Sustainability is a topic very much in vogue these days. We hear it applied to our buildings, our wildlife, our forests. We hear it every time actor-turned-activist Leonardo DiCaprio steps off his private jet to comment on the environment.
Practitioners of commercial real estate are facing their own sustainability issues as they scramble to address the needs of a client base in the midst of watershed changes—both technological and social. Gee-whiz concepts, such as coworking, optionality, the Internet of Things and cybersecurity, are wreaking havoc on the traditional knowledge base of the industry, particularly for those in operations and management. Meanwhile, a younger and more diverse population is taking over the workforce (meaning, both our tenancies and our companies), with different needs and different professional expectations.
As if these disruptors—to use another phrase that is all the rage these days—were not enough, the herd is dwindling. According to some accounts, the average age of a property manager today is around 50.
AN ENDANGERED SPECIES?
These challenges invoke serious questions: Who will fill the ranks as baby boomers retire? How does an industry that is largely older, white and male better reflect a changing client base? And, how do we ensure all professionals have access to cutting-edge and ongoing education so they may address a new suite of corporate needs? The proper answers to these questions will arm practitioners for the future and attract a new generation to the fold. How we answer will determine if we, as an industry, can guarantee an ongoing crop of engaged and knowledgeable professionals. It also will determine whether or not real estate can win the war for talent.
It is a battle being fought against some formidable alternatives. "Tech is the bright, shining object for millennials," says Marc Intermaggio, executive vice president of BOMA/San Francisco. Intermaggio points to an odd irony: "Property management may not seem like the sexiest career in the world. But, LinkedIn and Salesforce have several buildings in our local area, and these all have to be managed."
All of which, of course, speaks to the sector’s relative lack of visibility. This multitrillion-dollar business differs from comparable industries, such as tech, airlines or insurance, in that it really has no public face, no branding—and, therefore, is off the radar of many future superstars. "People will see a name on a building," says Henry H. Chamberlain, APR, FASAE, CAE, president and chief operating officer of BOMA International. "But, they don’t think about the people who own the building, those who lease and maintain it or handle the tenant improvements."
EDUCATION TO THE RESCUE
There is some good news in this potentially dire picture. First, more than 40 colleges and universities around the United States offer some degree-granting program in commercial real estate.
The other good news is that industry associations like BOMA are not sitting idly by with the expectation that higher education alone will ensure an ongoing stream of future leaders. Both leadership and the rank-and-file are hard at work on initiatives to expose the profession to a wider and more diverse audience and step up the educational opportunities—for newcomers and senior practitioners alike.
There are three cutting-edge examples of this educational effort. One is now celebrating its 20-year anniversary; the second is due to launch this spring; and the third is a grassroots initiative working directly with a local university.
REAP WHAT YOU SOW
The Real Estate Associate Program (REAP) is a two-decades-old initiative designed to "funnel"—in the words of REAP Interim Executive Director Ken McIntyre—top talent into commercial real estate and simultaneously promote a more diverse industry. "Senior management across the commercial real estate industry, for the most part, hasn’t felt compelled to address its diversity disparity," says McIntyre, who also is founder and managing principal of consulting firm Passport Real Estate. "And, by disparity, I mean what the industry population looks like versus the population of the country."
In fact, according to the 2013 Commercial Real Estate Diversity Report, white men dominate the senior executive level of CRE by more than 77 percent, while Black, Hispanic and Asian men together total less than six percent and non-white women comprise fewer than one percent. But, McIntyre is quick to point out that, in relative terms, the industry is making great strides. "Until 25 years ago," he explains, "commercial real estate consisted of privately owned businesses," which could essentially make up their own rules. Private equity and the public markets changed all that, and "every day, there are more firms interested in exploring what diversity should and could mean for them. Change takes time, and that snowball is increasing in size."
McIntyre estimates that REAP has funneled some 1,000 college-trained, skilled businesspeople into the real estate workforce over its existence. The vehicle is a 10-week, 20-class program that serves as introductions to such topics as financial analysis; valuation and budgeting; asset and property management; brokerage and investment sales; development; market analysis; and leasing and lease analysis.
Currently, the course is offered in nine cities around the country: New York; Washington, D.C.; Atlanta; Chicago; Dallas; Los Angeles; Kansas City, Missouri; and Cleveland and Columbus, Ohio. Entry into the program is no cakewalk, states McIntyre, even for these candidates, many of whom, he says, "have either undergraduate or graduate degrees from Ivy League schools. They’re also in careers at hedge funds, law firms and a range of other backgrounds." For the most recent spring semester in New York, there were 100 applications for only 40 seats, which were filled only after a rigorous screening process. The candidates also pay their own way.
A major part of REAP, in terms of the industry’s sustainability, is its networking aspect. "There are now 1,000 graduates who can serve as mentors to those currently in the program," notes McIntyre. "They also can access their alumni associations and clubs and get in front of minority students who may never have heard of real estate."
A robust job bank exclusive to alumni helps drive the initiative to its ultimate goal, McIntyre explains. "A firm like JPMorgan Chase alone has five different real estate groups, and it owns or manages 80 million square feet around the world. They send us listings of job openings at least once a quarter," as do other major, global firms that have seen the value of REAP. "If an alum is looking for a job, they may not go to those corporate websites, but they’ll go to ours," notes McIntyre. "We’re aggregating jobs for all of our graduates.
