In today’s tight labor market, finding and keeping great talent is every company’s greatest challenge. And choosing the wrong office location could spell immediate disaster—for companies and the brokers that helped them.
That’s where workforce data comes in. When you know where talent lives, how far they commute, how much money they make, and so on, you can advise clients to make a smarter, data-informed decision about where to do business.
Rick Hughes: Executive Managing Director, Cushman & Wakefield
Evan Stair, Senior Vice President of Data and Analytics, ESRP Advisory
Xander Walbridge, Director, Transwestern
Here are some of the highlights.
Eric: When are you starting to bring labor to the table, presenting it to clients? Is it day one, or is it once they start asking for it? Time frame-wise, when do you start to present workforce data?
Rick: Well, learning that information is power and that everybody is fighting for labor, we lead with it. We lead with the tool. A lot of brokers will basically go in and say, “I know all the landlords, and I know all the buildings.” And, you have to know that. We embrace Emsi’s tools and we walk in with the service up front. I can offer up a different narrative that I can help you with your business, not just your real estate.
We did a national deal representing a major helicopter manufacturer that was headquartered in Arizona. And we did an incentives RFP. The owner of it wanted it to be Texas, maybe Louisiana or Oklahoma City. So, we got the incentive packages and there was $117 million on the table to go to Shreveport. There was $53 million to go to Oklahoma City and there was only about $28 million to go to Dallas. Their employment force was predominantly welders. And the largest percentage of the skilled workforce was welders that could weld precious metals.
We determined because of the oil field rush in northern Louisiana and a similar one in northern Oklahoma, we had to pay welders $3.50 more an hour. When we started looking into labor over a period of time, those incentives were used up in 7.2 years in Louisiana compared to Dallas, which was the lowest cost for labor. Again, same with Oklahoma. The labor was there. There were plenty of welders. But they were getting paid time and a half working 70-80 hours a week in the oil fields. It’s about all the costs. Labor is the largest cost every company encounters. So, we lead with labor as part of our practice.
Mike: Labor should be one of the things you drive with. A lot of the time, though, it’s still on the back side. Here, we have these three opportunities, or here’s these three locations. Let’s do a labor analysis on these three locations just like you would do a demographic report on a retail site. So it’s the back end of it. Because the client needs to have some additional information to help solidify their decision.
Rick: It’s also commute and being able to identify where your labor is and how the commute patterns are. So, I guess once you see the success of Frisco, it’s almost like a second city. It’s a second center. We have clients that are law firms. They’re in Fresco now and they’re in downtown Dallas now because it’s a completely different market.
So, we use commute time as well, from identifying your existing employees and finding out where the next employees are going to come from. And we show them where they live.
Evan: We use it all the time, like from start to finish. Because if you put a client in a spot, they tend to remember that they had a crappy experience like five or 10 years after the fact and who did it for them, and why didn’t they all of a sudden present this thing to them. So, it’s really simple. You just pretend like it’s your business and all the things that you would consider, and then we present that to everybody.
One of the first things that could go wrong is not having people there to work. So, you nail that down, assure them, show them the population, show them the demographics, show them the crime, show them everything. You educate them about what food is around. So you do a complete service job for the client instead of just telling them square footage or how much it’s going to cost.
Xander: Before we do a deep dive with client and start developing strategy and whatnot, when we’re just strictly going into a pitch, knowing that we’re up against three or four other firms. We really don’t mention real estate in that initial pitch at all. Brokers tend towards “this is the rent, this is the absorption, that’s an appendix of past deals they can look at later.” Everyone knows that when you get into a meeting and you start putting up slides, you guys have a roughly 0% chance you’re going to get through the entire thing. So, you’ll spend four slides just small-talking. And then it’ll be up, oh, there goes the hour. So we always make sure that we talk about what’s really important. And it’s going to be labor most of the time.
In these conversations, the prospects become so much more engaged when we start talking about pain points that they see every day. Not a pain point they see every 10 years when their lease is up. It makes me think that the three or four firms that pitched before us probably just talked about real estate and how many deals we did last year, and we have 4,000 offices, etc.
Rick: You talked about using it to lead off, and that’s something that we do. But, at times, we use data to close, or to get approved. Several years ago, we worked with a stock brokerage firm in City Place. And they wanted to be in the Crescent. Going from City Place to the Crescent, that’s going from $18 a foot to $45 a foot. And so, the managing partner reported to the regional guy in Houston who didn’t really know Dallas, who reported to the head of real estate in Toronto.
So, neither the Houston or the Toronto guys really understand the dynamics of the Dallas market. So, they said, “Help me convince management.” So we put together their business case that went to Houston who says, “Oh, I didn’t know that.” I sent it to Toronto. Toronto’s going, “I really don’t want to pay that much.” But I used statistics that said there are more stock brokers in Crescent than there are in about all the buildings starting about a mile north of downtown, all the way to LBJ. They’re all in that one building. So, we use statistics, demographics, and labor information not to select the place, but to confirm the place. So that’s another way we use data.
Eric: Over the course of your career, have you seen changes that made labor more important in decisions? Is that a client-side change, where tenants are asking for it more? Or is it an internal change where you are trying to present more expertise? Maybe both?
Rick: Companies today are trying everything they can to find and keep talent. So, a whole lot of changes in the real estate business are really a dive to make it more attractive for somebody to come work for them.
Mike: I agree with that. You’ve mentioned that talent is becoming the number one, or keeping the talent, and finding the locations where the talent exists are becoming more and more important for occupiers of space, especially in the office sector. Labor analytics aside, just look at what is being done to your office spaces now that wasn’t being done five years ago to keep you at your company. It’s newer amenities. It’s live, work, play.
I would say that most people in our industry don’t understand or recognize that we can actually show them information at a micro-level, at a ZIP code level. If you are looking to hire software engineers in DFW, where should you really be?
Having access to tools like this [Emsi] makes it a lot easier to visualize and show that client, “Okay, here is where the people are, now let’s go find you and see what real estate options exist in there.”
Evan: Everybody’s getting smarter. They’re getting on here [gestures to cell phone], going on YouTube, they’re asking what makes good real estate deal. And all of a sudden, you have this information at the ready. So, because you have the democratization of information and everybody just gets more of it, and then you got to up your game to actually be the professional to match that level that they just upgraded to.
So, whenever a company is considering Dallas, they are doing the exact same thing. All of a sudden, they are aware of all the screw-ups their company has encountered, and they learned from that. Now they are asking questions, and one of their main things is labor. Because a lot of these buildings are getting cheaper. Because I can give you a lot of cheap land in the desert, give you the best price in the world. But there is nobody there to work your company.
Xander: So I think there are a lot more real estate decisions to be made around labor. And I think that the understanding of labor is your highest cost for an office-using client. So the marginal difference in moving out to the desert or out to the suburbs and maybe saving 40% on your real estate cost is going to be massively outweighed by losing half your workforce, spending months trying to rehire, etc. All those recruiting costs and things like that. We need to realize that, in meetings, I might have my brokers next to me, and the client across the table. But the client is not only being represented by a CFO or a head of real estate, but also heads of HR and recruiting. We need to speak to their pains as well.
For more information on Emsi and our workforce data solutions for real estate, contact Eric Walker at firstname.lastname@example.org.