With Tech and Goldman layoffs in full effect, do you think any RE companies or RE groups within banks have a doomsday coming?
Has anyone heard of or experienced any layoffs within the last few months?
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Probably but depends on the role. Transaction activity has come to a screaching halt. This shouldnt have been a surprise. Cost of debt rising rapidly, but sellers not adjusting cap rates yet. CMBS is essentially dead right now. Acquisition focused positions are going to take a hit. However, asset management will get beefed up. Depending on the firm, I have seen several shift the Acq team to AM to help with defaults, REOs, etc. If you're a purely focused development shop or acquisition shop, things might be rough for 2023 unless your backed by equity that has super low IRR requirements.
I’ve started to see layoffs on the acquisition side within my network. I’m assuming it’s going to start ramping up as the market has ground to a halt and companies will need to cut costs to survive.
I dont think you will see layoffs per se, because many CRE jobs are commission based. But what I'm seeing now on the leasing side is people starting to leave the business, which isnt necessarily a bad thing. Very few leasing people are making any money and the office investment sales market and debt markets are pretty much frozen up. A lot of younger guys who cant go too long w/o a paycheck end up going to tech sales. Some of the older guys who were coasting and making good money are now making minimal $$ and leaving to retire or pursue other opportunities. So its not layoffs, but it has a similar effect.
Distressed funds staying busy. Someone’s gotta buy the notes banks are selling
Where have you been? Layoffs in RE started several months ago…
Major market, haven’t seen it at all.
Major market also. Have heard about it all across the country. Imagine it’s going to only get worse before better.
Just moved from Acquisitions to AM…. Can’t even complain because transaction volume is so low it doesn’t make sense to bring on a full time analyst when you can just hire an intern for Pennies. Like it sucks but I get it.
Know shops that have the same thoughts. Nothing going on, no need to hire full time fine having 2-3 interns that work for $20-$30/hour.
Yea exactly. On the bright side, the shops I was in talks with let me know that they’d be hiring full timers in 6-8 months and I’m at the top of their list of candidates. I also have a guarantee from my prior shop a year down the line. I’m currently making around 95k all in, in AM recently out of undergrad so I can’t complain. Just gonna do my time and dip.
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How many people did Goldman lay off in their REPE division? That’s your answer
Developers is a different story though
They have one?
Yeah they have several very large discretionary debt and equity funds. Like several billion each
CMLS in Canada (2nd largest non-bank lender) laid off 15% a week ago. Mostly in the small debt $2M multifamily financing department, gov. insured similar to fannie mae down in the states
We're a small west coast value-add REPE with 75 employees so grain of salt. We'll be laying people off this week. But doing so will allow us to sustain ourselves through a recession, even if we're operating at a sizeable loss.
I'm one of the lucky ones (AM). I'll report back with details of the layoffs. Word of relevant advice - office optics is important.
Can you clarify what your company does?
If you’re a REPE fund (eg a capital allocator), 75 employees is a lot and you would likely manage several billion $. My company manages $4bn of equity (maybe $10bn of real estate?) and we have like 30 employees. But that’s because we’re just a capital allocator and not an operator - we don’t have an operations team, leasing team, construction team, etc.
I’m just clarifying because there’s a big difference between a REPE fund like Artemis laying people off and a multi family operator like Tides Equities laying people off. You can call them both REPE, I don’t care, but one is hemorrhaging money right now and the other is not because they’re fundamentally different businesses
Yeah, no problem. We're strictly a GP, manage $1B in RE assets and do $1-30MM value-add repositioning with in-house acquisitions, AM, PM, accounting, and leasing. I intentionally gave a larger range to be discreet. But we're more like ~50 employees total.
Does that clear things up?
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