The Good News about Real Estate Employment
Schindler, Martha, Journal of Property Management
Almost every real estate professional today could name at least two or three colleagues who are out of work. In spite of the old adages about keeping one's nose to a grindstone (or just keeping it clean), professionals at all levels and of all abilities have been hit by the rash of corporate mergers and cut-backs, bank takeovers and bankruptcies that color the business of real estate today.
Indeed, despite the disclaimers issued periodically from the White House and other optimistic observers, the American economy, and with it the national real estate market, appears to be facing more than just the garden-variety downturn. And, in almost every market, real estate professionals in search of employment are facing opportunities that range from grim to bleak.
For one thing, many companies, in the fact of shrinking business opportunities,
Top Ten Metropolitan Areas for New Employment in Finance, Insurance, and Real Estate
Jobs in 1000s 1983- 1988- 1988 2000 Los Angeles/Long Beach 77 60 Anaheim/Santa Ana 48 44 Washington, D.C. 52 39 Phoenix 46 39 Chicago 49 37 New York City 63 36 Atlanta 48 34 San Diego 32 32 Boston 56 29 Philadelphia 48 28 Source: U.S. Department of Commerce
are being forced to cut professional staffs--a process which in many cases includes the elimination of property management positions.
In addition to the slump in the real estate business, demographic changes also have resulted in declining employment opportunities in almost all sectors of the economy.
Specifically, experts like the Real Estate Research Corporation, Chicago, are predicting very low growth in the overall workforce in the 1990s, thanks to demographic and economic trends that include the aging of the infamous Baby Boom generation. In fact, the latest estimates by the Bureau of Economic Analysis, an agency of the U.S. Department of Commerce, predict an increase in real estate, insurance, and finance employment of only 1.2 percent annually in the '90s, down from annual growth of 4 percent in the '80s.
In addition to these types of overcrowding, the property and asset management fields also are being glutted by a whole new breed of managers: out-of-work real estate developers.
"The real shortfall in real estate employment situation is not in property management," says Sandford I. Gadient, chairman of Huntress Real Estate Executive Search, Kansas City, Mo. "The shortfall is in [positions for] people who were involved in development. "They're dead. They'll have to go into the restaurant business-or into property management."
However, despite this added competition, today's market does offer some good news for property managers.
For one thing, many property management executives and owners are skeptical of developers-turned-property managers, doubting both their ability to shift careers and their willingness to make a long-term commitment to property management.
Edward Biskind, chairman and CEO of E.I. Biskind & Associates, a suburban Chicago developer and agent, is one. "I've found that developers looking to augment their income generally are not as capable of dealing with clients and dealing with properties other than their own," he says.
"The whole business of property management is being flooded by Johnny-come-lately developers and other people from that side of the business," echoes Roger Ogden, chairman of Maurin-Ogden and Stirling Properties, New Oreleans. In general, he says, developers lack both the experience and the commitment to property management as a long-term strategy that are necessary for effective property management.
Gadient notes that some developers have made a successful transition to property management. "The sharp ones can pick up the skill relatively quickly," he says. "But, we've seen many cases in which companies made real mistakes by taking people and assigning them to a property when they didn't have the experience or expertise. Some of those performances have been pretty sorry."
According to Biskind, most developers shouldn't be a big worry to experienced property managers.
Instead, he argues, "There is an even greater need for highly qualified managers at a time when the field is being rushed into by developers who are looking to pay their light bills."
One bright spot
Indeed, despite the gloom that hangs over most of real estate, experts agree that property management is the one bright spot in today's job market. This probably explains why it is such an attractive option for professionals in the more distressed areas of the business.
"Given the current state of the economy, we are seeing a whole lot of areas of real estate that are getting tougher and tougher," says Stan S. Stanton, president of Huntress. "But the thing about property management is that it's here to stay."
