At nearly the same moment, a second event unfolded. Next
we’re experiencing the rise of the internet and a closely
associated technology boom. Yes, CRE had openings. But
now we were competing for top talent with one of the most
exciting industries to come along in decades. Moreover, the
CRE industry was asking its entry and mid-level talent to
accept a draw against commission-based positions. Contrast
that to salaried positions and the allure of a high tech IPO.
When all was said and done, in terms of talent acquisition, the
90s became sort of a lost decade for the CRE industry.
Things weren’t that much better in the new millennium. First
came the tech correction of 2001. The economy and real estate
values reeled – and again our industry jettisoned a good deal
of its mid- and entry-level talent, instead opting to hold on to
its longstanding, experienced, connected producers. Then in
2008, the cycle repeated.
The net result is an industry top-heavy in highly valuable, but
nonetheless, graying executives and significantly deprived of
mid- and entry-level talent, leading to two sets of risks.
• Economic risks: Think about independently-owned or even
some of the larger, publicly-owned brokerage companies.
Traditionally, people talk about the “80: 20 rule,” where 80
percent of the revenues are being generated by just 20 percent
of brokers. But with the aging of the workforce in CRE, the
ratio at many companies is now actually more like 90: 10,
with 90 percent of the business flowing from just 10 percent
of the workforce. That’s dangerous – as if even one of these
high-value, well-connected, high-skill brokers gets picked
off by a competitor, or retires, or just leaves unexpectedly,
that could be enough to turn overall profits for the firm into
losses. Now recognize that most, if not all, of a firm’s top-earning 10 percent is likely to be age 50, 55, or older. The
odds that a firm could lose one or more of its top earners
• Strategic risks: There’s another set of less obvious, but
potentially just as devastating, risks. And that is, the loss of
innovation and opportunity brought on by not pursuing and
sustaining a younger and more diverse workforce.