More real estate pros expect their 2024 compensation to be higher after last year’s decline, despite continued weakness in the investment-sales market.
Some 71.5% of staffers surveyed by executive-search firm Jackson Lucas said they expect compensation, inclusive of salaries and bonuses, to increase this year. That’s up from 69.5% who held that view at yearend, but still behind the 76.8% in 2022. Another 27.1% believe their payouts will hold steady in 2024, up slightly from 25.8% at the end of 2023.
The result follows a 3% decrease in compensation last year, driven largely by a 12% drop in bonus payouts that defied staffers’ expectations at the time.
In the latest survey, conducted via Jackson Lucas’ Personal Salary compensation-data platform, far fewer pros anticipate another decrease in compensation. Just 1.4% of the 214 respondents said they think compensation will decrease, down from 4.7% last year.
Frank Cohen, a senior advisor who oversees Jackson Lucas’ compensation practice, noted that staffers tend to be optimistic that pay will continue to improve or stay the same — which is why last year’s uptick in predictions of a decrease was unusual. That such pessimism diminished in the latest survey indicates that the “boots on the ground” think property values and the investment-sales market have stabilized.
“It’s a good indicator of where folks see the market,” Cohen said. “It suggests that we’ve reached the bottom, or employees think that they have reached the bottom.”
To be sure, there were variations across asset classes. Notably, 9% of pros working with office properties, the hardest-hit sector, are expecting another pay decrease. That’s up from 7% last year and none in 2022.
Last year’s decline in compensation coincided with a 52% year-over-year decrease in property sales of $25 million or more. The first half of 2024 isn’t faring much better, with lower volume posted again in the office, industrial and hotel sectors so far.
It may be too soon to tell whether firms will look to cut payouts again, and most are pushing off the planning process until after Labor Day, said Lisa Flicker, head of real estate at Jackson Lucas. “It really was a tough cycle,” she added, and “there is still a bit of a mismatch” in terms of expectations.
Jackson Lucas was founded in 2017 by Chris Papa and Anthony Fanzo. Starting last year, the firm merged its dataset with that of Personal Salary, which gathers compensation information directly from commercial real estate staffers. To take the compensation survey, go to jacksonlucas.com/survey.
From Green Street’s Real Estate Alert