"The one area in real estate where there is demand [for staff] is property management," echoes James L. Phillips, managing director of the national real estate practice at Russell Reynolds Associates, Inc., New York. "Property management is the one area where you can enhance the value of your portfolio, and people are really paying attention to it."
Of course, many property owners, in an effort to cut expenses, are reducing their property management staffs and spreading the work among remaining employees.
"A lot of companies have been downsizing and reorganizing, and that means that there will be extra people [left without jobs]," says Frank Livingston, CPM [R], senior vice president at Draper & Karmer, Inc., Chicago.
However, Stanton and others contend that biggest changes in the employment market care created not by the elimination of positions but instead by a "shuffling" of employees among different jobs.
Some of the biggest shufflers in today's market are financial institutions, Stanton says. "These are lenders who used to just lend money. Now they are finding themselves owners of real estate." This change in ownership--a handoff from a traditional property owner or real estate organization to a financial institution with a radically different culture--often results in the layoff of an entire property management staff.
"When a bank takes over a building, everybody who ever had anything to do with that building is blamed, regardless of the reason for the property's failure," Stanton explains. "So, they get rid of everybody and start all over again."
In addition, many financial institutions in workout situations will fire property management employees who don't meet their "corporate credo," Gadient says.
"Institutions taking over properties are looking for institutional-type people to manage them," he explains. "That means if you can't wear a business suit, tie you tie correctly, or make a formal presentation, an institution will say, 'Sorry, you won't fit in here.'"
However disturbing this trend is for those non-institutional types who are eliminated in an institution takeover, Stanton contends that this kind of personnel change is a good sign for the employment market overall.
"There are always going to be people let go, people laid off, and people hired," he]explains. "But at least this is an area of real estate that will continue to grow. There will always be movement here, and as long as this happening there will be opportunity."
Stanton and others point to the big cities as the best locations for property management opportunities today.
According to the latest Bureau of Economic Analysis projections, ten major metropolitan areas will grab one-quarter of all jobs in real estate, finance, and insurance in the 1990s. These cities are: Los Angeles/Long Beach; Anaheim/Santa Ana, Calif.; Phoenix; Washington, D.C.; Chicago; New York City; Atlanta; San Diego; Boston, and Philadelphia. The worst markets for these jobs include Buffalo, New Orleans, Oklahoma City, and Rochester.
As the latest arrival in the property management business, financial institutions today are doing a good deal of hiring. "Because of all of the repossessed properties, the clients that are being served in the greatest numbers and with the greatest level of increase are the institutions," Biskind says.
"Although the pickings [for jobs] may seem slim," he adds, "there are more properties today in need of professional property management," because fewer properties are still in the hands of their original owners.
In addition, foreign institutions in some areas are another big recruiter of American property managers. "Foreign institutions have increased their demand for people to manage their buildings here in the U.S.," says Phyllis Dembowski, executive director of Russell Reynolds' Southern California office. "They are looking both to broaden their investments and upgrade their professional real estate staffs," she says.
Dembowski also cites property management opportunities in corporate real estate. "A lot of companies--the IBMs, the Walt Disney's--are trying to bring in talented real estate professionals for the corporate management function." This means professional managers--"not entrepreneurs or institutional people," she says.
Opportunity at all levels
Of course, as the responsibilities among the different positions in property and asset management differ, so do the prospects for employment. Nonetheless, experts at Huntress and other organizations cite real opportunity across the country for qualified property managers at all levels.
Gadient lists some of the common qualities of property and asset managers being recruited today, although he is quick to note that many property and asset managers fall outside of the traditional age and experience mold:
Senior-level asset managers typically are between 45 and 55 years old, have between 15 and 25 years of experience in real estate management, and possess an M.B.A. (or other advanced degree) or "heavy experience," he says.
In addition, almost all have a professional designation (CPM, RPA, CSM), and varied real estate experience. "By necessity, these can't be one-function people," Gadient says. "They must understand all of the [real estate] functions, and they have to be able to stay on top of the competitive situation."
