It’s no secret that a toxic combination of war, rising inflation and inconsistent monetary policy has added to the woes of the commercial property sector. Indeed, our latest poll shows that the rising cost of debt and fluctuating asset prices are of concern for many. However, with 2022 behind us, I am finding that market sentiment has shifted and many real estate investors I speak to are expanding in 2023; this week alone, I have taken on 3 new mandates.
State of the real estate investment & asset management sector
Until last year, the real estate asset management industry had been in growth mode, topping €4.1bn in global AUM. Headcount growth had grown across most real estate sectors, and it was an extremely competitive marketplace for most investment firms and they had to offer good packages to attract top-performing talent. As a result, salary bands and total compensation ranges have stayed static (at worse) or increased.
But right now, in the perfect storm of headwinds we are experiencing, financial markets are well below their record highs from late last year and interest rates are increasing, having a knock-on effect on the real estate sector.
While trends such as ESG and DE&I are becoming increasingly high on the agenda for many shareholders of real estate investment managers, inflation is the elephant in the room and may cause discomfort to operating models and profit margins now and for some time to come.
Appreciating that most sectors across real estate including funds, private equity firms and developers but also real estate investment trusts in particular have had a demanding year and potentially more to come this year, I have also seen many new C-suite appointments in the last 24 months. These new hires need to continue to deliver transformation and change projects and create better outcomes for their organisation and client base. In addition, they will need to continue to invest further in the human capital they already have or bring new talent into the organisation.
How this is affecting the C-Suite
Those in C-Suite positions are facing some tough decisions and having strategic partners they can trust on issues ranging from the economy to politics has never been more important. These are turbulent times, and taking a binary view of decision-making may not be as effective as looking at the bigger picture. Strategic decisions need to be finely thought through and counsel taken from a range of partners; while you might not be a forecaster or political analyst, your clients are being affected by these types of issues.
So what does this mean for your business? It means it is now more essential than ever to have proper collaboration with external partners to help you navigate through what will probably be a volatile 24-month period that isn’t correlated to you running the business, but still means you can deliver results to the company and its shareholders. Seeking external counsel helps provide you with new insights and increased objectivity.
Trends shifting towards hybrid working, growing employee expectations, more focus on ESG and DE&I, digital transformation and technology playing an ever bigger role in the real estate sector all mean that employees as well as customers and product are now at the heart of many C-Suites’ business plans. For example, real estate leaders are striving to understand how to benchmark salary in line with the cost of living while remaining competitive, how to retain staff as well as attract them, along with bringing value to the business when margins are getting ever more squeezed.
Additionally, employees are increasingly wanting to “give something back” and have more fulfilment out of their roles, meaning companies are having to deliver much more in areas that aren’t necessarily the primary responsibilities of the business, be this ESG or DE&I initiatives. It’s also important to make sure signalling both externally and internally about what you’re doing so the messaging is clear to all audiences.
How an executive search firm can help you win the best talent
Since 2020, with Covid changing the lives in so many ways for many people, I am finding that at all levels, salary is not the main attraction for individuals when choosing which company to go to. On the contrary, a whole raft of other factors are now taking priority, be it benefits, commitment to ESG, flexible working, work/life balance, well-being, volunteering and mentoring opportunities as well as the opportunity to be part of a team of like-minded individuals with social interaction. On-boarding starts at the opening conversation; candidates want openness and transparency about where they are in the process. Regular communication and updates are key. Engaging candidates early on about the main selling points of the role need to be a priority, be it the role, company, culture, long-term opportunities and other initiatives. Two-way conversations about their hopes, aspirations and setting expectations clearly early on all help to elicit interest and can mean the difference between securing top talent and losing out to a competitor.
These reasons above all point to a strong case for engaging an executive search firm if you are looking to acquire talent. A solid search firm understands the market dynamics and can provide you with data-driven insights and advise on current trends. Effective partnerships will always be the answer to securing the best talent and strong connections throughout the real estate sector mean we are better placed to help find you the talent you need. Competitive advantage comes from the people you hire, so it simply makes sense to hire the best there is.
If you’d like to discuss succession planning or investing in your existing talent to help you navigate the current climate and drive your business forward, contact me today and let’s set up time for a call.