Commercial Real Estate Brokerage Culture?
Hi Everyone,
I have been working as an intern for a commercial real estate development firm for the past couple years. I am entering the brokerage realm soon, but the one thing that keeps pulling at me is the culture. I understand it's different for various markets and firms, however, there is the inherently selfish nature of brokerage that makes me hesitant. I am fully aware of the fact that it is a "dog eat dog" world and I actually really enjoy the competitive environment. I simply worry that there is a more rampant lack of integrity in this aspect of commercial real estate than other areas. Thoughts?
CRE Brokerage Culture
As with most other professions the culture depends on the firm. The best thing to do is to go out and meet people at the firm you want to work for. You can
Really depends on your firm. No matter where you go, you'll probably run into some dicks.
But before you make any decisions of where you're going to work, spend a ton of time meeting with people in that office. Get coffee with them, lunch, drinks, whatever. Odds are you'll find out pretty quickly if you click with the firm.
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Since it doesn't sound like you've actually worked in brokerage, it seems misguided to assume the entire industry suffers from a "rampant lack of integrity." It really depends on the shop. But since your young I'd recommend giving it a shot. You'll probably struggle to procure business and wash out, but those that do make it do well. You'll know pretty quickly whether it suits your personality/skill set
Also, it was a little unfair of me to say "there is a more rampant lack of integrity". It just seems to be a little more common amongst some of the brokers I have heard about to participate in questionable behavior. By the way, I appreciate the responses. I'm just trying to get a gauge from people who have dealt or work with the houses directly to see if there is a consistency in the behavior.
There are integrity issues in any type of sales position. This is the first time I've ever heard of anyone in the development industry move into brokerage, what do you do at your current firm and what do they develop?
I guess I should clarify a few things. We aren't strictly development; most of the work I have done with investments includes competitive analysis. It's a bit of a bummer that I haven't had the opportunity to work a full-on development project.
Plenty of folks do. Colleague of mine that my team does deals with came from Archstone from a senior level acquisitions role to our shop as a broker (big name national firm). The guy works lax hours and probably made $650k+ this year. I asked him why he made the switch and he said he was selling deals to brokers who made his annual salary on just one or two deals a year and it made no sense to carry all the risk and brain-damage to get the small bucks from a salary+bonus.
I've been working on some assemblage stuff with a national REIT and was going over the underwriting with an analyst. He pointed out to me that if it closes my fee will be as much as his salary this year. I get half the brain damage he went through. Not to mention 4 other deals I have in the pipe with these guys.
It's all relationship driven if you can get out and pound on doors until your knuckles bleed to meet the right guys doing deals you're going to make a buck or two.
Really depends on your firm. No matter where you go, you'll probably run into some dicks. But before you make any decisions of where you're going to work, spend a ton of time meeting with people in that office. Get coffee with them, lunch, drinks, whatever. Odds are you'll find out pretty quickly if you click with the firm.
If you know people in the industry, I'd ask them candidly their thoughts on each firm and the people you'd be working with. If anything they say gives you pause, maybe consider another firm.
But to the SeattleCRE don't worry too much. You'll be fine if you don't share your leads with everyone. Get everything in writing because some of the sellers and buyers are just as slimy as some of the worst brokers. They will go around you if you come off as weak or your don't protect yourself with a contract. Fee/Rep agreements control deals.
Just keep your head down and don't be afraid to hear the word "NO". You're going to hear it 1000X before you get a deal done. Pound the pavement and make the calls. It's a contact sport–all about touches. Don't expect to sell a deal immediately. You have to forge relationships with clients by add value to your clients. When those deals trade you will be the guy they call to list the deal.
Good luck!
@makecents I'm in the development group at a national REIT and we have lost an acquisitions guy to brokerage, although there is a different skill set in acquisitions than in development and the exit ops for both can vary.
A common exit for an acquisitions manager who desires to work in a more entrepreneurial capacity is to start his own company or go into brokerage.
A common exit from an institution developer is to go independent and look for deals to entitle and sell to institutional players or JV with a REIT and earn institutional sized fees and promoted interests. The long winded point is that its less common for a developer to go into brokerage.
Makes complete sense. One way or another I feel like I'm in brokerage to kind of do that latter. You're on the ground floor constantly digging up deals and while some of them you going to just sell for the fee.....there are others deals that you want an interest in because they're no brainers. If you find a deal like that, you bring it to a shop you have rapport with and roll you fee and JV on the deal.
I was at ICSC meeting with a principal of a dev shop who told me a story of a broker selling them a parking lot that was rather large in size and it was pretty much an entire city block in Downtown San Diego. Fee was $100k and he rolled it and JV'ed on the deal with them. They built a Class-A mixed use (apartment/retail) high-rise. They sold the deal with the same broker because he had the exclusive to list on the backend and his $100k fee turned into $1M check when they sold it and I don't think it included the fee he got from selling the asset either.
It's not an everyday thing but it does happen here and there. There's tons of pretty interesting deal stories floating around out there about stuff like this.
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