In reward for these qualifications, Gadient says, senior-level asset managers typically earn annual salaries between $100,000 and $250,000.
"Unless you're earning six figures, you're not really an asset manager," he explains.
Property managers, who can be divided into several sub-groups, usually are in the 35-to-45-year-old range, Gadient continues. Most have between five and 15 years of experience, although, as Gadient notes, older managers will be expected to have more years of specific property management under their belts.
Most property management have at least a college education, with a few "heads-up" managers earning master's degrees, Gadient says. As for the ideal variety of experience, Gadient notes that different companies ask for different things.
"Institutions [and other small owners] typically think that property management is property management, whether they're dealing with a retirement home or an industrial park. But, the larger organizations inevitably specialize according to product type.
"Generally speaking," he says, "the smaller the organization, the more varied your experience should be."
A professional designation also is important to property managers, Gadient says; most professional property managers have earned or are in the process of earning them. Salaries among property managers can range from $75,000 to $125,000 in an average market, Gadient says.
On-site managers typically are between the ages of 25 and 35, Gadient says. Most have at least a few years of college. "If they're smart, they'll start working for a professional designation," he adds. Salaries for this group range from $35,000 to $80,000, also depending on the area of the country.
Of course, each of these generalizations will have exceptions, Gadient notes: "There could always be a 55-year-old site manager or a real Cracker-Jack 30-year-old asset manager."
Both Gadient and Stanton strees the importance of a designation in today's job market--for managers at all levels.
"Designation give you an automatic edge," Stanton says. "The next best thing to having one is to be a registered candidate.
"[Designations] are getting more and more important all the time," he continues. "If you have a stack of resumes on your desk in a market like this, you're going to look at the ones who've got a designation first. There are so many qualified people that it just becomes a process of elimination."
Among experts, communication, finance, and tenant relations skills are cited regularly as critical for property managers today.
According to Bill Rothe, CPM, president of Koll Asset Management Services, San Diego, tenant relations tops the list of required skills for property managers today.
In times of booming development, he says, real estate professionals "tended to lose sight of the tenant as the ultimate reason for our existence. We got confused for awhile and thought that buildings were the most important."
In addition, he says, most property managers are beginning to take a closer look at their financial skills, as many employers and clients are demanding a property manager whose expertise goes beyond facility manager.
"This means you'll need to both undestand the financial condition of your own property and reasonably project where you're going to be next year and the year after," he explains. "Owners want managers with an understanding of local markets, macroeconomics, and plain, old accounting skills."
What all this means, of course, is that in many cases property managers are being asked to be more like asset managers, explains Douglas Skelly, director of property management services at Jones Lang Wooton, New York.
He says that the most valuable--and recruitable--property managers today have enough financial tenant-relations, and varied property experience to understand what makes a building successful. "That's not something you learn in books," he contends.
Livingston says that the problems in today's real estate market automatically dictate the qualifications that successful property managers will need.
"When markets are weak and overbuilt, the demand for marketing skills is intensified," he says. "When a building is in financial difficulty, you've got to be able to justify spending, increase the bottom line, and protect your asset.
"Property managers need to have 'people skills' so they can work with demanding owners, tenants, and all of the people who report to them," he continues.
"It's tough to find somebody with all those strengths," Livingston admits, "but that's generally what we look for."
Paul Fegen, president of Fegen Management, Los Angeles, a company that manages 7 million square feet of residential and commercial property, calls his ideal manager "someone who is smart and flexible. You have to be able to write well, speak well, and understand people." In short, he says, "You have to be attuned to the times."
Martha Schindler is associate editor of the Journal of Property Management.…
Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Article title: The Good News about Real Estate Employment. Contributors: Schindler, Martha - Author. Magazine title: Journal of Property Management. Volume: 57. Issue: 1 Publication date: January-February 1992. Page number: 20+. © 1999 National Association of Realtors. COPYRIGHT 1992 Gale Group.
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