Employment trends
Your Next Move
Zero in on today’s career opportunities.
By Sarah Hoban |
It may have taken a while, but the numbers are looking good
for commercial real estate professionals. Consider:
▶ “Job opportunities in commercial real
estate enjoyed the best summer ever, exceeding previous highs set in 2007, as
hiring built on momentum from the first half of this year,”
according to the third quarter 2014 Cornell/SelectLeaders Job Barometer.
▶ In a quarterly survey for the CoreNet
Global Corporate Real Estate Index, 75 percent of real estate executives
surveyed said they were optimistic about their company’s
prospects for growth and expansion; 47 percent said it was likely that their
company would increase their real estate portfolio as a result of more
employees over the next quarter.
▶ CCIM’s Quarterly Market Trends reported
that in 3Q14, 52 percent of CCIM members transacted more deals compared to the
same period in 2013.
The economic optimism is coupled with an overall drop
nationally in the number of commercial real estate professionals, many of whom
left the industry after 2008. “The average number of applications per job has declined by
about 30 percent from 2009 to 2014,” says David Funk, director of the
Baker Program in Real Estate at Cornell University. “Commercial
real estate is clearly now a seller’s market for talent — we’ve
witnessed a significant fall in the ratio of job seekers to position openings,
and not surprisingly, compensation is starting to move accordingly.”
But CCIMs who want to take advantage of this seller’s
market will also need to know how changes in the market have created new
opportunities — and what they’ll need to do to take advantage of them. Interviews with
CCIMs around the country point to several trends to watch.
Globalization
A flow of investors to the U.S. from all over the world is
creating wide opportunities in commercial real estate.
The Miami market, for example, is robust, and the influx of
foreign money has been a definite factor, says Danny Zelonker, CCIM, of Real
Miami Commercial Real Estate in Coral Gables, Fla. Zelonker specializes in
industrial and retail properties and has worked with investors under the EB-5
Immigrant Investor Program.
“The last three or four of my deals were from France,” he
says. “I’ve worked with investors from South America — Colombia,
Brazil, Argentina.” Zelonker finds it useful that he speaks French, Spanish,
and some Portuguese. “If I were 20 years younger, I would absolutely learn
Mandarin,” he says.
On the other side of the country, the Seattle-Tacoma, Wash.,
area attracts investors from Asia as well, thanks to its Pacific Rim proximity.
“We’ve seen
the surge of Chinese investment and money coming out of Taiwan, Hong Kong, that
whole area,” says Michael Armanious, CCIM, managing director at KW Commercial
in Tacoma. Armanious says that Asian investors are particularly interested in
both Seattle and Vancouver, British Columbia. “EB-5 has been huge here,” he
says.
Globalization is even affecting tertiary markets. “People
are coming from all over the world to buy in our small area,” says
Jay Verro, CCIM, associate broker at NAI Platform in Albany, N.Y. A major
nanotech development that broke ground in 2010 has driven some of the traffic,
but Verro also points to the reach of the Internet. “You can
post a new land listing online in a tertiary marketand have it looked at
by a developer over in Asia within a matter of minutes,” he
says.
The international business trend helped convince Verro to
switch from a small boutique firm to a
larger NAI affiliate in his market. “Part of my decision was the fact that
I’d have
a second global reach for my clients to enhance my ability to get them the best
price from a wider pool of buyers,” he says.
Urbanization
The move to revitalize urban business districts is also creating
opportunities.
“What’s happening in Miami is happening all over the world,
especially in the U.S. — everybody’s building up because they’re
running out of land,” Zelonker says. He points to several areas of the city
that have grown quickly in the last five years, including Brickell, which
boasts Miami’s primary financial district as well as high-rise upscale
condos and apartments; and Wynwood, a rapidly gentrifying neighborhood with an
emphasis on art and design. “But all of Miami is undergoing incredible growth,”
Zelonker says.
But development isn’t limited to multifamily and retail,
he adds. “We have 228 million square feet of industrial space in
Dade County, and during the recession, nobody built for five years,” he
says. But now the city has a 4 percent vacancy rate, and “everybody
wants to build — my industrial business has been booming.”
Seattle’s market has been like its weather — “no
crazy swings,” Armanious says. “There were a lot of extremes in other
parts of the country, but in the Seattle market, it’s been
steady. It went down steadily and it grew steadily — it didn’t crash
and it didn’t take off like a rocket.”
However, he adds, the city has seen a surge of development
in an area known as South Lake Union, north of downtown. Vulcan, owned by
Microsoft co-founder Paul Allen, led the development of the area, which has
become a hub for life science organizations. “It’s class A office space in one of the
most desirable areas of Seattle,” Armanious says. “It’s on
the lake, and there was only so much waterfront property in the city to
develop.”
Albany’s market has also avoided economic swings, Verro says. “Because
we’re also the state capital, we’ve been
pretty stable.” Verro specializes in investment properties — apartments
in particular — and sees a definite trend toward downtown revitalization. “The
multifamily downtown, while it seemed risky at first, appears to be paying off,” he
says. “Landlords down there are either leasing or selling their
properties with relatively little heartache, as far as carrying time.”
