Like a hunter on safari, the talent scout tracks his prey, zeroing in on the best and brightest executives for companies that buy or build the nation's highrises, shopping centers and apartment buildings. Patiently, the headhunter culls the herd of C-suite candidates for a powerful enterprise, snaring the one most suited to the firm's culture.
Today, the demand for experienced leaders is acute, as commercial real estate and investment firms expand, and baby boomers retire from corporate suites with a dearth of contenders to take their places. From February to April, commercial real estate job postings jumped by 35%, and more than 60% of recently polled senior executives expect an increase in their immediate hiring needs over 2006, says David Funk, director of Cornell University's real estate program.
So fierce is the competition that top candidates juggle multiple offers and companies thrust aggressive counter-offers to keep executives from leaving. Claire Janssen, a CPA with a lengthy resume of expertise in commercial real estate, was quietly going about her consulting business in Atlanta when a recruiter from New York-based Equinox Partners determined she might be perfect for a position in Arizona. During a December holiday season, the recruiter phoned to describe the job, but Janssen was engulfed in a whirl of family and business activities.
The talent scout persisted, and Janssen agreed to interviews. When she flew her daughter to Chicago to celebrate the girl's birthday with her grandmother, Equinox founder Tony LoPinto tracked her down and presented her with a contract. Now, Janssen is CFO of Opus West, part of the $2.1 billion Opus Group, a development company, and her family has relocated to Phoenix.
Other firms had tried to recruit Janssen, but she liked the Opus culture, and relished a chance to guide its evolving Western finance operation. In persuading her to consider the job, she says that Equinox “didn't leave any stone unturned.”
Who's in demand?
Across the country, as capital cascades into commercial real estate, spurring development and investment amid the shortage of new talent, firms are hiring executives to manage their growth and oversee new divisions and projects. Some companies need visionaries to preside over billion-dollar empires as the baby boomers retire from C-suite positions — jobs with “chief” in the title, such as chief executive or chief financial officer.
On the development side, CEOs call for skilled negotiators and deal makers, people with connections who can find raw land and persuade local governments to rezone it or dangle incentives to build. On the finance side, though job specs vary, hiring managers scout CPAs and contenders with master's degrees, experienced at legal due diligence, acquisitions and asset management.
The best candidates in a recent search commissioned by Houston-based Raintree Resorts International could analyze financial data and make strategic recommendations, says recruiter John Mann of The Alexander Group in Houston. Among traits he sought: “Are they results oriented? Can they gain the respect of senior management? Can they lead groups of people?”
Leadership vacancies can crop up swiftly. Starwood Hotels & Resorts dismissed CEO Steven J. Heyer and announced in a revised 2006 annual report that he had resigned on March 31, 2007. The board of directors lost confidence in Heyer's leadership and management style, despite “exceptional results” for Starwood's hotel portfolio and 19.2% growth in its vacation ownership business, Chairman Bruce W. Duncan noted in the report. Starwood declined to discuss its search for a new CEO.
Good news for job seekers
For job candidates, 2007 has been a very good year thus far, with the dramatic upsurge of postings. The Southeast, particularly Atlanta and Charlotte, posted the fastest industry job growth of any region from February to April, a 60% increase, according to SelectLeaders, a program created by Cornell and Equinox, which teamed up to offer an online job board and chart industry hiring trends.
Most senior executives polled expect compensation for new hires at all levels to rise this year. Banking and multifamily decision-makers were particularly optimistic, with up to 75% of executives in those sectors predicting an increase in hiring and compensation. Even the relatively small self-storage and affordable housing sectors strongly anticipated hiring. And salaries for grads of master's degree programs specializing in real estate have risen 20% over the last three years, outpacing other MBAs, according to SelectLeaders.
At the pinnacle, top real estate and investment firm executives already enjoy enviable pay packages. The elite group numbers about 25,000, LoPinto estimates, since the 1,000 largest U.S. commercial real estate and investment firms may have five or six C-suite people, and 20 senior-level executives running departments and divisions. As the competition for candidates simmers, companies are ratcheting up the value of pay packages. The booming job market indicates that commercial real estate has been unscathed by the slowdown disturbing the residential market. Headhunters will continue to prowl, armed with hard-to-refuse offers.
