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Solving for the Property Industry’s Talent Shortage

Managing, leasing, and selling the world’s largest asset has changed. Today’s commercial real estate industry demands commercial real estate experts not only understand the fundamentals of real estate but also the technology being used in the built environment. The collision of real estate and technology is creating a skill gap that the world’s largest firms are rushing to fill with young talent, native to technology, capable of leveraging recent digital innovation to its fullest extent, but the commercial real estate industry isn’t on most of their radar. 

“Today’s brokers need to understand managing hybrid work, the mechanics of the lease, building operating systems, load factors, floor plates—all that kind of stuff,” JLL Chief Innovation Officer Steve Ramseur said. When he’s not helping lead innovation at one of the worlds largest commercial brokerages, Ramseur is serving as Executive Professor at Texas A&M’s Mays Business School, where he works with students in the Master of Real Estate Program, helping to develop a broader talent pool eager to join the industry. “Commercial real estate is now much more complicated but very exciting. It’s almost a new frontier, a gold rush of the 21 century.”

For decades, perhaps centuries, the world of commercial real estate has proven to be one of the world’s most lucrative industries. Global real estate values now total over $228 trillion. Over that time, while buildings have changed, the world of commercial real estate hasn’t. Historians broadly define four major industrial revolutions: steam, energy, and computing. Commercial real estate’s role in the first three was relatively simple: provide space and a place for enterprises to operate. The fourth revolution, the internet, is changing the world of real estate itself. Buildings are being filled with connected technology, generating endless flows of data capable of being analyzed in real-time by asset managers hundreds of miles away. Real estate’s digital footprint is becoming just as important as its physical one. The old ways of doing business, built around family connections, “country club equity,” and handshake deals are rapidly changing, demanding a new workforce capable of using technology to keep pace. 

The problem is, most of that young talent is looking elsewhere. Real estate’s traditional, aging workforce is becoming a major perception problem in recruiting. Decades of lax recruiting efforts have left the entire commercial real estate industry skewed toward the baby boomer generation. In 2019, 45 percent of CRE employees were 55 or older compared to 4 percent in the 19–24 age range, according to research by Deloitte. In comparison, 24 percent of the workforce across all industries and 22 percent of the banking and insurance workforce were 55 years old or older in 2019. In 2019, 30 percent of new hires were baby boomers. Strong preferences towards old-school practices in hiring are leaving much of the industry’s skillsets outdated. Leasing managers, valuation advisors, and pretty much every other real estate adjacent role is using more technology every year for jobs like automating handling required documents, insight generation, and tenant engagement. It isn’t just hard skills like data analytics that are needed in this new, smarter real estate industry. Soft skills like critical thinking, online communication, and problem-solving are also becoming more important. 

The biggest problem is young people, those most likely to have a high degree of technical proficiency, are just not interested in the industry. “Unless they know someone in commercial real estate, most undergrads don’t realize there’s a career to be had,” Ramseur explained. “It’s the world’s largest asset class, it impacts where we live, work, and play yet thinking about a career in that industry is not top of mind.” He thinks that the first challenge is awareness. We need more people to see this is not only a lucrative but a fulfilling, exciting career. The second challenge is a high barrier to entry. This has to do with the way compensation and commissions work. Junior brokers are often overworked and underpaid as most of their commissions go to their brokers in return for their experience and guidance. While there is certainly an apprenticeship aspect of brokerage, many brokers just throw new agents to the wolves and retain the ones that come out alive. The third is mentorship. In a cutthroat, hustle-based industry finding that mentor relationship within the industry that’s willing to put the time in. 

Making it in the world of commercial real estate is tough, especially in the world of leasing. There are only so many deals to go around so competition is fierce, even among colleagues at the same firm. Pay structures are slanted against most new hires, making it tough to make ends meet for a young generation that’s the poorest in American history. Oftentimes getting a piece of the action means someone at the firm giving it up. The enormous gap in networking connections, resources, and market knowledge make it nearly impossible for new hires to compete against the old guard. 

Some of the problem stems from human nature, clients want the best person for the job, not a fresh-faced kid straight out of college. Even being taken seriously in the industry is a major challenge as a young person. Living on a ‘draw’ off future commission isn’t feasible for a generation already saddled with tens of thousands in debt from student loans. The result is high-level compensation packages with variable pay that can end up bringing in multiples of a base yearly salary for senior employees while young bloods take on a second job and get roommates just to get by on making referral bonuses. If we are serious about attracting young talent into commercial real estate brokerage, a thorough examination of entry-level compensation is likely required, especially if you want to attract diverse talent. Outside of brokerages, pay structures can be more forgiving, where compensation can be more closely tied to performance metrics. None of that nuance matters if young talent isn’t even giving the commercial real estate industry the time of day. 

Roles in commercial real estate don’t even crack the top 50 most popular job areas for recent college graduates, according to Forbes. Before the pandemic began, commercial real estate was experiencing a labor shortage, recognized by NAIOP. As the labor market heats up and employers struggle to fill roles, the looming problem of the commercial real estate workforce is being brought to the forefront. That’s why firms like JLL are working directly with universities to help establish a pipeline for young talent. JLL, CBRE, Cushman & Wakefield, and other major firms have hired chief diversity officers in recent years to help build out a young, more inclusive workforce. “Taking this position at Texas A&M is one of our major recruiting efforts. One reason I accepted the position is it provides us with an opportunity to recruit and share the future of real estate professionals,” Ramseur said. 

Technology can help young talent close the gap, Ramseur explained. New recruits may not have the connections to build a book of business, but they are native users of technology that can leverage innovation to multiply efforts unlike any generation before. Powerful tools for prospecting, sales, management, and engagement are helping to level the playing field for younger generations. Surveys, requirements, and reports that used to take teams weeks to prepare can now be done by one tech-savvy employee in an afternoon. Using the right tools means a new employee has the potential to build a book of business faster than ever before. Technical expertise also helps new employees add value to a team in exchange for training. Junior team members are often the ones using the technology and apps to pull numbers, lining up deals for senior brokers to knock down, who in turn include younger team members in deals, allowing them to get the necessary experience under their belt. 

In addition to examining compensation and training, solving the problem requires HR to update policies and procedures. More than 31 percent of respondents in Deloitte’s 2020 Human Capital Trends survey said HR made little to no progress in modernizing their processes, technology, and capabilities in the past 10 years. Updates roles to include flexible work hours and location and rewards and recognition programs. Shorter job descriptions, a mobile-friendly application process, and automated interview scheduling can help ease things along. Beyond outreach at the college level, a collective industry effort to reach students K-12 will help younger students see the opportunities in commercial real estate before many make up their minds about college. It may be as simple as making sure you make time for an appearance at an elementary school’s career day. 

For anyone reading this considering a career in commercial real estate, I asked Ramsuer to give his best elevator pitch: “This is the next gold rush, commercial real estate is the next frontier. If we look at the next 50 years, that intersection between the built environment and technology means how people are going to work and interact will change rapidly. All that takes place around the built environment, there’s never a better opportunity to be in commercial real estate than right now.”

Associate Editor
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