Job Hunting
Sep 1, 2008 12:00 PM, By Elaine Misonzhnik
“When everybody is expanding, the retailers need [real estate] people, the developers need people, there was so much growth going on that you needed new people coming into the industry almost every year,” Baron says. “And there was lots of money to go around to contribute to bonus pools and compensation because if you developed a shopping center, you knew you could build it at a 7.5 percent cap and sell it at a 6 percent cap.”
That's no longer the case. Today, owners are more consumed with maintaining occupancy levels at existing centers, let alone securing tenants for new projects. In July, the value of nonresidential buildings fell 31 percent compared to 2007. And, year-to-date construction starts declined 7 percent in dollars and 15 percent in square footage, according to Reed Construction Data.
Throughout the summer, one developer after another announced project delays and cancellations — Memphis, Tenn.-based Poag & McEwen Lifestyle Centers, for example, scrapped plans to build a 200,000-square-foot development in Boise, Idaho, that would have become the first lifestyle center in the state. Meanwhile, New York City-based Related Cos. had to seek permission from city government for a ground-breaking delay on the Grand, a $3 billion, 3.6-million-square-foot mixed-use project in downtown Los Angeles.
During its second quarter earnings call in July, Developers Diversified Realty executives told analysts that the Beachwood, Ohio-based shopping center REIT would pay close attention to its development pipeline going forward and scale down or scrap any project that no longer made financial sense. The REIT wouldn't say whether its new strategy would have an impact on the size or depth of its development department.
“Our development pipeline remains robust, and we have staffed accordingly to meet our needs,” says Nan Zieleniec, senior vice president of human resources with Developers Diversified. “We won't speculate on future staffing needs; however, we are committed to the development business, it is part of our strategic plan, and will continue to provide our retail tenants with great opportunities. As our business needs change, we will continue to monitor our staffing.”
General Growth Properties, Inc., during its second quarter earnings call, said the Chicago-based regional mall REIT planned to cut its development costs by $500 million by delaying several new projects.
As a result of all these cutbacks, completions in the retail sector next year may be off by as much as 70 percent from projected numbers, according to David Kass, CEO of Continental Retail Development, a Columbus, Ohio-based firm.
A demanding market
Leasing representatives and asset managers, however, continue to be coveted among owners who are fiercely competing for tenants. Morgan Sullivan, for example, is currently conducting a search for 15 real estate positions. Most are for leasing agents, financial analysts and property managers.
“In a down market, good leasing people are needed to gain good relationships with tenants and to get relocations to your center,” says Baron. “The same with asset management — people who are able to figure out how to keep tenants happy, how to bring them in, that skill is important.”
Even so, prospective employers have gotten a lot more demanding in their requirements. Unlike in the past, when developers hired on the spot because they were in a hurry to fill a position, now the process has been prolonged to ensure the potential candidate is right for the job. In one example, according to Kreiss, a client recently requested that a candidate applying for a middle management level position provide six references instead of the usual three.
Even newly minted MBAs from the country's top real estate programs can no longer count on multiple offers from potential employers, according to a May 2008 story in our sister publication National Real Estate Investor (NREI). In some cases, employers are taking back job offers made just a year ago, NREI reports.
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