Head-hunters in the UK real estate market anticipate a slowdown in hiring from the big agencies – and potentially even job cuts – as the risk of recession looms.
Over the past week, the global bosses of firms including CBRE, Cushman & Wakefield and JLL have told shareholders and analysts they will look to cut costs as the macroeconomic outlook worsens. Limiting new hires was singled out as a crucial part of those plans.
At recruitment firm Falmouth Fairfax, co-founder Lucy Cook said “unprecedented” salaries for new joiners could mean that “when the focus is on profitability and reducing costs, those hires will look very expensive and unsustainable”.
“The agencies are always the first to ‘hire and fire’, as it were,” she said. “They react to market trends quickly in order to capitalise on opportunities or to reduce costs. They are also a cost that is often cut from their clients’ business model when the market cools down, with internal roles on the client side picking up a broader range of tasks to facilitate this.
“Typically what is seen from agencies in tougher times is a reallocation of resources and focus,” she added. “The transactional teams will usually stop hiring and maybe even lose people, while teams such as distressed asset servicing grow rapidly, and internal movement occurs towards held asset-focused teams. Based on previous trends, if we hit a recession, we would definitely be expecting to see some of the biggest staff losses coming from the large consultancies.”
Joanne Cuckson, director for real estate executive search at Summit Search & Selection, said the firm has “already seen a recent slowdown” in senior-level hires, with director-level gaps being filled via promotions and more focus on mid-level hires.
Leaders at the big agencies did not go as far as mentioning job losses in their second-quarter earnings calls, but all sounded a note of caution over their past pace of hiring. Matthew Evans, a director at real estate recruitment firm the Management Recruitment Group, said the overall market is showing “more caution” when it comes to expansion.
“The agencies across the board seem to have challenges to ensure that salaries aren’t overstretching the P&L,” Evans said. “The junior-level, surveyor-associate has seen such a dramatic increase in salary levels that extracting value become a challenge, hence the need to pull back on costs.”
But not all parts of the market will be affected equally. Evans said that although hiring in office and retail capital markets, agency and valuation “have begun to cool”, sectors including life sciences and industrials “remain competitive in acquiring talent”.
Summit’s Cuckson also pointed to growing activity in the living and bio-sectors, saying it should mean any downturn differs to those of the past. “A greater emphasis on long-term investment strategies, rather than short-term returns, leads me to believe that recruitment within real estate will hopefully be less severely impacted by a potential recession,” she said.
At real estate recruitment firm Holtby Turner, founder Toby Turner said a market downturn could open new growth avenues for companies with the right balance sheet and expansion plans. “Some stronger companies may use the opportunity to restructure and recruit key people, particularly if the recession appears to be relatively short term,” he said.
Nonetheless, market sentiment could mean that companies struggle to attract candidates even in businesses they want to build out – such as Cushman & Wakefield chief executive John Forrester’s targets of data centres, biotechnology and life sciences.
Christopher Clay, managing consultant for real estate at executive search firm Irving Knight Group, said: “I have already spoken to many candidates for positions I am working on who have stated their reluctance to make a move due to the risk of recession. This has made hiring for positions much more difficult – nobody wants to be the new guy who is the first to get let go when cuts come.”
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