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Recruitment and Retention: The Essential Ingredient of the CRE Industry

There is no doubt that the backbone of commercial real estate in brokerage, finance and special  services are the people in the trenches and those who manage them. The trick is finding the right people for the job and keeping them engaged. Indeed, recruitment and retention (R&R) in commercial real estate is one of the paramount essentials of maintaining and building for the future.  

According to IBISWorld, a company founded in 1971 that provides industry research on thousands of industries worldwide, currently, there are 3,934,795 people employed in the United States’ CRE industry, an increase of 1.8% on average between 2017 and 2022. Many of those are brokers or account executives.

The art of recruiting and the ability of retaining these people takes many shapes and forms, including such extravaganza affairs as Running With The Bulls in Spain. And while the pandemic had and continues to impact CRE and the U.S. economy, any thought of a slowdown in recruiting and retaining during a pandemic was and is never an option.  

At Tauro Capital Advisors in Los Angeles, CEO Steven Stein was adamant about the role recruitment and retention is for the firm. “In our business, people leave or retire. You must replace them with those with little or no experience to the veteran, who has years in the business. For me, It’s about maintaining a balance between the young and the experienced. However, culture plays an important factor in keeping people on board,” Stein said. 

For Hessam Nadji, president and CEO of Marcus & Millichap, R&R are essential ingredients of an ongoing strategy. “Management never stops focusing on recruitment and retention as an essential ingredient to our long-term growth. One could argue in a dislocated market like the one we are currently in, retention and development would be less of a priority, but to the contrary, we believe this is the best time to develop skillsets as investors have a higher need for problem-solving, creativity, and execution.” 

Lee & Associates’ CEO Jeffry Rinkov echoed Stein’s and Nadji’s comment, calling recruitment, retention, and balance one of Lee’s “top priorities.”  

“Recruiting brokers at every level of experience in the business is on our roadmap. Our recruitment initiative is highly focused on the quality of the individual broker and their team rather than their age. We have found that younger brokers adopt technology differently and use certain resources on an accelerated basis, while more tenured brokers bring expertise, market penetration, and experience. The balance of adding brokers and various levels is increasingly important in our platform and helps create longevity, as well as ensures our clients are receiving the best possible direction and advisory services,” said Rinkov. 

Even under the cloud of COVID-19, which had an enormous impact on CRE, the industry kept recruitment and retention on track. 

“COVID actually had a positive impact on our recruitment efforts, especially with companies that let people go, which we had hired,” said Stein, noting that people that were in the industry but not specifically in capital markets but were looking for a change either because their business slowed down or they were looking for a change, were also potential recruits. “Overall, we came out ahead, including on the revenue side. Our options are greater now and recruitment and retention play a prominent role in that.” 

And COVID’s impact on Lee & Associates’ efforts? 

“After the initial shocks of COVID (which negatively impacted CRE employment), the market became feverishly hot for talent in the industry across virtually all disciplines including investment sales, debt advisory, investment funds, banking, and valuation. The market has begun to soften since Sept/Oct 2022, but great talent remains in demand.” 

For Marcus & Millichap, the pandemic proved to be a challenge, however, the firm was able to utilize other ways to connect.  

Said Nadji: “Covid posed numerous challenges as our entire model is built around personal interaction. This includes interacting with our clients and the physicality of real estate brokerage, which includes market research, property assessment and valuation, and property tours, all of which were temporarily shut down during the pandemic. From a training and development perspective, our in-person group training programs and mentorship were disrupted by the lack of physical activity. However, as a tech-ready company, we were able to switch to virtual execution for all aspects of the firm within three business days at the onset of the economic lockdown and therefore persevered through that particularly challenging period.” 

Now, post-COVID, there are signs of normalcy and a gradual return to the office. But other issues were born out of the pandemic including the robust employment market, which posed a new challenge in attracting new talent, particularly recent college graduates and the added volatility in the real estate transaction market since early 2020. 

“Our job as management is to persevere through challenges which we have done effectively through virtual sessions, virtual career fairs, and video interviews, which resulted in many successful hires during the worst of the pandemic and has since improved dramatically in the recovery,” said Nadji. The current market environment, which is increasingly challenged due to the most aggressive tightening by the Fed since 1980, poses a new challenge given the sharp decrease in trading activity temporarily. We point to many current leaders in the firm who started with us in 2008-2009, as their success is largely rooted in having to learn the business during a more difficult time.” 

