EDITOR’S COMMENT I know the sun is shining and no one really wants to read about doom and gloom (although they are the headlines you all tend to click on most), but there’s a distinct feeling out there that too much hay may have been made while the sun shone.
The national newspapers have been awash with stories about massive pay packets being agreed for lawyers as the war for talent and the big push to get people back to the workplace wages on.
The same appears to have been happening in the real estate sector, maybe not to such an eye-watering degree, but enough to make a lowly journalist wonder whether she made the right life choices. I jest. A bit.
Recruitment specialists tell us this week that the “unprecedented” salaries that have been agreed across the sector over recent months could start to bite a bit and might see several real estate firms tightening the purse strings or even letting some people go.
It was a theme echoed by the big agencies, which despite seeing revenues rise in the first half of 2022, are getting increasingly twitchy about the looming recession and ever-increasing inflation figures.
CBRE’s Emma Giamartino told investors off the back an almost 22% rise in revenues to $15bn (£12.6bn) that the agency expects a slowdown in the third quarter and a recession in the final months of the year, continuing into 2023 so was “already taking steps to limit new hires, eliminate non-client related travel and entertainment, and reduce other discretionary expenditures”.
And, she adds, it’ll go further if it needs to and make more reductions.
Her sentiments were echoed by Cushman & Wakefield boss John Forrester, who will be “very careful” about how it uses “every dollar in the company”, despite posting an 18% rise in H1 revenues to $4.9bn.
And by JLL’s Karen Brennan, who said the firm had already started to pull on some levers around travel and expenses, marketing and hiring. That came fresh off an 18% increase in first half revenues to $10m.
The big advisers have definitely been spooked. And while we, of course, don’t want to peddle doom and gloom and talk down the market, these are the thoughts running through so many of our leaders’ minds.
Does real estate run the risk of the classic boom-and-bust scenario? Has it spent way too much money poaching staff from each other, pushing up base salaries to ridiculous amounts so it can make hay when the sun shines?
And now the sun has stopped shining – metaphorically anyway – what happens? As a host of real estate recruiters tell us, the agencies are the always the first to “hire and fire” and for those that went big, offering giant salaries just to get people in, that firing might just come quicker.
To send feedback, e-mail samantha.mcclary@eg.co.uk or tweet @samanthamcclary or @EGPropertyNews
