New York US Hiring Trends – Private Equity
Real Estate Private Equity Trends:
It’s been nine years since the end of the last recession and while the markets’ recovery has in many ways surpassed expectations, real estate investors have continued to expect another downturn and the only uncertainty has been timing. Over the last few years we’ve witnessed record-breaking capital raises and an increasing influx of new players; however, overall deal flow has been relatively weak. The most consistent theme that we’ve heard from clients and candidates across the investment spectrum is: there is an abundance of dry powder, prices and competition are high and returns are lower. As of June 2018, dry powder held by closed end private equity real estate funds stands at $278billion according to London-based alternative investment research firm Preqin. In addition, there continues to be increasing appetite for debt funds of various strategies that offer higher downside risk protection.
What does this mean for hiring trends?
The current real estate investment conditions have influenced hiring trends in several ways but as recruiters we have seen the most impact reflected in: the functional roles in high demand, shifts in traditional career paths and new opportunities for real estate investment professionals. From our private equity clients, we have seen a high demand for talent in asset management, portfolio management and loan origination. Across the board, investment banks have faced their own unique challenges with talent in retaining strong talent with 3
rd & 4
th year Associates. While the desire to transition to the buy side remains strong, many Investment Bankers have been forced to either stay put or look elsewhere for their next career move. Traditional private equity hiring for Acquisitions roles has been extremely competitive and hiring managers have prioritized candidates with strong asset level modeling and valuation skills and existing experience within the scope of their strategy. The impetus for hiring in these roles have been generally due to attrition and lateral moves vs an overall increase in headcount with the exception of family offices and smaller boutique platforms who have remained very active often due to their flexible capital.
Investment Bankers have decided to explore career paths in corporate advisory, capital markets or investment sales. For those still hoping to land a position on the principle side, many see investment sales as a strategic career move to gain asset level investment experience with institutional investors and be better positioned down the line with a more well-rounded skill set for future acquisitions roles.
New trends in the real estate investing and technology have also had an impact on hiring. With the sudden influx of new real estate PropTech/ FinTech companies coming to market and the increasing the appetite for Real Estate SaaS, real estate investment professionals are well positioned to take on a major role in disrupting the real estate industry. Whether its Real Estate Saas to help power the competitive landscape in the luxury residential market, improve co-living and community driven spaces or joining a
platform that has developed a cloud-based deal management platform for institutional investors, the entrepreneurial opportunities are out there.
Raising interest rates and what it means for local owner/operator/developers
Earlier this summer the Federal Reserve raised its benchmark interest rate for the seventh time since late 2015 and both U.S. consumers and investors are seeing its impact clearly. In New York, home sales have been falling for three consecutive quarters and increasing supply, sales in Manhattan fell 17percent at the end of the second quarter, according Blomberg News. Multifamily has been hot since 2010 and the slow down seems inevitable at this rate. In this new lower-yield interest rate market as the gap widens between what sellers think their property is worth and what buyers are willing to pay investment professionals at owner/operator/developers are seeing this slow down and beginning to look for opportunities elsewhere in mid-size platforms with a wider investment strategy and geographical reach.
While overall hiring has been consistent for the North American real estate platforms, the shifts that have had the most impact in market have been the types of platforms that have had the highest demand for talent, the functional roles that are in demand as well a departure from the myth of a “traditional” career path.
For further information on Real Estate/Infrastructure in America, please get in touch with our New York Office.
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