Bad time to career switch into CRE?
Hi all!
Been reading in this community for about the last month or two. I currently work in management consulting (financial services). I have 4 YOE and I'm 26.
The thing is, I've always loved CRE. I interned in CRE in college at a family office with ~2mil Sq Ft of property across retail, office, and resi. I loved my time in the industry. However, I turned down their return offer because I had an offer to be a consultant that paid more. (Oof)
Fast forward to now - I have been studying for the gmat since October and I'm in a position that I think I'll have a shot at Wharton / Columbia MBA, but targeting UNC. This is all with the idea of concentrating in real estate and switching into, hopefully, development. I understand the risks of entering with no direct RE exp.
Lately I've been getting some cold feet and the risk averse side of me has been chattering. Am I risking entering a market (would matriculate in '25) with no internship/associate roles? Do we think the future of CRE (say, multi family or retail) is future proofed (AI, VR, etc). Trying to ensure I have my bases covered before giving up 150k in comp at 26 to pursue a job in an area that actually interests me. Thanks and happy Saturday.
Hey there! It sounds like you're at a crossroads, and it's great that you're considering all angles before making a leap into commercial real estate (CRE). Based on the most helpful WSO content, here are some thoughts to consider:
MBA as a Pivot: Pursuing an MBA, especially from top-tier schools like Wharton or Columbia, can be a strategic move. It's a recognized path for career switching, and these programs often have strong real estate tracks. UNC also has a solid reputation, particularly if you're looking at development. The alumni network and recruitment opportunities from these institutions could be invaluable.
Experience Counts: Your past internship in CRE and the experience at a family office are definitely assets. Even though you've been in consulting, that experience can be spun positively, showing a diverse skillset and analytical capabilities.
Market Timing: Entering the market in '25 means you have time to research and understand the cycles of CRE. While no one can predict the future, CRE has historically been resilient. Multi-family, in particular, tends to be more stable, but retail is undergoing significant changes due to e-commerce.
Technology Impact: Regarding AI and VR, these technologies are more likely to augment the CRE industry rather than replace it. For instance, VR can enhance the buying/leasing experience, and AI can improve building management and efficiency. Staying abreast of these trends could make you a more valuable player in the field.
Risk Assessment: It's natural to feel risk-averse, especially when considering giving up a high salary. However, if CRE is your passion, and you're financially able to take the leap, the long-term satisfaction and potential in an industry you love could outweigh the initial financial sacrifice.
Networking: Leverage your current network and the WSO community. Talk to people in CRE development to get a sense of the market and opportunities. Networking can also lead to internship opportunities during your MBA, which can smooth the transition.
Remember, the decision ultimately comes down to your personal goals, risk tolerance, and the life you want to build. If CRE is where your passion lies, and you're equipped with a solid plan, it could be a fulfilling path. Happy Saturday to you too, and best of luck with your GMAT and future endeavors!
Sources: When to jump - Advice on switching jobs, careers, and fields, Breaking Into Commercial Real Estate, When to jump - Advice on switching jobs, careers, and fields
I think the biggest uncertainty in the future of CRE is not so much AI/VR/WFH, but the fundamental flaw in the value proposition of illiquid private assets (example). This most directly affects PERE (especially the core stuff, cough cough BREIT) but will have broad implications for capital allocation to RE more generally. There are already some signs of declining investor appetite for illiquid alts with questionable risk-adjusted performances - for example the recent ouster of Nicole Musicco who advocated heavily for CalPERS to allocate to private market managers. Real estate as a sector will always be there, but I think there is going to be some really big reshuffling of players in this business as allocators begin to question the way things have always been done.
I would also advise against going to UNC specifically because you want to get into development. You should seriously consider schools a tier below M7 (Ross, Haas, etc.) Despite how much people love UNC on here, serious CRE shops still prefer generalists from more reputable programs than specialists from smaller, less prestigious schools. If you have zero experience in RE, I think recruiting for a bigger name brand will be more beneficial than trying to bust into the business starting from the ground up. Just my $0.02 though.
I would push back on being against UNC-tier schools. If you can’t secure the RE role you want, then a Top 20 still allows you to pivot elsewhere.
UNC still places folks across the RE field outside of development too.
But yes, OP, probably not the most advantageous time to shoot for RE.
Agreed with your first part. CRE allocation as a % of the portfolios bloomed in the past decade. Mostly because everyone was making money and the constant decline in rates played in their favor. Now many are starting to realize that the CRE we knew for the last decade was not the norm.
this is a bit off-topic and staying anonymous for obvious reasons, but I worked in BREIT valuation. without saying much, the most fascinating thing to me is that private REITs get the final word on their NAV share price. thus, they can report value as they please as long as they are within a reasonable range, but obviously, this can be manipulated.
