Job Hunting
Sep 1, 2008 12:00 PM, By Elaine Misonzhnik
As retail real estate developers pull back on the construction of new shopping centers throughout the United States, development professionals are suddenly finding themselves on the street. At the same time, professionals with any kind of leasing acumen are in demand, although even they are not being recruited in massive numbers.
During second-quarter earnings calls, retail REITs Developers Diversified Realty Trust and General Growth Properties were just two of a growing number of firms that have announced decisions to curb, postpone and/or more closely scrutinize development pipelines.
The numbers illustrate the extent of the development slowdown. From June 2007 through June 2008, spending on private non-residential construction fell 15 percent, to $301 billion from $354 billion, according to the Washington D.C.-based Associated General Contractors of America, a national construction trade association. Moreover, in July, spending on new retail projects fell 24 percent compared to the same month a year ago, cites Reed Construction Data, a Norcross, Ga.-based construction research and information provider.
As a result, in June, the U.S. nonresidential construction sector lost approximately 17,000 jobs, according to the U.S. Census Bureau. Overall, the construction sector lost 557,000 jobs since its peak in September 2006, with both residential and nonresidential sectors contributing to the decline, reports the Bureau of Labor Statistics.
“The number of resumes we are seeing has probably doubled, maybe more than that,” says John Kreiss, president of Morgan Sullivan, a Northboro, Mass.-based executive search firm serving the construction and real estate industries. “Site managers, corporate real estate people, people in charge of a particular region are being eliminated. Their positions have gone by the wayside,” he says.
Being a cyclical industry, the commercial real estate boom that began in 2001 was sure to slow sooner or later. While it has been almost a decade since the boom began, it did not spark the overbuilding that was responsible for the market's collapse in the 1990s. However, over the past few years, many firms had expanded their pipelines. This year developers are forecast to deliver approximately 136 million square feet of new retail space to the market, or 23 percent more space than the historical annual average of 104 million square feet, according to Property & Portfolio Research (PPR), a Boston-based real estate research and portfolio strategy firm.
The projected development prompted real estate firms to hire more retail real estate professionals, including site selection specialists, site acquisition agents and building managers. Now, as retailers apply the brakes on their expansion plans and financing for new projects has dried up, cash-strapped developers are jettisoning workers, many of whom are seasoned professionals.
With the current downturn expected to last at least until 2010 or 2011, it will be a while before things begin to improve, says Robert Baron, founder and president of American Real Estate Executive Search Co., a Chicago-based executive search firm specializing in the real estate industry.
Even before firms started shrinking their pipelines, real estate researchers estimated there would be a significant drop in new retail completions next year to 70 million square feet, according to PPR. As a result, the number of jobs in the development and construction sectors will most likely continue to drop.
A sea change
It wasn't that long ago when real estate staffing firms went begging for talent, citing a dearth especially within the retail sector. Last year, John M. Ryan, president of Chicago-based human resources consulting firm RSMR Global Resources, told Retail Traffic at the ICSC Spring Show in Las Vegas that experienced real estate professionals had the upper hand in job negotiations because there were too few of them to satisfy everyone's staffing needs. Many retail real estate firms such as Developers Diversified, Macerich Co. and Inland Real Estate Group of Cos., had even instituted internship and training programs for college students, hoping to lure more young professionals into the field.
This held especially true for development departments, according to Baron, where high rates of return on new projects guaranteed generous compensation packages.
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