath.