CMS launches fresh round of redundancies

Real-estate is low-margins work even during a good economy – it’s largely not that complicated (limiting the value-add which you can mark your fees up to reflect), there are very strong pressures from clients to keep fees low, and there are dozens of firms who can do it, meaning there’s a lot of competition with very little differentiation.

When the economy dries up, property is one of the first investment classes to be affected – the lead-in costs for property development are stratospheric, with a long time before the asset becomes profitable, meaning that new buildings stop getting built and in-progress projects often get paused or cancelled. Couple that with lower interest from end-users in leasing / buying real estate during financially straightened times (would you move home if you’re getting a pay cut?), and then there’s less transactions in completed properties as well. Investors are also keen not to allocate capital to extremely illiquid asset classes like real estate, when there’s a risk of negative market movements.

The same thing happened during the GFC seventeen years ago – the property markets got absolutely eviscerated, and lots of RE and REF lawyers either lost their jobs or retrained as something else. That was even more acute given that the financial contagion there began in the real estate markets, and large swathes of the market took decades to recover. Here there’s no real property crash – but the economy is not hugely healthy, so the wider macroeconomic issues apply.