With the macro landscape still unclear, and so many profound changes in the last few years, many hoped for a more stable 2024. However, change and adjustment are likely to be themes for this year too, as boards plot their way forwards in a higher interest rate environment. A rate environment which has caused so much havoc already, after a dreadful pandemic which also brough challenges to so many sectors. With M&A activity still remaining subdued, real estate debt advisory has emerged as a busier area, creating demand for skilled professionals with knowledge of the intricacies of debt financing within real estate.

Amidst the subdued M&A environment, real estate debt advisory space has definitely shone brighter from a hiring perspective, driven by several key market factors. A confluence of higher interest rates, continued inflationary pressures, and sluggish public markets compelling firms to explore alternative avenues for capitalisation - particularly in real estate. Investment banks and debt advisers have returned to offices, which has talent attraction and retention implications, but as we all know in many other sectors hybrid working or working from home remains. This is creating real uncertainties over many areas of commercial real estate, and in particular the office sector. Please see my recent interview with Sandy Wilson, Real Fund Manager, at Northtree Investment Management. As I write this, it’s also been reported in the Telegraph that German office valuations have plummeted. With these uncertainties looming large over the commercial real estate sector, the demand for debt advisory services within the real estate sector has grown at pace.

In this sort of landscape, the quality of talent in real estate debt advisory becomes more important than ever. At Fram, we've witnessed a real increase in demand for skilled professionals with execution experience at Senior Associate and VP grades. The ability to navigate intricate deal structures, analyse cash flows, and evaluate financing options has never been more crucial.

The impact of returning to offices for IBs and debt advisory firms? Well remote working was hard for many teams. How can you interact on modelling remotely? For many firms it was a challenge. In person working makes collaboration easier and increases cohesion. Junior colleagues can be more effectively mentored and can learn from those around them. However, the trade-off is that having got used to having some flexibility, some experienced individuals are keen to hold onto this. We’ve definitely seen instances where irregular hours and 100% office attendance has worked against hiring firms. For many leaders this mindset would have been unthinkable pre-pandemic, but this is environment leaders are now operating in. For boutiques, this isn’t as much of an issue, they don’t need to find 100 people who agree with their set-up, but boutiques for the most part don’t pay as well as large banks. Therefore, it’s a tightrope act for senior leaders at all firms to find what works best for clients and their business, while at the same time making themselves appeal as an employer to colleagues with diverse needs.

Looking ahead, the volatility and uncertainty in the market are likely to persist, necessitating a proactive approach from firms in building and maintaining a consistent pool of talent. In such a dynamic environment, adaptability and flexibility will be paramount qualities sought after in professionals across all levels. Firms need to cultivate a diverse workforce equipped with a wide range of skills and expertise to navigate the ever-changing landscape effectively. This calls for investment in talent development programs, cross-training initiatives, and fostering a culture of continuous learning and innovation. By nurturing a versatile talent pool capable of swiftly responding to market shifts and client demands, firms can position themselves for resilience and sustained success amidst turbulent market conditions.

Moreover, the evolving nature of work and the shifting preferences of the workforce underscore the importance of adopting a flexible approach to talent management. Recognising that one size does not fit all, firms must embrace diversity and inclusivity in their talent strategies, accommodating the diverse skills and needs of their employees. By fostering an inclusive and supportive work environment where individuals feel valued and empowered to thrive, firms can unlock the full potential of their workforce and drive innovation, growth, and competitiveness in an increasingly volatile market landscape.