And, he adds, “offices seem to be shifting back to
central business districts from the suburbs as firms look to hire the next
generation of staff to carry them forward. There’s a movement to renovate older,
functionally obsolete class C office space in the CBD — as well as older
industrial space — into luxury apartments, lofts, and condos to lure more
employees downtown.”
He also sees parking becoming less of an issue: “There
are fewer CBD tenants with vehicles, with the advent of car sharing in more and
more cities,” he says. “The whole goal is to lure retail and create a community
where you can buy groceries, do your dry-cleaning, and go to work without
getting into a vehicle or using mass transit.”
Crowdfunding
While it’s still relatively new, equity crowdfunding could change
the commercial real estate landscape significantly. “Crowdfunding
provides access on both sides of the transaction,” says Elizabeth Braman, CCIM, chief
production officer for Realty Mogul in Los Angeles. “For
passive real estate investors, it provides investment opportunities that
previously they would not have the opportunity to invest in.”
On the active side of the transaction, where most CCIMs work
as brokers or principals, crowdfunding provides access to a larger pool of
capital. Small to midsize investors who are looking for noninstitutional
capital but have outgrown their friends and family can now make offers and
execute on transactions, and be active real estate investors, she says.
“Any time there’s additional capital in the market,
it means that more deals are getting done,” Braman adds. “Previously
you had a lot of great sponsors who couldn’t get checks written small enough to
focus on the small to midsize deals, and now there are players in the industry
who are able to do that.”
Braman sees crowdfunding as another resource for CCIMs. “It’s a
great way for a broker to bring something fresh and new to the table. If you’re
trying to help a sponsor work with you and get more transactions done, you may
look to crowdfunding as a way to supplement your services.”
Sizing Up Skills
Spotting trends, though, is only part of the equation.
Commercial real estate professionals will need to call on a wide variety of
tools to take on new opportunities.
Some of these tools CCIMs already have. “CCIM is
about three things,” Braman says. “Technology, education, and networking
— all of those things are huge when it comes to real estate.”
“Really understanding and getting comfortable with the use
of technology to access data sources would be my advice to any broker in this
market,” she adds. “I think data is going to be the
broker’s best friend in the coming years. We’re all
skewing toward big data and understanding what big data tells us about market
fundamentals.”
“Technology has played an integral role in our business,”
Armanious says. “Technology is so readily available, and it’s
available to everyone. If I’m slow to the punch, everybody else just grabbed my
client. And there’s a higher level of expectation: The newer generation of
investors is expecting answers right away.”
The availability of online information has also made
professional acumen that much more important, Verro says. “It’s not
like the old days where people called you, and you were the bible of
information. There’s so much out there that they can find out. It’s not
inconceivable for a client to know more than you do about a certain property.
So you need to maintain and sell invaluable market knowledge that they can’t get
from reading two pages online.”
Verro has also embraced social media. “I’ve
gotten a lot of hits from listings I’ve sent out on Twitter and posted on
Facebook,” he says. He also actively participates in a number of
online discussion groups.
“Education is all important,” Zelonker says. “You can’t
compete in the 21st century without being educated.” For
his part, he reads constantly and is a strong believer in taking additional
courses, but also takes full advantage of CCIM resources, particularly STDB.
Armanious is also a strong believer in education, and in
fact, just was licensed in the state of Washington to teach continuing
education real estate classes. He enjoys the chance to share his knowledge, but
teaching is also another way to connect with other commercial brokers and learn
about potential deals, he says.
In addition, Armanious developed a mentoring program last
year: He trains participants for a month in the fundamentals — cold calls,
business procurement, databases — and then works with them as they begin to do
deals. For a 50/50 split, “I go on listing appointments with them. I’m on
the phone with them when they’re talking to clients. I’m in the loop on all of the e-mails.
I’m
guiding them, and when I need to step in, I step in,” he
says.
Verro recommends learning everything you can about your own
area. “Maintain and obtain invaluable local market knowledge by
every means possible,” he says. “Make the time to read legal notices, track property sales
and leases, and know the players in your market.”
Getting the CCIM designation also plays an important
educational role. “It can take years to learn the fundamentals of real
estate,” Braman says. “That’s why a CCIM designation is so
important — it fast-tracks you. It’s an MBA in commercial real estate.
By getting your designation, you’re learning all the fundamentals of
what it takes to understand real estate transactions and to be a valuable
participant in the deal.”
The designation also provides the essential networking
connection. It’s particularly valuable if you’re not
with a big company, Zelonker says. “When I call another CCIM, they take
my call,” he says. “They know I’m not going to waste their time — and
that I know what I’m talking about.”
Verro serves on national CCIM committees and encourages
activity at the local level as well. “Participate in your chapter and
events so you know fellow CCIMs,” he says. “It’s
amazing how much you can learn from other people with the same level of
experience that you have. Don’t be afraid to ask questions of everyone. You’ve got
to keep learning.”
Sarah Hoban is a freelance business writer in the Chicago
area.