Landlords have increased hiring, salaries and training, report shows

The 71 respondents answered the survey toward the middle of last year. They provided base salary information for calendar year 2017 and incentives-related data for both calendar year 2016 and fiscal 2016. The questions covered position-based information on base salaries, annual cash compensation, long-term incentives and total remuneration. The respondent companies detailed their backgrounds, organizational practices and financial performance, and they answered queries about year-over-year changes to pay and incentives as well. The researchers also asked the companies how they dealt with eligibility, performance measurement and administration for their incentives packages. “About a third of the companies expanded the number of people who were eligible to get long-term incentives, which is pretty typical in a healthy environment,” said Josh R. Anbil, a senior managing director at FPL.

Other questions attempted to gauge the way executives felt about the previous 12 months. “We asked them how their year looked and gave them permission to define that based on whatever criteria were most meaningful to them,” Anbil said. “More than 60 percent of companies said they’d had a better year.” It was the second survey in a row in which the majority of participating companies expressed such optimism.

While gains in the U.S. stock market and in consumer confidence levels have been dramatic, the numbers in the report were, in the main, stable in comparison to the year before. Barring dramatic events like the most recent recession, these metrics tend to move slowly and steadily over time, Anbil says. “Industrywide, it really feels like things are moving toward a plateau, as opposed to being on a rollercoaster ride,” he said. “But plateauing at this level of performance and compensation is not bad news at all. Across many parts of the industry, we are at an all-time high.”

Eighty percent of these respondents were private companies. Owners, operators and developers of real estate comprised roughly 90 percent of the respondents, and the rest were retail chains. Seventy-eight percent of these companies said they had boosted base salaries companywide in 2017. “Among those 78 percent of companies that did increase base salaries, the average increase was 4.5 percent,” Anbil said. “That might not sound like a lot nominally, but, historically, we are used to seeing that figure in the low-to-mid-3s.” Seventy-two percent of the respondents said they expect salaries to continue to increase.

On the employment front, 82 percent of responding companies said they had hired staff over the past year, or had made plans to do so at the time of the survey. When head counts are growing in such a comprehensive way, it is a sign of confidence in the future, Anbil says. “You don’t hire at that level unless you think the future is at least somewhat stable,” he said. “Most of these new hires, by the way, were in leasing, property management, marketing or property-level accounting. These were real-estate-related hires, as opposed to HR or IT.”

The survey data do hint at discrepancies in performance and payouts in an increasingly bifurcated industry marked by winners and losers, Anbil notes. “For example, only 41 percent said they had increased bonuses in 2016,” he said. “However, among that 41 percent, the average increase was 17 percent. That is a big number, especially because we were coming off pretty healthy numbers to begin with.” The remaining 59 percent of respondents either kept bonuses flat or reduced them. “We’re seeing more of a divide or separation within the industry,” Anbil said. “That’s something of a change.”

Another trend is a greater focus on noncash incentives among job candidates, says David Poline, president and CEO of Atlanta-based recruiting firm Poline Associates. Over the past year or so, Poline says, candidates have shown stronger interest in receiving stakes in company profits, investment funds or projects. “At higher levels, there’s more of a desire to have profit participation, a carried interest or true equity, whatever a firm is comfortable in providing, in the deal,” he said. “And companies do seem to be more willing to offer that as part of the overall package.”

Such stakes in development projects typically range from less than 1 percent to about 5 percent, and they are cashed out whenever projects receive permanent financing or are sold. But highly experienced executives with specific development or redevelopment expertise can command more. “I’ve worked on recent assignments where the prospective employers were willing to offer candidates equity stakes in excess of 10 percent in a completed project,” Poline said. “That’s in addition to a package including significant cash compensation. It’s reflective of how much value these employers think candidates with development experience can provide.”

Besides being a powerful draw for strong candidates, such incentives can also be good for the employer’s bottom line, Poline says. “Nothing aligns the two parties’ incentives quite like an ownership interest,” he said. “The candidate has a single-minded focus to do everything possible to maximize the value of the project.”

Meanwhile, the rise of confidence in the economy appears to be translating into a greater willingness among candidates to relocate for the right jobs, Poline says. “People haven’t been as willing to move in the last few years, but now we’re seeing more and more candidates who are expressing a willingness to do so,” he said. “As a result, companies are outlining stronger incentive packages related to relocations. It’s everything from paying for the physical move itself, to a period of temporary housing, to even providing dollars to renters so they can break their leases and move quickly.”

As Poline sees it, job candidates are also more focused on the quality of benefits prospective employers are offering, possibly as an outgrowth of the prevailing uncertainty regarding the U.S. health care system. “The difference between the good insurance policies and the not-so-good ones seems to be greater than ever before,” Poline said. “Being able to show candidates that they’ll be potentially saving thousands of dollars a year in health insurance premiums and deductibles can make a big difference in convincing someone to make a move.”

Over the past year, the candidates in highest demand have been those with experience in successfully developing or redeveloping mixed-use properties, says Rollbusch, and also deal makers experienced with wooing new, traffic-driving restaurants and entertainment tenants. As one might expect, the declining role of regional malls in less vibrant U.S. suburbs means that demand — and compensation — for mall managers in that sector has fallen off, Rollbusch says. “The growth there has been maybe 2.5 or 3 percent, pretty much flat in comparison to the economy,” he said. “Developers are backing away from traditional regional malls in suburbia, so there’s a surplus of candidates in those types of roles.” By contrast, experienced mixed-use development executives who would have made annual salaries of $130,000 or $140,000 a few years ago can now command $175,000 or so, he says.

Meanwhile, salaries for leasing executives with significant experience in doing restaurant and entertainment deals have grown by about 10 percent, according to Rollbusch. “For those who have that entertainment and restaurant experience, which is where retail is going,” he said, “salaries have gone up tremendously.”

The 2017 North American compensation report is available from ICSC. The cost for nonparticipating ICSC members is $2,995; for nonmembers it is $4,995.