Keller Augusta Partners

CRE Entry Level Job Openings Drop

CRE Entry Level Job Openings Drop

Jun 11, 2024

Setting up Talent Squeeze

Entry-level jobs in commercial real estate have declined steadily over the last two years, piling on the challenges faced by young adults interested in CRE careers and threatening their ability to gain the skills and experience needed to advance to senior and leadership roles.

Data from real estate job site SelectLeaders suggests a significant decline in opportunities. As of May, listings of positions requesting zero to four years of experience are down 26% year-over-year. Between May 2022 and 2023, there was a 35% decline.

In addition to a weak commercial real estate market, these jobs are among the first to be outsourced to artificial intelligence or overseas workers, and their absence can leave lasting impacts on the career paths of would-be CRE pros.

“We’re in this glass-half-empty version of the Goldilocks story, where the uncertainty has been spread out for just long enough that people are happy to just not make decisions,” said Andy Hunt, director of the real estate program at Marquette University in Milwaukee. “And that trickles down to the entry-level hiring more than almost anything.”

The impact can vary considerably. Human resources professionals, leaders of college real estate programs and Gen Z real estate pros say certain positions, sectors and regions have done well.

For example, opportunities may be abundant in asset management in a fast-growing region such as Florida or Texas, while those seeking transaction or financing gigs in the Midwest may be out of luck. 

But with many organizations slowing or stopping hiring altogether — BGO Chief Economist Ryan Severino said he knows several large CRE organizations that have instituted a hiring freeze — the challenging commercial real estate job market hits young applicants the hardest.

“It’s truly playing the match game,” said Collete English Dixon, executive director of the Marshall Bennett Institute of Real Estate at Chicago’s Roosevelt University. “Hopefully you can find a space that your students are interested in, where they can do well and where companies are interested in your students.”

Hanging over the malaise for young workers is technology, especially AI. While much of the concrete uses of AI and its larger effect on the commercial real estate workforce remain speculative, it’s a key topic of conversation. Many worry that, as its uses and utility expand and improve, work that would historically fall to an entry-level worker, analyst or broker may be performed by technology. 

“I do believe that we need to be aware, the reliance on AI, at least as a first-level work tool, is going to have an impact on how many analysts people need,” English Dixon said. “I think that's an interesting challenge between teaching the fundamentals and then teaching them how to be prepared for the new paradigm of AI.”

The hiring results of this year’s class of college grads underscores some of the challenges, as well as regional variations. At University of Central Florida, about half of the 100 real estate graduates have gigs via internships, said program director Sheila Potts, while another 25 have job offers through other means.

At Marquette University, about 60% of the recent class of 40 real estate students have a job lined up, “with many more looking for work. More than we’ve seen in a long time,” Hunt said. 

But the impact of this mixed market for Gen Z workers may hang over the real estate industry for years to come. Severino points to broader economic research that suggests the environment where you start your career “sticks with you the entirety of your career,” and certainly makes the initial hurdles much higher. 

“Real estate right now is a less attractive industry for people to enter as they graduate because real estate is effectively in its own recession,” RCLCO Management Consulting Practice Managing Director Ellen Klasson said. “The opportunities are elsewhere. So what happens in five to 10 years when people are looking for mid-level employees?”

Today’s early career CRE professionals face a gauntlet of structural challenges. The backlog of hiring that caused an explosion of job demand in 2022 meant rising compensation.

Hiring has slowed or stopped over the last 18 months, especially for transaction or analyst roles, yet compensation remains high and the bar is high for who gets hired, according to Keller Augusta Senior Managing Director Kaitlin Kincaid.  Firms can also afford to be slower and resist compromising on requirements or skill sets. 

“It felt like you were paying more, but getting less from a skill set,” Kincaid said of hiring in recent years. 

This generation can get a “bad rap,” Kincaid said, with them being perceived as unmotivated, having a sense of entitlement or having less exposure or training.

“I think there's a steady flow of openings, but there’s a premium around compensation, so if firms are going to pay that premium, they’d rather have more talent and higher technical capability,” she said. “The days of someone being able to stand on ‘I'm motivated, I'm interested in real estate, I want to work hard’... I think it’s just really hard to break in now.”

There’s also been a larger industry pullback from many DEI initiatives, which a few years ago had created a new crop of internships and mentoring programs that offered increased opportunities and advancement for younger, more diverse CRE professionals.

These programs haven’t necessarily been cut, but Kincaid said she felt that firms have “looked at their budgets and probably pulled back from mentorship and training in that type of thing.”

“I'm conflicted, because I think recruiting in general has changed for the better in terms of diversity and is making the process more equitable,” she said. “But I think going back two years ago, we had so many assignments where it was not only a priority, it was like a requirement.”

There’s also the drain of rising living expenses, which can impact who can take the earnings hit of starting out as a commercial broker. Beyond Commercial founder Amy Calandrino said the new generation of employees has a bigger focus on work-life balance, and unless they have the bankroll or support from parents to make it through the first few years of building their career, it’s hard to break in.

Finally, the impact of the interest rate environment seems unlikely to change hiring anytime soon. Bill Ferguson, CEO of Ferguson Partners, a global talent management firm that focuses on real estate, said he’s seeing a few green shoots in the market, but overall, companies are looking to hire in 2025 and reevaluate their strategies.

“The rest of the year is going to be a challenge,” he said.

At the moment, many career paths are temporarily closed, at least in terms of entry-level hiring. No acquisitions, no development, no capital raising or anything that involves deploying capital. Younger applicants simply aren’t getting developer jobs or as many valuation jobs, said Yvonne Baker, executive director for the Florida State University Real Estate Center.

“Real estate jobs are down in general, particularly transactional roles,” Klasson said. “It might be another six months before hiring gets back on track. And we're seeing fewer people graduate in this cohort.”

The younger generation’s path into CRE may pivot around how quickly they can take advantage of these opportunities, and how fast the market turns.

Real estate has been more impacted than other industries, Ferguson said, so he sees the potential for young talent seeking out industries with fewer challenges.

“This downturn is all about the real estate industry,” he said. “I think a lot of kids are going to go into different sectors that don’t have the same issues real estate has.”