CBRE Cuts
Just read that CBRE is cutting $400m from its payroll. Any word from other brokerages like JLL, Berk, WD?
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Berkadia will never cut jobs. Since they are private the firm will do everything they can before removing labor. As for other firms, seems like the first wave has already hit.
Are you an intern answering this?
No. Just haven’t updated the account.
Why never?
Their servicing book it’s the largest in the multi family industry. That’s their bread and butter. Originations can be fully supported by their servicing book for an entire cycle.
This isn't an answer for "why never." It's an answer for why they don't have to. If they see a lean couple years, why wouldn't they cut staff? They're not running a charity. Your deal comes up and they renegotiate a split that's so disadvantageous as to essentially be a layoff.
Besides, intern or not, I sincerely doubt you have the insight into their P&L to tell us with confidence that their servicing book can, in effect, float the entire company for a period of several years or more ("an entire cycle")
So very clearly this kid works at Berkadia. Just to clarify, he is assuming loan originations income supports all capital markets/brokerage which is not true. Either this or he didnt read the OPs question at all. Anyways at CBRE we have a servicing portfolio too, but its a completely different departments. This like saying Bank of America will never layoff anyone in the trading division because their retail lending is doing so well. Clearly this person has no concept of how corporations are run.
I also work at Berkadia - the servicing narrative gets floated as a means to calm nerves during times of uncertainty.
Hypothetically, we are all told that our servicing income can cover all overhead (MB & IS) in a doomsday scenario of zero production. Nonetheless, as others have mentioned, it's not like management wouldn't reduce headcount if long term profitability is trending down. We're just better insulated from short-term volatility shocks & knee jerk layoffs due to not being listed on the NYSE.
I don't think we made any immediate cuts at the onset of peak COVID uncertainty, and that was ultimately the right move looking back @ 2020 & 2021 volumes. Things this time around appear to be very different.
I don't think loan servicing and loan originations are the same thing. I mean, I agree with your overall point completely, but loan servicing is more about the fees charged to do the housekeeping on an existing mortgage, whereas originations is fees generated by doing new business.
The (really shitty) point the OP was making was that the servicing business does well enough to cover overhead. Which is of course inherently impossible, because over time loans mature or default and the servicing fees dry up: you really can't make the argument in good faith for more than a very short period of time. Obviously the loan originations business is in for a lean few months, if not longer, to say the least.
Tell us you work at Berkadia without telling us.
CBRE, JLL, Berkadia, W&D, etc are bottom of the barrel when it comes to base pay whether its junior staff or senior management. Cant imagine laying off people moves the needle. Banks which pay more and have a more diverse business model even within CRE are not laying off people yet but let's see.
What’s the base pay there for 1-3 year analysts?
This info is a bit stale but I had some Berkadia analyst level friends on the debt side from like 2014-2018 who made a killing on bonuses but their base salary was only $50k despite working long hours. Bonuses were six figures since they were on super productive teams. I was also friends with a more senior/MD level guy there too who did very very well but told me his base salary was shockingly low and basically minimum wage for the amount of hours he worked on its own.
Ranges from $65k-$90k depending on YoE
Who would you say are tops outside of Eastdil then?
Some of my friends from larger institutional and top IS teams are talking about potential staff cuts in the upcoming weeks/months. Looks like the tech industry has shown that some firms/teams have over hired during COVID. Obviously, this is dependent on staff size and how quickly the firm or team has grown in the past few years. My team leads have talked about cutting out research, marketing and junior analysts as well but I work with a smaller brokerage firm.
IS markets are pretty much frozen right now w/no sign on unfreezing until interest rates stabilize, which could be months.
Who is even on Payroll at CBRE? Most those guys are 1031 or their team pays them.
IS analysts, marketing/graphic design, research, accounting, property mgmt, admins, HR
What Ricky said plus CBRE IM and TCC, technically. Although those businesses are very profitable compared to CBRE as a whole, so doubt we will see any impact
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