Eric L. Enloe, MAI, CRE, FRICS, and a Senior Managing Director at Partner Valuation Advisors, called people and culture the lifeblood of the Chicago-based company.  

“We have created a culture that believes in teamwork and trying to serve our clients with great work product in a highly professional manner. We take pride in being very connected to the market in terms of transactions and trends and that connectivity comes from our team members being thoughtful and inquisitive about market activity. We believe the valuation space is a tremendous opportunity to learn and be at the forefront of market trends in the overall real estate industry.” 

As far as COVID’s impact goes, Enloe said the industry faced initial shocks. However, that same market has changed. 

“After the initial shocks of COVID (which negatively impacted CRE employment), the market became feverishly hot for talent in the industry across virtually all disciplines including investment sales, debt advisory, investment funds, banking, and valuation. The market has begun to soften since Sept/Oct 2022, but great talent remains in demand.” 

For Lee & Associates, the addition of technology, service platforms and specialty groups were important factors in retaining brokers and providing better service to the client.  

“We are putting real infrastructure into our training programs. When I got into the valuation business 20+ years ago I was given a manilla folder with the property name, property address, city, and state as well as a name and phone number of who to call to tour the site. That was the training program. We have obviously come a long way since then, but we now have training videos, everyone is assigned a team leader, and we also have professionals on our staff that their sole job is to assist in training our team.” 

Said Enloe of Partner Valuation: “We are putting real infrastructure into our training programs. When I got into the valuation business 20+ years ago I was given a manilla folder with the property name, property address, city, and state as well as a name and phone number of who to call to tour the site. That was the training program. We have obviously come a long way since then, but we now have training videos, everyone is assigned a team leader, and we also have professionals on our staff that their sole job is to assist in training our team.” 

Along with recruitment and retention, balance was another key word in attracting and retaining professionals.  

“Balance is critical in ensuring we have immediate expertise and client relationships by attracting experienced professionals,” said Nadji. “At the same time, younger professionals are a necessity for scaling competency and transferring the expertise and experience of our maturing professionals to plan for the future of the firm. The same demographic shift in the services industry is occurring among clients, with many private investors involving the younger generation and family members in the real estate business.” 

Nadji pointed to a generational shift within the institutional real estate industry with a growing cadre of professionals in their 20s, 30s, and 40s becoming more influential and rising within the ranks.  

“So, not only do we need immediate expertise through experienced professionals, but we also need them to pass on their knowledge and experience to the next generation. This demographic shift is not unique; it is happening to principals of both private and institutional investors and is also mirroring how our clients are changing,” he said. 

So, while all agreed R&R was crucial in developing the business model, where are the watering holes for possible new hires?  

“We have identified a number of industry groups and designations that have delivered top-quality professionals that provide local leadership, excellent client connectivity, and market penetration, as well as assist in keeping our professional and ethical standards at the highest possible levels,” said Rinkov.  

At Marcus & Millichap, Nadji said the company has a diversified recruiting strategy, including new and inexperienced talent such as recent college graduates, business school candidates, and sales professionals from other industries. 

Said Nadji: “Multiple channels are used to expose Marcus & Millichap to this talent pool locally, regionally, and nationally. The most recent example is the William A. Millichap Fellowship which targets new talent interested in developing a career in real estate brokerage and financing. Our sales internship program and recent partnership with Project Destined and CREW further increase our access to the talent pool while also diversifying the ethnicity and gender of our sales force. In addition, the relationship that our specialty directors, division managers, and regional managers have developed with numerous experienced professionals, teams, and boutique firms is resulting in the recruiting and acquisition of experienced talent throughout the industry. Simply stated, we are leveraging all sources and not just a single watering hole to attract talent.” 

Along with balance, culture also plays a key role in R&R, something Stein called “the glue of retention.” At Tauro Capital, the annual event for the company is Running With The Bulls in Spain, something Tauro has been doing since 2017. The company provides the flight and accommodations for the four-day event.

  

“We use this event for recruitment and retention. For example, we had someone who recommended a person who we brought on. It was a good recruit, so we wanted to reward the person who recommended this individual. We contacted him and asked him what he’s doing in July and told him that we like to invite him to Running With The Bulls. And as an incentive and reward, when a broker excels in transaction activity—$1 million or more—for the year, we invite them. It’s not only a lot of fun and exciting, but we are able to create a culture that people want to stay a part of. For us, this defines our culture.” 

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Lee & Associates' RinkovMarcus & Millichap’s NadjiTauro Capital Advisors' Stein

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