Landlord vs. Tenant Rep
I've previously asked about CCIM and such, but am curious about the differences between landlord and tenant representation. To my understanding, tenant reps can make bigger commissions than landlord reps because they are hustling for more deals, but landlord reps also might have a more steady stream of current clients.
I'm interested in going into the leasing side of brokerage, but want more explanation on the pros and cons of each, or anyone's personal experience with this.
Start on the landlord rep side if you can. You will hopefully be on a team that reps clients and this will expose you to deals right away. As a tenant rep junior broker, you will spend the majority of your day cold calling. I have found that those that stay in brokerage and make it, many of them that are young are on landlord teams. They don't need to worry about sourcing as much, just executing. After a few years and you have learned, you can jump to tenant rep.
LL is good but i think tenant rep gets the bigger split on deals
Tenant Rep Pros: generally higher compensation relative to LL rep (if you are good); more schedule flexibility; repeat business gets easier; no issues transitioning firms laterally and taking clients; get to learn about different types of emerging businesses (ancillary investment opportunities) Cons: extremely limited exit opps, both to other RE jobs and to other geographic markets; cold calling; no analytical/underwriting exposure; higher variability in compensation, ie. swings up and down.
Landlord Rep Pros: more analytical/underwriting exposure; more exposure to real estate heavy hitters; easier transition to principal side; generally less variable compensation Cons: less schedule flexibility; incessant property tours; incessant leasing activity/reporting calls; generally lower compensation relative to T rep; generally more frantic/stressful--have to churn deals constantly to generate commissions at lower fee structure.
Could you elaborate on some Tenant Rep exit opps? I feel like you could easily swing into LL represenation after knowing the tenant market and tenant side of deals. Besides working in corporate real estate for a large retailer or office occupier, is there anything else?
Sure. I think it depends on what kind of tenant rep broker you are. If you are experienced and have an intimate understanding of how options affect pricing (ie ROFO/ROFR/expansion, etc.), how landlords think about stacking a building (leasing bottom up/top down), how different ownership types generally think about deals (ie REITs more occupancy sensitive, developer may hold out for highest rent) then the transition to LL rep could be easy. In my experience, most tenant rep brokers only have a limited understanding of these concepts.
For better or worse, the principal side of the business does not have a generally positive opinion about the analytical abilities of tenant rep brokers. Jumping to that side of the business is much more difficult. Not impossible, but you would have to self-teach basic valuation concepts and pitch your competitive advantage to an office firm that you understand what tenants want, future occupancy trends, etc. I have literally heard a tenant broker say "the only excel calculation I know how to do is my commission." No, I did not punch him in the face.
Finally, consider that if you ever want to transfer geographic markets, you are useless (unless you are truly a big shot T rep with nationally-based clients). The value of a broker is largely grounded in local market knowledge. If you moved cities, there are instantly 100+ brokers who know the market 10x better than you do.
Big meech,
Can you elaborate on the compensation difference between the two? Just took a job with an office leasing team starting on salary, curious as to what types of commissions I could be looking at.
Dallas: 4.50% of base rent to the tenant rep and 2.25% to landlord broker.
Depending on the market and/or firm a lot of brokers do a blend of both TR and LR. The LR allows them to have a steady stream of income while chasing some bigger TR deals.
Thanks for all the insight, I might (its up the air) have the opportunity to join a reputable LL team as a junior broker at a big shop in the next few months, so that's why I am interested in hearing the key differences
I work in Tenant Rep. I specialize in industrial deals. I have listings for industrial spaces, but not nearly as many as the listing brokerages in my area do. The reason for having listings, especially in my tenant rep specialty property type (industrial), is to generate calls that I then flip into tenant representation. 9 out of 10 calls received on a 20,000 SF warehouse sign do not fit their specific needs, but I then have someone potentially on the hook for a tenant rep assignment that is looking for a decently sized deal. On the tenant rep side I push for 4 points on each deal, leaving the listing side with 2 points. This is the norm in my area.
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