CRE roles on the log? How the downturn may change the real estate job market

A recent series of high-profile workforce reductions by international brokerages, including a “global transformation” at JLL, layoffs at Avison Young and cuts at CBRE – which announced a $300 million cost cut which will focus on the workforce – has sparked waves of concern across the CRE industry as the economic downturn continues to unfold.

But this particular slowdown — figures from the Urban Land Institute estimate $600 billion in transactions per year in 2022 and 2023, well below the record $855 billion set in 2021 — comes during a seismic shift in use of offices and increased investment and deployment of technology in industry, may hit harder for certain types of jobs and leave longer lasting impacts on the CRE labor market.

Each significant slowdown or recession leaves lasting scars on the labor market. This cycle seems poised to bring technology to the fore, jeopardizing jobs that can be replicated with an automated process or contract worker, economic factors intertwining with the structural issues at play in CRE.


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While the mass layoffs may be over, commercial real estate hiring may be delayed for years.

“The real estate industry is clearly moving, some companies faster than others, towards automated solutions; relocation; increased use of independent consultants and temporary workers; use of third party suppliers; and greater digitization of processes,” according to Christopher Lee, whose firm CEL & Associates conducts a highly regarded national survey of commercial real estate company salaries. “I expect layoffs and workforce reduction activities to continue through Q2 of 2023. The next six to nine months are going to be very challenging from an operating and growth perspective.”

Trading volume may not return to 2021 levels until at least the second or third quarter of 2023, according to Lee. During this downturn and pause, it sees layoffs concentrated primarily in office leasing, accounting and administration, last-in, first-out hires, investment sales, finance and some project management positions.

JLL’s recent Future of Work survey, which surveyed more than 1,000 global CRE leaders, concluded that the next few years represent a key transition point. Businesses need to “double down on smart tech investment,” according to the survey.

There are already clear signs that changes in pandemic-era operations have changed the workforce calculus for many businesses. In property management, for example, there is much more emphasis on technology, such as remote viewing and digital tenant platforms and applications, which make repairs, operations and scheduling more efficient and less demanding in workforce.

Historically, CRE’s boom and bust cycle, along with a traditional reluctance to invest in technology relative to other industries, has meant that hiring for administrative and assistant positions rises and falls sharply with the volume of transactions. Long-term planning, sustainable hiring and investing in automation have often been overlooked in favor of rapid hiring and firing when needed, said Allison Weiss, CEO and Founder of CRE Recruiting . This appears to be happening as the 2021 peak has given way to less activity this year.

“Big companies call these roles ‘cost cutters,'” Weiss said. “As transaction volume slows down, you don’t need more deal coordinators, you need fewer assistants, you need fewer marketing people, you need fewer recruiting people because you’re not bringing new people into the business. The teams on the front line, attached to brokers but not strictly speaking, see their role more at risk.

These reductions can sometimes lead to offshoring, Weiss said, because roles are not replaced in a takeover, but rather transferred to foreign and contract workers. Berkadia has a team of financial analysts overseas, Weiss said.

But that doesn’t mean senior and management roles are necessarily safer than frontline and support staff. These are the times when middle managers can be cut, and Weiss thinks this is when the “bad economy” excuse can be used by companies to ignore bonuses or cut pay raises.

Other analysts do not see the situation as so dire. Bullpen CEO Tyler Kastelberg, whose platform connects CRE freelancers to job opportunities, said he was not convinced the market had bottomed out yet. Hiring will fall behind and has slowed in the brokerage and lending spaces, but he no longer expects major layoffs; businesses have been relatively lean since 2008. CBRE, he said, has laid off many back office workers who will likely be replaced by contractors.

There will be reductions, but more of a pause than a long-term decline, according to Anita Kramer, senior vice president at the ULI Center for Real Estate Economics and Capital Markets. She said companies will start to look ahead strategically and plan for the rebound. There has been a strong hiring of analysts, because the quality of transactions matters a lot more now, so people are very picky.

“The strength of the multi-family sector is still there, and the industrial sector is still there, and the retail, there are still big pockets of retail in the right places,” she said. “There are a lot of people planning for a different time frame right now.”

The winners, of course, will be those in revenue-generating sectors and services with significant potential. Lee said layoffs are likely to be much lower in the multifamily sector, leadership positions that create value creators, talent management, asset and property management, and C-suite leaders.

Recent layoff announcements also suggest more shifts to roles focused on analytics, consulting and recurring revenue streams. CBRE CEO Bob Sulentic said in a statement that the company will focus on “corporate and local facilities management, investment management” and other “cycle-resilient consulting business lines.” , part of an industry-wide shift towards more comprehensive offerings.

And despite, or perhaps because of, the expected disruptions, retaining talent, especially those involved in transactions and revenue, will become even more vital. Lee actually predicts that compensation will “rise significantly.”

“It will be important for all real estate companies entering this time of disruption and uncertainty to have a strong talent management plan in place,” he said. “Nothing in real estate is accomplished without talent.”

Weiss argues that if the recession lasts and employers get more clout, it’s easy to imagine a world where those who hire, tired of paying too much in a competitive labor market, begin to cut back on recent wage gains.

And again, it comes down to the challenges of using technology as a labor-saving device. There is potential, especially in a market where it is still difficult to fill vacancies, make existing employees more efficient and reduce costs. But there’s always the potential for jobs to be eliminated, and as entry-level roles and responsibilities become more and more automated, it’s eliminating some entry-level jobs essential to gaining a foothold in CRE.

“If we then outsource financial analyst, brokerage assistant or coordinator roles, we carve out a very important stepping stone for people who want to come into our industry and learn the trade,” Weiss said.

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