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The Onsite Hiring Crisis

Property Management Onsite Talent
September 2017

The flood of new development is creating challenges for apartment management firms to find and retain onsite talent.

Developers delivered 15,522 apartment homes in Dallas last year and another 24,639 are expected to come online this year, Axiometrics reports.

Dallas has not absorbed this much new supply since the late 1990s, and this acceleration places the metro area second nationwide in apartment deliveries behind only New York.

As these new apartments come online, property managers of existing communities become nervous. And rightfully so. Rents are down about 350 basis points from mid-2015 in Dallas, per Axiometrics.

Competing with new communities for residents is part of the challenge that property management companies encounter in supply-soaked metros. The other is the battle to find, hire and retain onsite staff — everyone is competing for the same, limited supply of talent.

“In Dallas, your top talent can be poached by competitive lease-ups; new properties that have $2,000 and $3,000 rents and are able to pay managers 150 percent of what they were getting paid at their previous job,” Pensam Capital’s Director of Asset Management Eddie Reiner says. “Poaching is going on in all the major markets, including [high-performing] Dallas, Houston and Denver.”

In one major market filling up with new development, rumors that one company hired away nearly the entire staff of a competitor by simply offering $2 more per hour are confirmed.

When a company’s top talent is lured away, management firms often backfill those positions by hiring from within. But more often, industry professionals say, the better solution starts with offering more money.

Pay hikes also figure in when companies are offering raises during performance reviews. From 2011 to 2014, Reiner says that Pensam typically offered a 3 percent to 5 percent boost.

“In the past two to three years, the raises have been much more accelerated because [apartment industry professionals] are interacting with other firms and are networking at local apartment conferences and other regional events,” Reiner says. “Regional managers know who the top talent is and can target them. Everyone knows everyone in the industry and everyone knows someone who is doing a lease-up. To maintain a high-quality workforce, we have had to increase pay for some by well over [3 percent to 5 percent].”

Melanie French, Executive Vice President, Operations, for Cortland Partners, says, “Dallas is one of our toughest markets for labor because of all of the new development going up,” she says. “Newer properties tend to pay more, so it’s much more competitive.”

The Bainbridge Companies has increased compensation by 15 percent to 25 percent during the past two years, according to Kevin Keane, Executive Vice President and Chief Operating Officer.

To recruit and retain onsite staff, FPI Management has increased salaries and its housing discount.

“We have to so we can remain competitive,” San Francisco-based Vanessa Siebern, a Vice President at FPI Management, says.

Class B and Small Markets, Too
Finding labor in high-delivery markets such as Washington, D.C., Dallas and Seattle has always been competitive. Today, that trend is also apparent in smaller markets that are thriving and at Class B properties that find newer developments opening in their neighborhoods.

“In a market like Des Moines — where unemployment is 3 percent and the job market is not so deep — onsite staff turnover becomes a huge inconvenience,” Reiner says. “It is not easy to find a qualified manager who is waiting in the wings to take over a property in Des Moines. The same goes for Pensacola and Jacksonville.”

Class B owners are struggling in markets like Dallas because their employees are being targeted by communities in the lease-up stage who offer new-lease bonuses and “ridiculous compensation packages that a stable class A and B community cannot compete with,” Reiner says.

A better salary and the opportunity to sell new, luxury Class A product is exciting for some.

“A lot of people want to work in a shiny, new building where there are higher commissions,” says Tracie Yoder, Senior Vice President US Residential, based on the Gulf Coast region.

The Maintenance Quandary
History shows that maintenance worker supply and demand follows patterns of construction jobs. From April 2006 to January 2011, the construction industry lost 2.3 million employees — that’s a number greater than the population of Houston.

When the construction market slowed, some of those workers took maintenance jobs in the apartment industry, according to Chris Pilato, Vice President of Construction and Development for CAPREIT. Others moved to other industries, retired or were immigrants who left the United States altogether.

The construction industry workforce has shrunk by more than 1 million workers since 2005 when 11.5 million were employed. The pool fell to 10.6 million in 2010 and to 10.4 million in 2015. BuildZoom's Chief Economist tells Bisnow that part of the problem "is young workers do not find physical labor and construction work attractive."

Now that development is booming again, some maintenance technicians are switching back to higher-paying construction jobs. For apartment developers, that is a good thing. But for property managers, it adds to the challenge.

Siebern, of FPI Management, based in California, says that the construction companies she talks to tell her that contractors are turning down projects because they are unable to hire enough labor to support the project.

“You can swing a hammer and make $20 to $30 an hour,” Siebern says. “Our entry-level salaries cannot compete with that.”

Fogelman Management Group Chief Administrative Officer Melissa Smith battles with HVAC repair companies for maintenance personnel.

“HVAC companies are hiring anyone who they can and then having them gain certification,” she says. “With so much development going on, anyone who can find skilled workers are hiring them and paying them a lot more [than normal].”

Relocating Staff
For other apartment firms, staying competitive means transferring talented onsite staff into hot markets. Camden and Bainbridge staffs its lease-up communities with internal candidates, grooming their high performers to work at newer assets.

However, Keane says that when relocating staff, the company must be prepared to offer relocation packages and higher salaries.

