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TALENT POOL

Developers scramble to cultivate a new generation of executives

By Joel Groover

Thanks to a hot market and years of outreach by REITs and private developers alike, young job seekers are rediscovering retail real estate, observers say. The demand for enthusiastic students of the real estate arts has never been greater, not only in mature markets such as the United States and Europe, but in developing ones in Asia.

Last year some 400,000 people visited GGPprodigies.com, the Web site for prospective interns at General Growth Properties, says Judy Herbst, senior vice president of human capital. The number of students enrolled at ICSC’s University of Shopping Centers, meanwhile, rose 24 percent over the past two years, even as total ICSC membership surged past 61,000.

“I can guarantee you those aren’t all 50-year-olds,” said Gregg A. McCort, SCMD, director of education. “A whole new generation is coming into the business, and that is what is fueling up a lot of our attendance. The industry has become a magnet again for people with an advanced education who are looking for a dynamic business to be involved in. It is almost back full circle to where it was in the salad days.”

The salad days, of course, ended with the real estate recession of the late 1980s and early ’90s, which, along with the tech-sector frenzy that followed, siphoned off a generation of young people who might otherwise have pursued careers in the shopping center industry.

The lingering effects were apparent five years ago on the campus of The University of North Carolina at Chapel Hill, where students were far more likely to say they were interested in banking or consulting than real estate, said 28-year-old UNC grad Will Ponder, who earned his real estate MBA last August. Today, however, the infamous downturn is ancient history at UNC.

“I was president of the real estate club, and we had 80 members out of two classes of, say, 175 people,” said Ponder, now a capital markets associate at Columbia, S.C.-based developer Edens & Avant. “There is just a tremendous amount of energy around real estate in general right now. … [A] number of my peers have gone into great retail real estate companies, and walking around at [the Spring Convention] this year, I saw lots of folks who were fresh out of business school and excited about the opportunities.”

The level of interest is such that business majors often must compete just to get into a real estate program. Even with an enrollment management system that limits the number of applicants, The University of Georgia now receives double or triple the number of real estate applicants it can accept, says Henry J. Munneke, an associate professor of real estate. “If we didn’t buffer it, we tend to think we’d be swamped,” he said. “They don’t have such a system at Florida State, and they have something like 400 [real estate] majors.” The University of Georgia program, which produces 150 graduates a year, puts a premium on real-world experience. About 80 percent of its graduates serve an internship, and the goal is to raise that number to 90 percent, Munneke says.

Increasingly, real estate students are finding those internships in the shopping center industry, which began to ramp up its outreach to college campuses about five years ago and continues to forge ties with a growing number of academic institutions. The ICSC Educational Foundation once worked with just a few Ivy League programs but has expanded in recent years to support graduate-level study at a broad set of schools, says Sarah Ritchie, manager of the Educational Foundation.

Longtime private developers, too, have taken an interest in the next generation. Kemper Freeman Jr., owner of the blue-chip Bellevue (Wash.) Square mall, serves on the advisory board of the University of Washington’s Runstad Center for Real Estate Studies, while Robert D. Champion, founder of Los Angeles-based Champion Development Group, teaches real estate development at the University of Southern California.

General Growth Properties, Developers Diversified Realty Corp. and other top retail REITs, meanwhile, are beginning to reap the benefits of the initiatives launched partly in response to the challenges of the 1990s. “We mentored more than 140 interns in 2005,” said General Growth’s Herbst. “Ultimately, we ended up hiring 24 that were seniors. We’re really seeing the fruits of our labors.”

By hiring interns and sending its executives to work with students at the likes of DePaul University or the University of Arizona, General Growth aims to spread the word about shopping center careers. Brian Marchal, a 28-year-old DePaul real estate student, typifies the target audience. Not long ago Marchal was a bored civil engineer who knew little about the shopping center industry. “I had no idea what was out there,” he said. “I figured there was running a mall, or you could own a store in a mall.” His eyes were opened after taking a class at DePaul co-taught by Mark D. Bethel, General Growth’s first vice president of development.

In February Marchal, who has two classes left before graduation, took a tenant coordinator job at General Growth. He now oversees retailer build-out plans for a mall in Rogers, Ark. “One of my ultimate career goals is to be a developer,” he said.

Developers Diversified targets recent college grads in a six-year-old recruiting and training program that is the brainchild of top executives rather than the human resources department, says Nan R. Zieleniec, senior vice president of human resources. Before being placed in the field, participants rotate through the company for 18 months, studying transactions, leasing, development and property management with senior mentors.

