In the latest Bayfield Training Webinar, Sonia Martin-Gutierrez and Lucy Cook present: Real Estate Recruitment under the COVID-19 pandemic. Lucy Cook, a real estate recruitment specialist and Director of Falmouth Fairfax, provides an overview of real estate trends after ten months into a Global Pandemic. In the webinar, Lucy describes the type of companies that are recruiting at the moment, in what sectors, and how COVID-19 is affecting the remuneration packages. Additionally, Lucy discussed the most desired roles by candidates.
Market Commentary and Trends of 2020
Unsurprisingly the first pandemic-induced lockdown resulted in a considerable drop off in recruitment. Moreover, the lockdown went on longer than initially thought. Thus, while there was recruitment during that time, it was essential recruitment only. Recruitment picked up near the end of the summer, catalysed by a belief that the lockdown period was possibly nearing an end. However, the implementation of the second lockdown reduced recruitment appetite, with some firms electing not to recruit unless they had to. Since December started, recruitment has picked up. Lucy argues this is driven by positivity surrounding the vaccine’s development and firms unable to continue suspending recruitment.
Lucy explains that one of the key trends this year has been the disparity between different market areas. Specifically, there have been some companies that have been growing and consequently recruiting larger teams. Conversely, many firms have struggled and have frozen salaries and/or downsized their teams. According to Lucy, this pattern is an anomaly—typically, in a global market downturn, everyone is in the same boat.
Moreover, different firms have implemented different approaches in how they have treated employees. For example, some companies have been positive and made their staff feel secure. Conversely, there have been cases of people who have been placed on furlough at reduced salary rates even when their companies have been in a strong financial position.
Moving on, many of the redundancies have emanated from consulting firms. As Lucy explains, this is because consultancies mirror what their businesses/clients are doing. For example, if they expect to be instructed on big projects, they will recruit to facilitate that. Moreover, when the market is picking up, they recruit very quickly to facilitate their growth. Consequently, in a market downturn, consulting firms are often the first to retract staff. Equally, where client-side, companies can save on fees and bring services into their existing team capacity and skill set, then they’re often electing to rollout redundancies. Typical examples include asset managers.
In terms of the level at which redundancies have taken place, it has been slightly different from the credit crunch downturn, whereby a lot of the casualties were senior level, high-cost figures. This year, redundancies have occurred at a more junior to mid-level. Lucy explains that people seem to expect that we will bounce back from the pandemic quicker than you would expect in a typical downturn. Therefore, firms want to keep the senior employees who have the contacts, and the relationships with potential clients in the firm, thus ensuring the firm can bounce back as quickly as possible when the market starts moving.
Furlough was a significant trend of the year. Near the end of the initial furlough scheme, many companies enacted redundancies. Even when the furlough scheme was extended, some companies carried through with further redundancies. Lucy explains that this is because the furlough scheme does not adequately account for a business’s costs to have someone in a seat. Moreover, it was also the result of the anticipated workload (or lack thereof).
Regarding role applications, surprisingly, many have come from people with existing employment. However, because of their current firm’s treatment or prospects, these candidates are looking for a more engaging and sustainable role. For example, Lucy’s recruitment firm put an advert for an investment position on LinkedIn and received over 400 applications in 3 days, when they would generally receive roughly 50 in a regular market.
A Year of Adapting:
Unsurprisingly, it has been an enormous year of adaptation for businesses. In varying degrees, most businesses have had to adapt their business plan for the year and their strategy going forward. This is because some business plans are simply not viable.
For example, if you had an office acquisition business plan for this year, that would not have weathered the conditions. Adapting to the way people are working is a good example of a change in strategy. For example, some firms’ office portfolios are adapting by converting the building into a Flexi office space instead of looking for one main corporate client.
Tied to this, companies have had to implement remote working whilst ensuring efficiency is maintained. Many employees have been a lot more happy working from home and spending more time with family and having greater flexibility in managing their own time, which has meant their personal efficiency has been increased. Nonetheless, other people have not enjoyed it at all, particularly if they are in a flat with no garden during summer in lockdown. Consequently, that has affected their efficiency.