Could you DM me? I've been working on REIT NAV valuations and the range even within publics can be surprisingly wide.
What do you mean about "allocators questioning the way things have always been done"? Do you mean that LP capital is going to look outside of RE for returns? Does that assume that a lot of LP capital rushing into private RE is not a new phenomenon? What would these allocators pivot to?
private credit, private equity
RE is cyclical. Just the name of the game. If that discourages you, steer clear. If you can bite that bullet then study hard for the GMAT and apply to the schools you mentioned. Go where the money is because you can't go wrong with any of those institutions. I'm very skeptical there won't be an internship from a big name company for someone going to a top 20 MBA program or real estate program with your background.
Thanks for the reply. I think I can bite that bullet with the understanding that no industry is immune to cyclicality. My sub service line group 2 years ago in consulting was selling more work than we could staff. Now, our headcount has been slashed from 20 to 13 and our leader just got sacked in December. Not so say there aren't clearer cycles in RE... just to say that theoretically I could try and climb the consulting ladder and get sacked a year before MD or partner. If I can fail at something I dont like due to external forces, I really would like to try something I think I'll enjoy more.
And appreciate the confidence in the mba path, I did wayyyy too much research before making the 'go' decision and targeting those 3 schools... just the way my mind (anxiety?) works
No problem. The sentiment I'm hearing from most people is that 2024 is better but will be a bit of a slog. 2025 and beyond is expected to be much better for CRE but who knows. That being said, now would be a good time to join one of these programs since we're in a down market.
Why did you consider mba over one of the msre programs ?
This was a decision that I spent quite a bit of time researching and reflecting to make.
Number 1 - I need an internship, as I come from consulting. 2 year mba programs with strong RE concentrations basically guarantee a shot at internships with big named firms who recruit on campus.
Number 2 - the floor seems lower at MSRE/MSRED. At Columbia and Wharton, the cohort is strong top to bottom. The bottom 30% of MSREs will not be as strong as the bottom 30% of a Wharton class.
Number 3 - MBAs are more portable in general
Number 4 - MBAs seem better for career switchers. From what a gather, generally over half (and upwards of 70-80%) of an incoming MSRE/D class will have prior RE experience. I'll be attending the same events as these people, and networking with the same hiring managers / recruiters. People with prior experience, in general, are better positioned than people like me.
Thus, MBA for me.
I want to make clear that this was a decision that likely doesn't have a terribly wrong answer/path for most folks. It's more of an optimization for me. And if I'm taking off time from work and paying this amount of money, I think it's worth optimizing. The answer will be different depending on individual circumstances.
If you can get into Wharton, go to Wharton lol. Shouldn't even be a question. Even Colombia. Unc you will get nowhere near the looks you will from those schools. Why do you want to get into development? I highly, highly recommend starting off in some sort of investment/finance role after getting an mba. Going straight to a development associate role at a dev shop won't really get you the reps on deals to understand how to look at them.
Appreciate the perspective. In terms of MBA programs, I've seen this mentioned, but I also see the stats. UNC sends more into real estate than any other program, with similar median salaries and similar employers on their reports.
Am I arguing for UNC being level with the other too entirely across the board? I'm not. Am I saying that unless I want to be top of the top REPE in NYC or bust, that they are more or less equivalent when it comes to their real estate concentration? That's what I've gathered. I'm also currently in the southeast and love it here
I think very highly of UNC for RE and get what you’re saying. But go to Wharton over UNC if you can get in. Not even a debate.
Might be similar in terms of recruiting but one day you’ll thank me when you go to raise capital or find LPs.
I did 2 years as an FS consultant before I pivoted to CRE. I did so by breaking into a brokerage role first. This is to say you don't necessarily need to do grad school if you don't want to but it will increase your chances and probably set you up for better opportunities (at the expense of two years of experience of course).
Our industry has largely been neutered for 2 years now particularly for the equity side so its been rough and that's why you're hearing what you're hearing and why jobs have been scarce. I think the tide changes and new bull market begins by end of this year but that's just my take. CRE is one of the largest asset classes in the world, its not going anywhere, anyone that tells you otherwise has no idea what they're talking about. Its just a highly cyclical business, and its getting more competitive as its gotten a lot more institutionalized.
Really appreciate the insight - useful to hear from someone who shares my background. Cheers
Why don’t you do the program where you can work while going to school for the 2 years?
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