Uncertain CRE Job Market ‘Like A Middle School Dance’ — And No One Is Making The First Move

After big brokerage firms laid off hundreds in the last year to stem the tide of dwindling revenue, 2024 was expected to be a rebound year for commercial real estate hiring. Not anymore.  

Gripped by uncertainty about the state of financing and real estate transactions, job seekers and employers in CRE are eyeing each other but are unwilling to commit, according to industry analysts and top headhunters. 

“Everybody is waiting for somebody else,” CRE Recruiting founder Allison Weiss said. “It’s like a middle school dance. You have to wait for one person to get brave enough to cross the floor.”

The uncertainty surrounding the real estate market will bleed into the 2024 job market for CRE, likely leading to lower raises, limited hiring and continued personnel challenges, experts said. While earlier this year there were suggestions that deal flow would be back in early 2024, firms now expect next year to be a quiet one, and their hiring and personnel strategy reflects that.

RCLCO’s annual compensation survey, taken throughout the year, found the labor market continues to be very tight: 85% of companies reported trouble hiring skilled talent.

Combined with transaction volume down about half year-over-year, hiring for development and acquisition-type roles in CRE is down between 10 and 15%, said Eric Willett, managing director of RCLCO Real Estate Advisors' strategic planning and management consulting practice. 

CRE hiring is expected to slow down further next year, according to RCLCO. But it shouldn’t be another year dominated by layoffs, either.

“There simply isn’t the massive wave of layoffs you’d expect, given a 50% decrease in transactions,” Willett said.

While it may not have been commensurate to the amount of lost business, there were noticeable layoffs within CRE over the last 12-plus months. CBRE cut $150M from its transaction business in October, after $300M in staff reductions announced a year prior. JLL had announced an unspecified number of layoffs last November and another round of cuts in March. Avison Young, Cushman & Wakefield and Marcus & Millichap all quietly axed employees at the end of 2022 as well.

Most firms feel more comfortable battening down the hatches and weathering the storm than changing headcount, Weiss said. She said she believes the current inflationary environment will be a burden on hiring and expanding teams for the next few quarters at least. The cost of employing someone is likely going to go up in a significant way in 2024, more than it has in prior years. The typical seasonal rhythms of hiring and firing within the industry have yet to revert to pre-pandemic norms. 

“I feel like we’re in The Upside Down [of Stranger Things],” Weiss said. She expects the typical burst of hiring that happens at the beginning of the year to be very muted in 2024, as firms maintain a holding pattern. “There’s no real understanding of what it should be like anymore.”

That’s carrying over to expansion plans, said RCLCO managing partner Jim Wright, who leads the firm’s new compensation consulting practice, formed in partnership with longtime experts at CEL & Associates earlier this year. He has found that many CRE firms with plans to grow into new regions or asset classes have put those plans in part or completely on hold. 

That includes a slowdown in raises. 

“Relative to compensation, the big issue is everybody's expecting a very difficult year next year,” Wright said. 

The results from RCLCO’s compensation survey suggest a very low to moderate increase in salaries. 

“There’s been a softening, a little bit coming into 2023 and more going into 2024,” Wright said. “I think you’ll see median merit increases in the 3 to 4% range, with some outliers perhaps around 6%, according to the survey. And my sense is now that we’re in the fall, and everyone is taking a hard look at budgets and the reality of higher interest rates, higher insurance costs, pressure on [net operating income] and pressure on overhead, that those numbers were a little bit optimistic.”

Building Careers President Carly Glova, whose recruiting firm does surveys with clients to determine hiring and compensation trends, found that total comp packages within the CRE industry will likely be the same or similar in 2023 and 2024, with a slight bump of a few percent points for inflation. This is in sharp contrast to two years ago when salaries jumped 20% in some cases. 

Today’s market isn’t anywhere close to the employer-friendly market of a few years ago when talent found incredible opportunities and could land new jobs with relative ease. But Glova has noticed an uptick in employees looking around for opportunities and taking more calls and meetings, a shift she interprets as more passive job searching during a lull in hiring.

Specific roles and sectors have seen either more competition or greater demand during this uncertain moment. Office is suffering, industrial has done better and retail is generally having a good year. Marketing roles have been hard to land, with potential talent flooding the market, Weiss said. Alternately, those who focus on workouts, modifications and asset management, especially those who can help preserve revenue and raise NOI, will be in high demand for the foreseeable future. 

The limbo that appears to have settled across the employment market is, in part, a reaction to fears of repeating mistakes made during the Great Financial Crisis, according to Willett. In 2008, CBRE, then CB Richard Ellis, laid off 1,100 workers, while JLL laid off nearly 1,000 workers in February 2009 alone. While firms aren’t hiring, they also aren’t engaged in the same degree of layoffs and job cuts they did roughly 15 years ago, fearing that in today’s tight labor market, losing talent would hinder their ability to ramp up when the market does return.

“Many of the organizations we work with felt like they were rebuilding for such a long period of time that they missed some part of the expansionary periods once you got to 2012 and 2013,” Willett said. “How can we streamline the organizational pullback, up to the point where we're not cutting into the labor that we know we’ll need in two years?”