BOSTON — It started around the height of the pandemic when it essentially made fiscal sense for commercial real estate companies to scale back their workforce. After all, office buildings were for the most part empty, so the math was easily understood. Yet after the first round of reductions in 2020, and two years into ‘the great return to office,’ the industry continues to prune; and it may be heading into its most tumultuous stretch in decades.

“It’s a scary time out there right now,” opined one industry veteran who wished to remain anonymous. “The deals are scarce and [it takes] much longer to make them work, so if you’re new to the industry, it’s a challenge to say ‘stick around’. ”

Climbing interest rates, a hybrid work environment and a drastic reduction in deal pipelines have seen profits erode, bringing a massive challenge to industry executives - and to keeping its talent pool intact.

This year, JLL depleted $5.8 million in severance and employment-related costs in the second quarter, while Cushman & Wakefield disbursed $12 million for “a reduction in headcount across select roles to optimize its workforce” according to its earnings report. And CBRE continues to cut expenses, working toward a cost-reduction plan of $400 million in savings - the majority expected to come through layoffs.

It’s not just the brokerage shops that have devised employment reduction plans, prop-tech firms, landlords, lending institutes, and property management (especially office property) firms have slimmed back staff, both through voluntary and involuntary measures.

“Right now we’re seeing a movement of senior executives getting out ahead of it, perhaps before getting let go,” says Kaitlin Kincaid, Senior Managing Director of Keller Augusta, the Boston-based (commercial real estate specific) executive search firm. “There is definitely a demand for senior talent … experienced executives are reviewing their company’s portfolio and crunching numbers … and if promotions and equity are not available for senior people, some will start looking to make a move.”

Kate Keller, founder and principal at Keller Augusta attributes the consistent demand of senior level placements to the aftermath of COVID-19. “During the height of the pandemic, there was a mass exodus which left a lot of companies compromised, people didn’t expect to have these gaps in their org charts, but many [veteran] executive-level people made the choice to get out on top after spending their careers in the industry.”

Kincaid attests her firm has, “stayed steady and busy” throughout and despite the downward spiral within the industry. She says the shifting focus and expansion of portfolios by investment groups has created the need for firms to add categories and as a bi-product a specialist within those business lines. “There have been cuts on analyst and entry-level positions, but firms have had to bring in senior professionals to handle new business categories, and they are paying well for those.”

The downsizing of companies combined with the appeal for leading senior talent has created a transformation in hiring at all levels, according to Kincaid. “There is less hiring, and there is a shift in salaries for sure … before the pandemic, companies were taking more of a risk on junior-level people, and in a lot of cases paying over their budget just to get them in while they were so busy … now they are staying true to their budgets and are not flexible on salaries.”

One goal, inclusive to every industry, both within and outside commercial real estate is the desire to get people back into the office, but according to a recent sur-vey by Keller Augusta, just 20% of companies have employees back to the office more than three days a week. It is a topic that Kincaid confirms arises on nearly all assignments. “Most firms have a policy to get people back … but with remote work here to stay, they have to be flexible. We had a client ask our opinion of a young [entry-level] candidate that they wanted to hire but he didn’t want to go into the office, and he was living in Southie, and we said, ‘if he doesn’t want to come into the office just one or two days a week and he lives that close, he’s probably not the right person for the job anyway’.”

Yet to be seen is the likely fallout when loans mature, buildings default and the available supply of office space continues to balloon to levels never experienced. The herd will continue to thin but some experienced professionals see that as a bright spot for both young and seasoned. Said one C-level executive, “This is a new opportunity to learn, work hard and get stronger if you’re younger, and if you’re older, it’s time to use your skills and stay close to your clients … we’ll come out of this, Boston always does and we’ll be in good shape.”

From the executive search side out-look, Kincaid concurs, “There are those who are still holding on to see true val-uations on buildings and hiring, but 53% of companies we surveyed [the Keller Au-gusta survey received over 600 respons-es] say they plan to expand their work-force. We’re seeing demand for specialists as firms adjust and change strategies, so we’re feeling optimistic in 2024.”