REPE - are you married to corporate life?
I've been thinking a lot about whether to transition to the REPE or development side of the business and would love to hear your guys' thoughts about the below questions. I did a bit of digging and couldn't find any past topics that directly answered any of these:
1 - Does going the REPE route handcuff you to the corporate life? As a developer, it seems you always have the leverage of being able to walk away and start your own thing (read: very easy to bet on yourself). Granted that an REPE professional can try to land an anchor investor and start their own fund, but that feels like a much bigger undertaking (and ergo less leverage in employer/employee negotiations).
2 - If the above is fair/accurate, how "replaceable" is one REPE professional versus the next? What does an irreplaceable employee look like?
3 - Does committing to REPE also commit you to a gateway market?
4 - Likely tied to the latter half of #2, but how do you generate alpha while working in REPE?
I know this topic has shades of "REPE vs. Development", but I'm hoping that these questions can steer us in a different direction and yield a productive discussion nevertheless. Thanks for reading and looking forward to reading your thoughts.
This is a very broad set of questions, probably better to focus them, I'm not sure where to begin..
Quick thought.. You can break away from REPE or development (or well anything) and do your own deals. Probably easier in the 'REPE' type space, at least in that buying a property is generically easier than developing one. I think its really scale/scope, I mean the ability to buy or develop a property depends on ability to raise capital/resources; clearly large 'corporate' firms do bigger deals/funds/projects because they can (and really have to due to size/scope).
I think you can leave 'corporate' life whether at a large REPE/developer/brokerage or whatever, what you do next will be different. I think you can find many people who have done this in practically any market, it's not rare by any stretch.
Thanks for your thoughts - my late night musings seemed to have caused scope creep...
It seems that REPE allows for more latitude than I was initially giving it credit for. Do you see yourself as a NYC-lifer or are you expecting to leave the city at a later stage?
So, first... I am not an 'NYC-lifer', because I actually moved to the region (from a large secondary market) to accept a job I as headhunted for several years ago. It was one of those job opportunities I had no way of saying no to. Since then, I switched jobs once from essentially networking. I have a lot of family in the NY metro area, and do like it, but it's not really 'home'.
So, would I relocate back to a smaller market, possibly. I would move to another large market (I prefer east coast and hate Chicago, but if opportunity knocks..) but I doubt I would really want to.
I have to say that being in a major market, especially like NYC, has significant in the type of people you meet, see, and can network/work with on a daily basis (or at least you could before COVID). That is what will keep me here longer. Still many years away from thinking I can give up the benefits of being in city.
I think both teach relevant skills. You’re learning how to get deals done. I don’t think going one or the other stops you - one just happens to be corporate. You should really be thinking about what do I want to do and what fits my work style - going the REPE route will not handcuff you to the corporate life. You can also take your REPE skills and do your own deals. REPE vs Development - one doesn't set you up for doing your own deals more than the other. The issue you may run into in terms of being 'handcuffed'- if you go the REPE route, salaries and bonus are generally higher at the start, so it might be a hard pill to swallow if you want to move to a developer. Most developers are just not as well capitalized and can't pay the same salaries. My friends who started at developers all were able to get a piece of the fees (acquisition, PM, Dev, etc.) and this is how they eventually evened out their salary. Regarding replaceable vs irreplaceable - employees are pretty much replaceable at all levels. Some people may be more 'key' than others and the Executive Team might view them as irreplaceable. But if people leave, they get replaced. If you want to be 'irreplaceable', become the person who owns the relationships. You can always take your book of business with you. Plenty of REPE firms play in secondary markets. On generating Alpha, it depends on how firms look at it. But if your benchmark generates a return of 7% per annum, and your firm does value add investing and generates 9% per annum, you generated alpha.
Thanks for your perspective, definitely a lot to think about. Are you saying that the salary hit happens when jumping from acquisitions at a REPE to acquisitions at a developer? Or are you saying that you've known people that jump from REPE to development later on in their careers?
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