“I don’t see candidates who want to move for an equal or lateral compensation package,” Keane says. “We have to do whatever it takes to get folks to come into some of these markets.”

Yoder says US Residential finds that a company’s culture—as well as salary offerings—plays a big role in convincing new hires to come or existing staff to stay.

“When I interview onsite managers, it often still comes down to the company,” she says. “Some people will move for 50 cents, but most folks want a solid company to work for with good values and good benefits. We are competitive in that sense.”

More Job Openings, Higher Salaries
The number of job openings nationwide continues to spike, while hiring stumbles along, according to a report in August from the U.S. Department of Labor.

The U.S. Labor Department reported that job openings vaulted to a record 6.16 million from 5.7 million in May while hiring decreased, evidence of the difficulties companies are having finding suitable employees.

Construction jobs continue to show up prominently on the Department’s survey, which in turn, affects maintenance staff hiring in the apartment industry. There were 62,000 more openings posted in construction, bringing the total to 225,000, which ranks second in openings only to manufacturing on the survey.

With a national unemployment rate of 4.3 percent through June 2017, competition is likely to intensify in more than just the apartment industry. And with that, companies and their employees can expect salaries to increase.

Minneapolis Fed President Neel Kashkari told business leaders prior to the Labor Department’s release that companies should be raising pay aggressively if that is the case.

“Are you really struggling to find workers? If so, the proof for me is you are raising wages. If you are not raising wages, then it just sounds like whining,” he said, Marketwatch reports.

Average hourly pay has been growing at approximately a 2.5 percent rate, slower than the 3 percent to 4 percent growth more typically seen during an economic expansion. – The Wall Street Journal; Marketwatch

10 Ways to Solve the Labor Crunch

  • Cortland Partners looks to its construction teams to help supplement its maintenance staff. “For properties under construction or in renovation, those working for our construction teams would take over the make-ready process to help expedite immediate move-ins,” says Clay Landers, EVP of Construction at Cortland. “This allows the facilities team to focus on residents’ needs.”
  • CAPREIT often relies on training its employees for open positions. “We would rather train than hire because hiring is difficult,” Pilato says. One potential negative about investing in employee training, Pilato says, is that the company could simply be improving an employee’s résumé, and then watching that person leave for a better opportunity. “That is something we are cognizant of, especially when it comes to training for air-conditioning certification and project managers,” Pilato says. “If you train someone to be HVAC-certified, what is to stop him or her from going to a company that pays a couple of dollars more?”
  • Camden says that hiring through its network of current employees is more effective than finding people through job boards. “The biggest and best recruiting tools are our people,” says Kevin Smith, Director of Recruiting for Camden. “We really promote our referral program. It gives us better employees. It brings in people who already have a connection to us.”
  • Employer review sites can prove to be a lure for new hires. Much like consumers use Yelp, job seekers visit review sites such as Glassdoor before they decide to take a job. In turn, companies encourage their employees to post about the positive experiences they have. “We value our associates’ having good experiences,” says Cristina Sullivan, COO at Gables Residential. “When do, we know they will talk about it.”
  • Several colleges and universities offer a major, minor or area of concentration in residential property management. Among them: Virginia Tech, University of Georgia, Drexel, Ball State, University of Alaska, University of Wisconsin (Stout), Georgia Tech, University of North Texas and Valencia College. Program graduates are ideal job candidates.
  • US Residential identifies industries that are shedding jobs and, if those positions have responsibilities that are compatible with apartment management, it tries to reach out, says Laurie Lyons, Executive Vice President of Client Services. “These employees could be qualified to become our next maintenance people or work in our leasing offices,” Lyons says.
  • FPI Management formed a team of property managers and human resources staffers whose sole focus is to recruit new team members.
  • Darby Development Company, based in Charleston, S.C., touts its prime location as “one of the top vacation spots in the country,” says Victoria Cowart, CPM, Vice President of Property Management. She advertises jobs on Craigslist websites in other parts of the country to entice workers to move to her area. As a result, her company has hired people from Arizona, Tennessee, Florida and Virginia. “Our location gives us a competitive advantage when it comes to lifestyle,” Cowart says.
  • Cortland Partners, to focus on its residents’ needs, has found success by promoting jobs that include non-traditional hours, such as keeping its leasing office open until 8 p.m. four nights a week. This helps recruit college students, military spouses and other people who may want to work part-time, unconventional hours at a reasonable hourly rate.
  • When Western National had difficulty hiring porters, it hired a third-party cleaning service, says Regional Vice President Scott Wickman

NAA Education Institute RPM Careers Site Drives Hiring
The NAA Education Institute has a variety of resources available to help boost your success with finding qualified talent. Launched in 2014, RPMcareers.org is a one-stop shop for both job seekers and employers. Recruiters can easily: 

  • Post open positions in the career center.
  • Participate in the RPM Career Launcher program, designed to tap qualified talent from outside the industry and quickly ramp them up to be superstars.
  • Post an event on the RPM Careers interactive map and let us promote it for you on social media.
  • Download college outreach toolkits for successful campus hiring events.
  • Link to RPM career videos or order career brochures to help promote career pathways on your website and at career fairs and events.

Please contact Sarah Levine for information on these and other resources to help with your workforce development needs.