Lastly, people have used their time this year to add new skills. For example, those on furlough have decided to use their time to increase and improve their skill set. For example, people have chosen to improve their financial modelling skills by taking virtual modelling courses such as those offered by Bayfield.
Active and inactive areas in real estate
Regarding active areas, logistics has been significantly busy. The e-commerce world has boomed, and logistics is part of that supply chain. Similarly, retail repurposing has been very popular. There is a real understanding that there is an opportunity in retail if one takes a repositioning/ repurposing angle. This includes repositioning assets such as putting Flexi offices on the top floors of shopping centers.
In terms of active roles, a big trend has been portfolio management analysis roles. This is catalyzed by the need for firms to understand how their portfolios are positioned, track their activity and exposure points, and undertake re-forecasting of the coming months and next year.
Concerning the inactive areas of real estate, institutions have been reticent. For example, funds cannot be seen to be taking on additional costs or extra hires where withdrawals have been stopped this year.
Candidate motivations for moving and priorities in new role search
Many candidates have looked to move because they do not feel as though they were treated particularly well by their employer. Essentially, candidates have read into their experience. Specifically, candidates feel as though they have seen a different side of their employer that they do not like. For example, Lucy explains that a big motivator was cases where people did not receive bonuses honoured.
Secondly, candidates have looked to move for a better work/life balance and greater flexibility. Therefore, a motivator has been situations where employers do not intend to have a permanent arrangement for working from home. Thirdly, a final motivator, has been situations where current roles are not providing the satisfaction candidates desire.
Regarding the role’s candidates are seeking, candidates’ priorities have been primarily focused on the experience that they get in their position. This includes job security, senior management engagement, transparency about progression, and the opportunity to learn and attain professional accreditations (e.g. CFA).
Difficulties recruiting during a pandemic
Unsurprisingly, recruiting this year has been quite challenging. Firstly, on client expectation management, the perception of firms has often been that everybody is looking for a job because everyone has been made redundant. Consequently, employers have put forward a low salary bracket and rate. However, that is not necessarily the case. Specifically, there is misalignment—typically, clients have been recruiting for specialized roles targeting the top 10% candidate pool; however, expecting that they will be able to do some cost-effective recruitment.
Secondly, Lucy explains that benchmarking salaries has been particularly difficult this year. Generally, the assumption has been that the salary levels and benefits packages are mainly going to be the same as they were pre-pandemic. However, bonus levels are often the point where the expectation or the expected bracket has been reduced.
Furthermore, attracting good candidates from their jobs has been a challenge for employers who are unwilling to have a long-term commitment to allow working from home. Given the time they’ve been recruiting, this has been a deal-breaker for candidates.
Lucy emphasizes that the recruitment process has been troublesome, especially having to recruit over Zoom. According to Lucy, it is hard for candidates to build rapport and get their charisma across, which is often a driver to progressing to the next step. Moreover, employers have been cautious about offering employment without an in-person meeting with candidates. Similarly, candidates are also wary of starting a new role without meeting (in-person) with their potential team. Nonetheless, Lucy contends there have been candidates who “have started where they’ve never met anyone in the team or been to the office, which is understandably a tough situation for them.”
Going into 2021? What might real estate recruitment look like?
Going into 2021, there are some encouraging signs first of which is the development and rollout of the vaccine. Many of Lucy’s clients are looking to implement roles with a view of people starting in April onwards.
Furthermore, another variable influencing recruitment is a return to the office. It helps when firms know they will meet candidates recruited. Another critical variable is fluidity in the transaction market. If there is no investment going on, it holds everything up and has a chain-effect: if clients are not buying anything, they do not need investment managers, analysts, leasing managers, portfolio managers, and portfolio management. Essentially, it is only when there is transaction activity that the domino effect starts, and recruitment volume increases.
Lastly, flexibility is vital. Companies that are willing to offer flexible working terms will be the winners in attracting the best candidates. As Lucy emphasizes, although people may not take it up as much as they think they will, what is essential is having the option to, for instance, work from home. It also instills the idea that employees are trusted and allowed to choose how they are most efficient and effective. Consequently, firms are identifying how they sanction flexible working terms into permanent contracts.