“Smart executives should always assume and expect that their best talent is being approached to better their opportunities,” says LoPinto. “If someone leaves their head in the sand and thinks it's not happening, they're making a big mistake. I think companies need to be more aggressive about managing their current talent pool and making sure they're compensated appropriately, and they're challenged and promoted appropriately so that they are less interested in hearing about other opportunities.”
When Mann conducts a search for The Alexander Group, 90% of the people he contacts are not looking for jobs. He studies the client firm to get a sense of the culture and the personality that might fit, and casts a wide net over as many as 300 potential candidates, identifying them through his database and recommendations. Some recruiters use e-mail and video interviews to save time and money in evaluating prospects. After assessing skills, holding phone interviews and a frequent-flyer round of meetings with finalists, Mann winnows out five or six names to present to his client.
Relocation is a flash point for candidates, and has killed countless deals and tested others. When Raintree Resorts needed a CFO a few months ago, Mann found one — in Orlando. Myron Thomas, who has an MBA from Wharton, was happily employed at CNL Income Properties, an unlisted real estate investment trust (REIT), when Mann came knocking.
“He has the credentials, he's a CPA. He was with a Big Four accounting firm early on, so he had a great background. What was equally important, maybe even more important, is the person. Myron's just a great person,” says Mann.
Raintree, which buys timeshare resorts in the United States, Canada and Mexico, sought a strategic adviser for CEO Doug Beck. “Doug was really looking for a partner in the company. Not an equity partner, but a person to bounce ideas off,” the talent scout explains.
The need to uproot the Thomas family could have torpedoed the deal. “I had dinner at the CEO's house with some of the other managers, and I got the chance to meet people that would be reporting to me,” Thomas says. “My technical skills and credentials helped get me in the door, but I'm sure it was discussions on my management style, my mission, vision — things I could do for the company,” that swayed decision-makers.
Thomas lives in hotels now. He travels constantly for Raintree, examining potential acquisitions and the privately held company's condo resorts, spread out over 32 locations, as he gets to know employees and their roles. “My family is still in Orlando, we're in the process of finding a home.”
Meanwhile, he has no apartment or long-term quarters. “Whenever I'm here [Houston], I just get a hotel for a few days.” He has no regrets. “I'm very happy with the challenge I've been faced with, the exposure to a new industry.”Adjusting in Arizona
Moving was tough on Claire Janssen's children, then ages 9 and 12. It meant separation from their father — Janssen is remarried — and flights to Atlanta to visit him. The move cost Janssen's husband Larry Coltharp his job, but he got a new one as CFO for a Phoenix firm.
“It was definitely a stressful time for the family,” Janssen says. They had been happily ensconced in a colonial in suburban Alpharetta, playing ping pong in the basement, before the job offer. In Phoenix, home prices were higher than expected.
“We looked all over Scottsdale and the houses were significantly smaller,” for the money, Janssen says. “We ended up buying something closer in town and older. It did work out well, but it's sort of a fixer- upper, so we're having to remodel. We had to give up the basement, and my kids had to give up their ping pong table and their air hockey table.”
But they got a pool instead; daughter Lauren, now 11, shrieked when she spotted a scorpion on her raft. The family is adjusting, and enjoys walks on a nearby bridle path.
Like Thomas, Janssen is pleased with her career move, and now finds herself hiring new managers and junior-level employees, using agencies that work on contingency and are less costly than executive search firms.
Top-tier headhunters typically earn a retainer, and a fee based on a percentage of the hired executive's first-year salary, generally one-third. Although the recruits did not disclose their salaries, retained executive search firms often recruit people who earn upwards of $250,000.
Phil Canzian, a partner with Pittsburgh-based Crown Advisors, mainly places real estate executives earning $300,000 to $500,000 a year. Currently, he's searching for divisional presidents in Norfolk, Va., and Jacksonville, Fla., for a major office and industrial developer. His fee is one-third of the first-year compensation package, well over $100,000 in most cases, and his evaluations are rigorous.
