As the pandemic appears to subside and many tenants are formulating plans to return to the office, Gemma Burgess, the incoming CEO of Ferguson Partners, a global executive search firm focused on the real assets industries, was in high demand as a speaker during ULI’s Spring Meeting in San Diego last month. During the meeting, Urban Land sat down with Burgess, who is also a member of ULI’s Office Development Product Council, to learn, among other insights, where real estate employees went after they resigned and why.
What happened to the employees in commercial real estate? Why did they leave and where did they go?
First, we must remember that we’re in a cyclical business. If you rewind the clock back to the GFC [Global Financial Crisis], there was a huge period where either people were cut from the industry, or they just didn’t join the industry. They didn’t come into the investment banking programs or the training programs; so, we’re suffering from a missing generation of professionals across the industry.
Then, you layer in the baby boomers retiring, people taking sabbaticals, and people staying at home more, wanting more flexibility. There are also people not wanting to work as many hours as they did 20 years ago. And then, you add into that people who just left CRE altogether and joined a different industry. Many of those folks were functional professionals who were concerned that they were going to be called back to the office full-time, i.e. technology, HR, accounting, finance, legal, marketing, etc.
What’s the impact on office real estate if people don’t go back?
Many firms have changed their approaches to the return to office situation over the past 12 months. Many firms, at this point, are developing some form of hybrid solution. When people are only in the office two or three days a week, we’re finding most colleagues are in the same two or three days a week. The office footprint is very similar regardless of whether you are in the office five or two days a week.
But the other big difference is people want their office to be a destination with great amenities and lots of shared spaces. I believe we are going to see winners and losers in the office space with new builds [being in demand] and some of the older stock being less attractive.
It will be interesting to see what happens to suburban offices in the medium term and whether employees’ behavior might change if we encounter a recession.
What should commercial real estate employers know about attracting top talent now? What’s fundamentally changed about it?
The industry needs to approach human capital in a different way. The traditional way of people coming into a firm and staying for their entire career has evolved.
To access talent, we have got to look to other industries that have evolved their hiring practices. You build a company that allows employees to join the organization for a couple of years and then either transition to do something else within the firm or transition out of the firm altogether. [Firms need to] build the training machine that’s needed for this to happen because the current mentality of many younger people coming into any industry is not to stay for 10 or 15 years—they want to do something and then go off and do something else.
It also means you’ve got to look at your existing staff with a different lens because again, if you don’t give people an opportunity to try something new or do something different, they could get bored or frustrated and leave.
Historically, people who have traded jobs every couple of years have been discounted by people like us—recruiters—and by companies because you don’t want somebody that’s only going to be there for a short period of time. But again, I think that’s probably going to change. Employers are going to need to boil down job descriptions to the core skill sets needed, and then match up skill sets, as opposed to experiences, to get the right people in seats that are open across the industry. This is especially important if the industry wants to bring more diverse talent into the asset class.
If employees are working fewer hours, are employers going to have to hire more people to get the same amount of work done?
With the technology evolution, we can hopefully work smarter. People desire to work less hours, therefore, you’ve got to find other efficiencies across businesses. Right now, a big part of the tech revolution is focused on some of these attributes. I was chatting the other day with a good friend who is an investment banker, and she said that at 7pm, she walked the floor at the IB, and nobody was there below a VP level, and that seems crazy. But if you are going to have analysts and associates who won’t work 80-plus hours a week anymore, then you have got to figure out a solution. Employers will have to either get more people or have more efficient processes to get to the same answers.
What level of talent is the most difficult to recruit?
From what I hear from clients, I would say more junior hires, anyone with less than 10 years of experience. They trade jobs for different reasons, but compensation is a big one. You hear stories right now of people getting their base salaries doubled to cross the street and join startup operations. When you’re doing more senior hires, people are trading for different reasons. When you are having that more thoughtful, bigger picture conversation, then people are not just trading for money or work-life balance, there’s a whole series of different things that will come into play.
There’s this idea of the ‘great resignation’ becoming the ‘great regret.’ Is it going to be the great regret?
I think we’re seeing this a little bit already. I have been surprised that some folks that were in their seats for a long time traded through the pandemic. When you ask why, in a lot of instances it is because they felt disconnected from their firms. Their firms looked after the people who they thought were high flight risks, and not necessarily the good corporate soldiers who people would never imagine leaving.
In isolation, people can make bad decisions because in a world of real estate, where we are used to doing a lot of due diligence, we are used to getting in front of people and asking the question, ‘Does this make sense? And, is this a good move?’ I don’t think everyone has been through that same process through COVID.
SIBLEY FLEMING is the editor in chief of Urban Land.