The commercial real estate industry has remained relatively strong and compensation is on an upward trend despite the residential market’s significant difficulties, according to the 2008-2009 Compensation Report, recently published by the National Association of Industrial and Office Properties.
The 132-page report, conducted by survey every two years, highlights compensation and benefit levels for 44 employee positions in the commercial real estate industry. Nearly 150 NAIOP member companies responded to a survey, reporting information on more than 5,800 employees.
Among the report’s key findings:
• Size of company is most significant. Employee compensation showed a direct relationship with size of the company for nearly all staff positions. Larger companies typically pay more than smaller ones. CEOs in companies with annual gross revenue of $5 million or less, for example, earn a median total compensation of $175,000. Those in companies with annual gross revenue more than $100 million, however, earn a median total compensation of $712,800.
• Ownership Type makes a difference. Companies that are publicly traded and REITs tended to pay the highest levels of compensation. Using the Chief Financial Officer as an example, median total compensation for REITs was $460,000, while private companies paid $267,200.
• Merit pay increases are on the rise. The average merit pay increase reported for executives in 2007 was 8.3 percent; managers received 5.9 percent; and other employees received 4.9 percent. Average merit pay increases were higher in 2007 than those reported in 2005.
• Incentives and perks are critical. In addition to cash compensation, incentives and perks are an important ingredient in attracting and retaining quality employees. The most popular short-term incentive surveyed was the annual performance bonus, with 93 percent offering this incentive to all or some of their employees. Other short-term incentives surveyed include bonus based on profits (65 percent); commissions (31 percent); and overrides (10 percent).
• Employee benefits retain importance. The cost of providing employee benefits, especially health insurance, has risen sharply during the past 10 years. Insurance benefits are a major component of an employee benefit package, with more than half of the responding companies offering medical coverage, life insurance, dental benefits, disability insurance and a vision plan. Less than half offered long-term care insurance.