Even as the fallout from a landslide of big tech layoffs crumbles in Silicon Valley (and alley), the real estate proptech sector is reluctant to admit that it will suffer a similar fate.
Some proptech industry executives asked questions earlier this month about the state of corporate hiring and layoffs heavily pushed back on the idea that real estate tech startups will suffer a fate similar to giants technology Meta, Salesforce, Booking.com, Twitter and Lyftamong other things making mega-discounts.
However, no proptech startup founder or industry venture capitalist answered PropTech Insider’s question about layoffs in their company or portfolio. Does that mean there were no cuts? Not necessarily, but nobody likes bad news, do they?
“We are still hiring quite actively,” said Julien Bonneville, CEO and Founder of Guarantors, a fintech-proptech startup that provides insurance products and financial solutions to owners and occupiers of residential and commercial real estate. “We’ve probably doubled the size of the team in the last two years. And we still have many vacancies, probably 15 vacancies right now. It’s really business as usual, because we’re hitting a lot more targets.
Founded in 2015 and based at 1 World Trade Center in Manhattan, TheGuarantors has 200 employees, Bonneville said. He added that the company The engineering team has hired 17 people in the past four months, while the company has made “significant additions” to marketing, IT, security and product functions in 2022.
This difference between proptech and tech in regards to recent layoffs is kind of built in. Unlike some of the huge tech companies whose hiring was driven by vast venture capital investments, which in turn require significant and rapid growth to produce returns, proptech startups are often more conservative in their growth prospects. , regardless of the overall macroeconomic situation.
“A common challenge for tech startups is that they hire too many people too quickly, and then in times of economic uncertainty they are forced to lay off large parts of their team,” Bonneville said.
Meta is an example of a Big Tech company that is growing too quickly. Parent Facebook and Instagram hired more than 27,000 workers in the pandemic years of 2020 and 2021, along with another 15,344 in the first nine months of 2022, according The Wall Street Journal. Earlier this month, Meta announced that it was laying off 11,000 employees, or about 13% of its workforce.
Likewise, a reported 44 proptech companies across the United States, many of which have been negatively affected by soaring mortgage rates, have laid off workers.
While he doesn’t necessarily expect a recession in 2023, Bonneville said his company still expects steady growth in hiring next year and has identified three priorities in its preparation for a possible downturn, all centered on the reinforcement of the main activity of the organization.
From a macroeconomic perspective, the past week has seen encouraging results new centered on the consumer price index growing at a rate of 7.7% for 2022 through October, down from the 7.9% that economists had predicted, and down from 8.2 in September.
In addition, some economists believed that the Federal Reserve’s aggressive interest rate hikes could start to be effective in curbing inflation.
However, some proptech scholars at the MIPIM Propel conference in Manhattan last week were more bearish on the 2023 economy.
Speaking in the background, a notable property owner and developer, as well as a major proptech founder, said they anticipate a deep recession, at least until 2023. The developer noted that the New Fed York was slightly more optimistic about falling inflation, but was much more attentive to such a prospect than other Fed bodies across the United States.
Either way, the proptech sector remained somewhat bullish on hiring versus firing in 2022.
“The proptech industry job market remains strong in the United States, as year-to-date, more than 4,288 new proptech jobs have come on the market,” said Ashkán Zandieh, co-president and founder of the Center for Real Estate Technology & Innovation ( CRETI), which tracks these statistics.
“Even though the proptech layoffs made headlines with Divvy, open door, Zillow and others, layoffs have been concentrated in industry sectors most sensitive to interest rates, such as housing, and where companies have overhired,” Zandieh said.
He added that “labour hoarding” is a trend to watch among prop tech companies, especially if interest rates continue to climb.
“I think it’s reasonable to expect that the proptech industry won’t be able to keep up if there’s another shock to the system,” he said. “However, I think we may have seen the lows in unemployment during this year.”
Philippe Russo can be contacted at firstname.lastname@example.org.