“It has evolved into a very nice college relations program where we are recruiting at a variety of schools, both business and liberal arts,” Zieleniec said. “We’re excited about the program, and when we look at the retention and placement rate, it is high.” So far 20 new hires have entered the program, and Developers Diversified has tapped several to fill such positions as development director, regional leasing manager and assistant vice president of leasing for the Caribbean.

Edens & Avant, a private company with 243 employees in five offices, has an active college recruiting program and puts new hires through a 24-to-48-month rotation cycle focused on development, construction, leasing and finance. It also rotates them geographically, so that they can experience the way the firm’s urban offices in Boston and Washington, D.C., deal with higher barriers to entry. The program helps the firm deal with what CEO Terry Brown says is a basic reality of today’s labor market: that vacant positions must often be filled with candidates who lack extensive experience in real estate. “Clearly, you would always prefer to get talented and experienced people,” Brown said. “But in a really hot market, you bet on potential.”

Others question whether a fresh face right out of college is really the best fit for an operations-level vacancy in, say, specialty leasing, mall marketing or mall management. Macerich is filling key operational positions by tapping outside talent with related skill sets, says COO David J. Contis, CLS, CSM. “We just hired somebody who was managing the No. 2 JCPenney store in the United States to manage Queens Center,” said Contis, referring to Macerich’s super-regional mall in Elmhurst, N.Y. “We said, ‘Let’s look at these department store managers who have large staffs [and] security personnel, understand the market and have been in the trade area.’ ”

Likewise, Macerich has filled marketing jobs with people who have experience at advertising companies or local chambers of commerce. When it comes to leasing, sales savvy is the key. “If you can sell widgets, you can sell space,” Contis said. “We’re looking at that.”

But Herbst says any influx of young talent will not be large enough to compensate for one sobering demographic reality: According to the Census Bureau, the U.S. will see the senior population grow by nearly 150 percent by mid-century, and the oldest of the 79 million baby boomers will be eligible for federal retirement benefits in just two years. This shift could easily translate into lots of classified ads and “help wanted” signs for the shopping center industry. “We have a shrinking labor pool,” Herbst said. “We’ve been talking about this statistically for years and years, but now it is upon us. It is probably the biggest challenge we face.”

Internationally, the fast-growing shopping center industries in the Middle East, India and China face their own recruiting challenges, notes Ian F. Thomas, chairman of Thomas Consultants, a global retail consulting firm based in Vancouver, British Columbia. While young execs in mature markets like Britain, Australia and the United States can work with mentors to master the basics of the shopping center business, the developing world lacks an older generation of experts. The answer in Dubai, United Arab Emirates, and elsewhere in the Middle East has been to hire from abroad. “In Dubai they are building some of the largest and certainly most successful malls in the world,” Thomas said. “Everybody working on those projects is international, whether they are Americans, Australians, Canadians or Brits. [In the Middle East] they have said, ‘Let’s bring in people who can do this with their eyes shut.’ ”

But China failed to recognize the critical importance of expertise, particularly when it comes to leasing, and has suffered as a result of trying to do too much, too fast, all by itself. “We’ve got this unwritten rule that about 60 percent to 70 percent of the space should be preleased before you press the construction button,” Thomas said. “But [Chinese developers] have no concept of this. They’ll build a 4 million- or 5 million-square-foot mall without any idea who the potential anchors will be. The vacancies are anywhere from 60 percent to 80 percent. It is so frightening.”

These hard lessons are one reason Asian developers are now bringing in experts like Robert F. Welanetz, SCSM, the former head of retail at Jones Lang LaSalle, to run their operations. Welanetz oversees retail investment, development and services in Asia for Charoen Pokphand Group, a Thailand-based international conglomerate, and is CEO of Shanghai Kinghill, the Charoen subsidiary that operates the massive Super Brand Mall in Shanghai. He also is co-chairman of a Chinese department store.

In such rapidly growing markets, grooming the next generation is likely to require a multipronged strategy. At Dubai Festival City, the Middle East’s largest mixed-use development, employees train with ex-pats, go on study tours, take classes through ICSC’s School of Professional Development and also rely on distance learning, according to Phil McArthur, CSM, an ICSC trustee, a Canadian national and a 25-year industry veteran who overseas leasing and marketing for the 1,600-acre project. The future of malls on the drawing board today will hinge on the success or failure of such training efforts, McArthur says. “The key is to communicate the high standards and objectives of our [approach to] development,” he said.

From Qatar to Mumbai, then, the early careers of young executives will be all about doing deals one minute and cramming for ICSC exams the next. Quite a course load indeed.

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