“How big is the portfolio you developed and that you're now managing?” he wants to know. “Is it handled in-house or do you hire external management firms to run your portfolio? If it's an external management company, how detailed are you in obtaining information from that organization? How hands-on are you in making decisions in regard to budgets, capital improvements or tenant relations?”
New hires can expect to work hard for the money, Canzian says. “Put a seven in your day at a minimum, 7 a.m. or 7 p.m., and in some cases both when you're dealing with the level of position we have. You're going to have 60- to 80-hour work weeks.”Porsche? Forget about it
Potential hires can forget about finding a Porsche in the driveway or tickets to Tahiti in the mailbox. In the past, some firms offered flashy inducements, but recruiters say that today the process relies on the compensation package and negotiated aspects such as productive expectations. Still, some firms go to great lengths to woo top talent.
One company was willing to change the structure of its organization, after an East Coast candidate balked at moving to Texas, where the firm was based, recalls Mann. “They were willing to build a group around this person, and have an office on the East Coast. It was a fantastic offer.”
But the candidate was uncomfortable with being the lone employee on the East Coast and having to build a bureau. Plus, the job required traveling to Texas for at least three days a week over the first six months. She said no.
Mann was disappointed, but he understood. “I would rather have that happen than have the person quit after the first month, after our clients have invested a substantial amount of money.”
En route to a selection, talent scouts may wine and dine a prospect, but they aren't likely to play golf to study personal traits, says Canzian. “If it's not the right fit, you don't want to be stuck on a golf course for the next two to four hours.”
Denise Kalette is Senior Associate Editor.For minorities, it's a long road to the executive suite
African-Americans spend $42 billion a year in hospitality-related travel and services, yet they own less than 1% of the nation's 50,000 hotels, says Michael Roberts, chairman of The Roberts Cos. The firm is based in St. Louis, Mo., and owns an $800 million portfolio of hotels, telecommunications towers and TV stations. It's time more people of color stepped into executive suites to buy or build hotels, shopping centers and other enterprises, he says.
“We stay in the hotels, we work at the hotels, we cook at the hotels — why don't we own hotels? Why don't we own more shopping centers?” Roberts' remarks came during a seminar at the 2007 Global Diversity Summit in Commercial Real Estate held recently in Atlanta.
During the three-day conference, talent scouts mingled with industry pros, project managers, brokers and MBA grads. The summit drew attendees from across the country, and offered workshops on deal-making, property valuation and insights from African-American leaders in the commercial real estate industry.
Cultural barriers historically kept African-Americans out of executive suites, and deterred them from investing in hotels or office towers. “We're trying to get more qualified people to try commercial real estate,” says Ginny Clarke, partner and leader of the diversity practice at recruiter Spencer Stuart in Chicago.
Real estate companies ultimately will be compelled to hire a more diverse population, as Hispanic and black populations replace the current majority, says Clarke, who spoke at the summit. In the meantime, job seekers should burnish their financial, analytical, and marketing skills, and pursue managerial posts in construction and logistics, she adds.
Lawrence Hollins, president of The Hollins Group search firm in Chicago, notes that eager employers are snapping up sharp MBA grads of all ethnicities. His firm recruits executives earning $400,000 to $600,000 a year, charging at least $150,000 per search. About 10% of the recruiter's roughly 50 active searches are real estate related. “While we don't solely recruit people of color, that's probably 40% of our practice,” says Hollins, an African-American. Plum jobs require exquisite financial skills, including the ability to quickly analyze in one's head key aspects of a deal, the recruiter adds.
The real key to the executive suite is networking, asserts Craig Triplett, managing partner of The LeRoi Group, an Atlanta search firm. Directories don't list ethnicities, so ambitious applicants need to be resourceful, says Triplett, who earned an MBA at Harvard. Gatherings like the summit are ideal for networking, Triplett says. “I ran into at least 10 Harvard grads at this conference.”
— Denise Kalette