Newport Beach, California–based real estate recruiting firm RETS Associates recently completed its 7th Annual Commercial Real Estate Financial Analyst Survey, which includes responses from more than 200 financial analysts across the nation, according to a release from a representative of the firm. The release says the survey revealed that in the last year, 69 percent of financial analysts have actively pursued a new job or position, either with their current employer or another firm, which is a 9 percent increase from the company’s previous survey the year before.
Also notable, according to the statement, was the fact that over a three-year period, analysts with graduate degrees showed a 30.8 percent wage increase, while those with a bachelor’s degree rose by only 19 percent.
SoCal Real Estate spoke with Kent Elliott, a principal with RETS Associates, about what the survey results say about the CRE industry’s health, how the findings have changed from previous surveys, and what the wage-growth findings mean for our industry.
SoCal Real Estate: What do your survey’s findings about job searches among financial analysts say about the state of the commercial real estate industry currently?
Elliott: The state of the industry continues to be strong. There’s hiring at this level and it’s strong, and this type of candidate — the financial-analyst candidate — is an entry point for many candidates in the industry. It’s a bellwether on the front end of a recovery that began nine years ago, and it indicates the optimism in the industry in that the strength of hiring has continued during that time period. It reflects the overall health of the industry.
Financial analysts are a relatively lower-cost employee compared to other positions. Employers continue to hire at this level to augment their staff. Keeping track of this metric keeps us in touch with the talent that is entering the industry. We look at a candidate’s career as a marathon. When they’re at the starting line (out of college, no experience), we can’t help them, but after a year of experience, we can then start working with that candidate. We can take that one year of experience, and we have many clients who want to hire an analyst — a smart young kid with a year of experience who has exposure to real estate and thinks it will be their career.
How have this year’s findings changed from past surveys?
There are subtle changes each and every year, and I think when we look at the broad data, you’re going to see those changes. It’s indicative of the age group that responds to this survey. It’s not like your grandpa working at Sears for 50 years and retiring. These are younger professionals coming into the workforce with a lot of expectations. The vast majority of employers when hiring think, “If I can get two years out of them, then that’s great.” We like to counsel and advise our client that two years is great, but it can be longer if you continue to let the employee grow, with increases in responsibility and compensation.
When we sent this survey result out to clients, one response was, “What’s the difference between a senior associate and a senior analyst?” and the answer is years of experience. When you’re a senior associate, you’re doing that job a heck of a lot better than when you were a senior analyst.
It looks like millennials are job hoppers, but their entrance into the workforce at this level means they change jobs every couple of years, no matter what year it is.
What does this say about the economy and where it might be headed?
When I look at the broader picture of our platform, there are plenty of people who ask, “What’s going on in the industry? Isn’t it the bellwether of the economy?” They’re correct in that companies don’t engage recruiting firms when things are slowing down but when they need people and the economy is growing. On a macro level, we are as busy now as we were 12 to 24 months ago. The number of searches we’re working on is very healthy and demonstrates the continued health of the real estate industry. Also, heading into the holiday months, we know there are slowdowns, but we’re not into the true holiday season yet.
How do you interpret the findings about wage growth and where that may be headed?
When you look at this group of individuals who enter the workforce as analysts, there’s generally a pyramid. Yes, there’s wage growth, but the supply of candidates at this level keeps the pace of acceleration of wage growth down at more reasonable levels than the supply of more mid- to senior-level positions.
What else should our readers know about this survey?
At the end of the day, when we look at the approximately 250 searches we’ve done over the last five years and step back and analyze, what’s really apparent is that 95 percent of the real estate industry — when it comes to hiring analysts or associates — pay for experience as their primary factor and advanced degrees more as a secondary factor. If you’re an analyst or associate and decide to pull the ripcord and get your MBA, you will not only lost income for one to two years but also significant educational expenses for that time. Depending on whether you go for a MRED or MBA, you will lose roughly $200,000 in income during those two years and another roughly $100,000 in tuition expenses — that’s $300,000 total. It takes a long time to recover that $300,000. The top 5 percent of people can see where it makes a difference, but those are the all-star performers. Most should keep in mind that the real estate industry pays for experience as its primary factor.