Real estate-related companies are shifting gears to cope with a slowing market, looking for recession-resistant lines of business and, in some cases, dismissing employees as they try to cut costs.
For the most part, commercial developers and real estate brokers in the Baltimore area report that they are making only modest employment cuts, with almost all of them through
attrition. Statistics from the state Department of Employment and Economic Development show that employment in the finance, insurance and real estate sector is actually higher than it was in 1988.
The number of Maryland jobs in the finance, insurance and real estate sector rose to 134,500 in July, up slightly from yearly averages of 131,300 in 1989 and 129,100 in 1988, said Curtis Kane, spokesman for the Employment and Economic Development Department. Unemployment in the sector averaged only 1.3 percent last year, according to department statistics reported by economists at the University of Baltimore. (This year's rate is not available yet.)
"Basically, we're timidly watching what's going on," said Richard Alter, president of Manekin Corp., a commercial broker/developer in Baltimore.
Mr. Alter acknowledges that Manekin decided months ago to cut out the job of its director of market research, and the company's remaining market researcher has been told more recently to look for another job. But he said that overall cuts in staffing have been "nothing appreciable" and have come mostly through attrition.
Mr. Alter said Manekin has considered slowing down construction of some office space slated for delivery next year, and is using stricter guidelines figure out whether the market is strong enough to move ahead on later phases of ongoing projects such as office parks.
But Mr. Alter said that Manekin has had a good year so far leasing space in its office developments, which include the bank of Baltimore building downtown and the Commons Corporate Center near Baltimore-Washington International Airport.
A major competitor of Manekin's in the brokerage business sounded a similar note, saying that it's concerned about the office leasing market but able to drum up business in other services it offers.
"Certainly the market isn't great and our marketing income isn't great, but frankly we're not worried," said David Frederick, chief operating officer of W.C. Pinkard & Co. in Baltimore.
"We probably have a net addition of people, and we're at worst stable."
Mr. Frederick said Pinkard hasn't laid off any staff, but does say that two of the firm's 25 brokers have left and aren't expected to be replaced soon.
But he said people have been added in some of the other business lines which Pinkard is counting on to help it ride out the market's trough. "Those businesses are going gangbusters," Mr. Frederick said.
Pinkard is trying to boost its presence in less cyclical real estate areas such as property management, Mr. Frederick said. It has formed a workout group to help banks and developers evaluate and manage troubled real estate assets, a business that could also generate brokerage clients as the market improves.
In much of its workout business, Pinkard wants to work for disgruntled limited partners who have forced out general partners or for banks that have seized property in exchange for bad loans.
Real estate professionals say that if the market gets bad enough to cause an increase in layoffs developers will probably have to cut back first. Real estate brokers, who have lower overhead and less debt than developers, will be able to hold off their firing longer.
"Most brokers are on commission," said James J. "Joe" Casey, president of Casey & Associates in Baltimore. "When their incomes decline, they begin to look for alternate employment" without waiting to be fired, he said.
In the meantime, some companies are turning to alternatives such as government work that aren't very much affected by the economic cycle.