I am new to the industry (less than a year out of MSRE) and wanted to get a better understanding from more senior guys what it was like at your firm in 08-09 recession.
Did people get the ax? Specific departments? Senior or Junior guys?
Insight greatly appreciated.
I can only speak to CRE at large, but this environment is brutal when the economy isn't strong. You'll be dropped like a bad habit the moment the prospects for your company start to sour.
Today I work for an institutional real estate investor (not exactly PE, but with similar economically structural attributes). If the economy turned such that our portfolio started to hemorrhage cash then my assumption is that personnel would be the first thing to go.
I'd be interested to hear what people currently in REPE have to say about it. Are acquisitions personnel likely to get struck from the firm in lean times or are they likely to remain to take advantage of good property values? I would assume that would be a company-by-company decision based on the resiliency of their portfolio and access to capital.
I would assume that the groups in capital deployment are the first to go (acquisitions/development) and the Asset Management folks will have to stick around to manage the investments or liquidate the portfolio
A very smart and renowned executive who has survived many downturns told me his approach is to be extremely cautious about adding certain people in good times because he knows that things can change any moment.
Right this second I can't think of a consistent rule. People in REPE can definitely get laid off, both junior and senior.
I'm at a large life co (Pru/Met/TIAA) and we kept super senior/well liked/connected acquisition people (they still purchased/lent, just at a much smaller clip), moved the rest of the keepers to dispositions and then cut lower levels/small producers. Shops don't cut the people with Rolodexes and relationships - but they sure as hell didn't get any sort of sizable bonuses those years.
AM all stayed. Servicing all stayed. Distressed/workout group was created (included a new hire or two) and then later disbursed back into other groups when things were better.
Most of the shops I know of tend to run fairly lean to begin with, so there isn't a lot of cutting to be done when there is a downturn unless the whole shop goes under.
I have a friend at a CMBS servicing shop that had a 5% staff reduction in 2009 (all open positions) and another at a small AM that had no cuts.
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