"In this war for talent, it is our vision to become the foremost resource for minority talent in the commercial real estate industry," he continues. And, in that war, the ranks of potential leaders are destined to swell. McIntyre says REAP is working on a new strategic plan that promises a rollout to more cities. In addition, "my goal is to have 1,000 people graduate in the next five years," essentially doubling its output.
"The workforce is getting more diverse," adds BOMA International’s Chamberlain, "and we need to reflect that. We need to build the population of mid-tier professionals who will take over these companies in the next 10 years. That’s why programs like REAP are important." And, it is why BOMA is on the board of REAP, along with a number of other real estate associations. A host of major real estate companies, including CBRE, Duke Realty, JLL and Kimco, are sponsors of the program.
BUILDING AWARENESS AND COMMUNITIES
Another initiative, due to launch this spring, bands together no fewer than 23 industry associations, including BOMA, to spread the word about commercial real estate as a profession. It is dubbed Careers Building Communities.
Angela Cain, CEO of corporate real estate association CoreNet Global, is one of the professionals on the effort’s steering committee, and she explains that Careers Building Communities, or CBC, is a portal that "will direct interested visitors to each association’s website. The goal is to introduce visitors to the skills and educational requirements of different real estate-related careers."
In addition, the site will feature overviews of careers, interactive quizzes and links to pertinent videos. "We recognized a greater opportunity beyond our individual efforts to educate students in high school, vocational schools and college about careers that perhaps they never knew existed," she says. "In the war for talent, it’s imperative that we find ways to advance the professions we serve, and it’s a value-add for our existing members to fill that talent pipeline."
The associations, of course, can be goldmines for both current and aspiring professionals hoping to expand their industry knowledge base, she points out. They are "the best resources for professionals at any stage of their careers for real-world best practices, learning from seasoned practitioners and exchanging ideas in trusted, neutral environments. We’re finding new, better, innovative ways to collaborate and educate current and future talent." CBC will deliver that message and "give visitors the opportunity to choose the path they think is best for their career objectives."
Indeed, associations can be goldmines—if the messaging remains clear and cutting-edge, that is. "‘Build it and they will come’ isn’t going to cut it anymore," says Cain. "There are more choices and opportunities to learn and connect than ever. Associations need to keep what works, throw out what doesn’t and move on. The associations that run more like start-up businesses and less like traditional institutions will remain relevant."
And, relevance is the key word. It has been, really, since the job-slaughtering days of the Great Recession. Even today, notes Cain, the issue keeps "many association executives up at night. They must challenge themselves to stay relevant with programs and services that appeal to a younger audience. They connect, learn, grow and belong differently, and there’s no one-size-fits-all approach that will work." The balancing act here is to avoid neglecting the continuing educational needs of their more senior members, she adds.
BOMA International’s Chamberlain, who also is a steering committee member, agrees that relevance is a goal for which all of the associations strive. "We all have to work constantly on creating a strategic business partnership with our constituents," he says. "For us, we believe being involved in BOMA is good business. It’s a great strategy for developing your team, doing better business, enhancing net operating income and increasing asset value, while positioning yourself for future success." And, that is specifically the message the Careers Building Communities portal is designed to spread.
Initiatives that both attract tomorrow’s leaders and spread the gospel of commercial real estate as a career choice aren’t being handled solely at the national association level. Local association BOMA/San Francisco is a prime example of this push, with a program dubbed "CREATE," shorthand for Commercial Real Estate Alliance for Tomorrow’s Employees. Much like the national initiatives, CREATE is a joint venture with other local real estate groups, including nearby BOMA/Oakland-East Bay.
The goal, as stated on its website, is to provide "funding and support for college-level instruction, job shadowing and internship opportunities relevant to employers, in order to meet the hiring needs of building owners, investors, operators and service firms—at a time when we expect an industry employee turnover of nearly 50 percent in the next five years." The funding comes through the BOMA/San Francisco Foundation that Intermaggio also oversees.
In the midst of this war for talent, Intermaggio calls operations and management the "stealth side of the business," since most of the colleges and universities offering real estate programs focus on finance, architecture or construction and development, while operations gets less play. But, this opens "vast opportunities to strengthen college education on the property operations side."
CREATE addresses that opportunity by funding San Francisco State University’s Commercial Real Estate Certificate Program, which is comprised of four courses. It also funds a new CREATE Fellows Program that Intermaggio explains is a "mile-wide, inch-deep exposure to the industry. It’s based on BOMA International’s Foundations of Real Estate Management classes. And, we also teach some of the soft skills—interviewing techniques and building a résumé. It reaches 6,000 students in the College of Business. We’re getting greater exposure than we did in the early days." And, since the fellows program is fully funded by CREATE, "students don’t pay a nickel."
To date, through the certificate program alone, 18 scholarships have been funded to the tune of $58,000, and 37 students have worked as commercial real estate interns since 2014. Companies active in the program include Shorenstein, CBRE, Cushman & Wakefield and Kilroy Realty.
BOMA/San Francisco is certainly not the only local organization, inside BOMA or out, that has ongoing education as a focus. However, to the best of his knowledge, Intermaggio says, "no one else is actually providing college classroom instruction, coupled with such initiatives as career counseling, paid internships and mentoring."
No matter if it is at the local, national or international level, industry associations are taking note that commercial real estate is in the midst of major demographic, technological and operational changes. And, they are tackling the issue head on, redefining what "relevance" means in this new environment—and, in so doing, they are ensuring the long-term sustainability of commercial real estate.