New York City real estate avoided some of the deepest cuts seen during a year of record job losses across most industries.
Despite challenges like a temporary ban on in-person property showings and the spring shutdown’s outsized damage to retail and hospitality, the city’s real estate job cuts were mild compared to its broader workforce.
Across the five boroughs, jobs in the real estate sector fell 6.7 percent last year to 136,000 positions, according to state Department of Labor figures. That amounted to 9,100 fewer jobs industry-wide than in 2019.
Though bruising, those job losses amounted to roughly half the 13.5 percent drop the city recorded across all sectors during that time.
The number of licensed brokers at the city’s four largest commercial real estate service firms — CBRE, JLL, Newmark and Cushman & Wakefield — fell about 8 percent in 2020, a review of state licensing records shows.
“The labor market for commercial real estate professionals has been very resilient,” said Sam Chandan, dean of New York University’s Schack Institute of Real Estate. “There are some sectors that have been impacted more significantly than others. That being said, there’s an expectation of recovery and growth in some subsets.”
On the residential side, close to 4,000 brokers across the five boroughs terminated their licenses between January and December 2020. That amounted to a 9 percent drop from the 63,800 over the previous year, according to recent figures from Corofy, a data firm that tracks broker activity.
The Covid economy is going through what experts have deemed a K-shaped recovery, where workers in sectors hit hardest by shutdowns like retail and the service industry struggle the most, while white-collar jobs that can largely be performed while working from home are doing well.
And while real estate overall largely sits in the upward arm of that K, some segments of the industry performed far better than others. Layoffs at firms last year aligned closely with areas that were slammed by shutdowns.
‘Trimming of the fat’
Jobs that focused on areas like leasing retail space or selling multifamily properties were squeezed in a year when transaction volumes were way off. But those in segments such as asset management that were focused on preserving value, or in areas that remained buoyant like the industrial sector, were safer.
“I think what we experienced at the beginning of Covid were two things: You had a trimming of the fat and the ability for companies to take that time and be introspective,” said Lisa Flicker, a partner at the real estate-focused executive search firm Rhodes Associates. “Some companies cut excess weight, and some went deeper.”
“There’s an expectation of recovery and growth in some subsets,”
Big investment firms made cuts, such as Vornado Realty Trust, which laid off about 70 people. Some businesses like hotels were able to get by for a while on Paycheck Protection Program loans, though for many the money was a short-term fix that only delayed eventual layoffs.
The city’s big commercial real estate service firms like CBRE and JLL went through several rounds of layoffs and cost-cutting last year. Those two companies, along with Newmark and Cushman had a combined 1,274 brokers licensed at the end of the year, down from 1,386 at the last day of 2019, according to TRD.
Not all of the job losses, however, could be laid directly at the feet of the pandemic.
Parts of the industry like retail leasing and multifamily sales had been struggling prior to 2020. Brokers in those fields struggled more than their counterparts who work in areas like office leasing — which had a record year for activity in 2019 — or debt brokers, whose business has been on rocket fuel over the last decade with interest rates at or near zero percent.
In fact, brokers whose business normally focuses on selling properties transitioned to taking on more work selling debt in 2020, as selling loans proved to be resilient business. Some brokers also started doing deals outside New York where the pandemic’s impact was less severe.
Newmark sales broker Brett Siegel and his partner Evan Layne have recently worked on a few recapitalization and debt deals with their firm’s debt team, which is led by Dustin Stolly and Jordan Roeschlaub.
As the market thaws,“the lines between debt and equity will become blurred” for their clients, Siegel said.
Rhodes Associates partner Neda Levy said that since the beginning of 2021, she’s seen an uptick in hiring from companies that want to be able to act when deals bounce back.
“What I keep hearing is, we want to be able to look at everything that hits the market in our asset classes,” she said.