Development Manager Compensation
How does the comp structure work for development managers? Obviously there is salary + bonus, but are development managers also compensated based on project success and how is this related to promote? Do you have to have money in a company’s fund to see personal returns on projects? I’m sure it varies slightly between companies, but interested in a general overview.
Varies between companies. I was salary and bonus as a development manager. My old boss had salary / bonus / and a cut of the fees and promote.
Did you know anybody in a similar role that came from large commercial GC? Interested in how comp compares
Are you defining development manager as someone who oversees the business side - financing / marketing / investor relations / entitlements / accounting and budgeting / and sits side by side with construction project managers who are managing the GC? Or do you consider a development manager as a project manager who just oversees the GC? With this info I can answer your question.
Typically I’ve seen Development Managers stay in the base/bonus territory and then Director/VP is where it starts to get into promote structures and equity ownership stakes. That’s what I’ve seen at the firms I’ve worked for. That said, titles in real estate don’t always track, so there will be plenty of unique circumstances, but generally I’d say development managers do not generally get to see promote / equity / ownership stake.
I can second this, that's the structure I've seen at large and small developers alike.
At a large/institutional dev firm. At our firm, "Development managers" are the ones responsible for overseeing the execution phase of the project, and are not really involved in the pursuit aspects (as much) and do not manage leasing/sale/capital raising at all. With that in mind, our DM's (which is a track that goes from project coordinator and then up to SVP and EVP) are base/bonus, and then a discretionary YE profit share. There is no explicit promote/carry.
Does promote carry enter the picture at SVP?
It would be expected but not explicit (explaining how it works would dox myself). Generally promote only becomes explicit (rather than discretionary) at the principal level (although sometimes small portions get specifically allocated to non-principals on the investment teams). However a portion is always set aside for non-principals to allow for sharing. So an SVP-level development manager is still going to get a decent bit of additional comp on top of their base+bonus, it just won't be a formulaic payout.
When my title was "Development Manager" I got salary, milestone bonuses (that were quite small), and percent of pref at sale.
The title is increasingly rare, in my experience. Real estate firms are moving more to the Analyst -> Associate -> VP -> Director etc. model now where a "Development Manager's" responsibilities are more VP or Director level.
For what it's worth, my firm still has DM as a job title for one track
Development & Investment Track (sources and capitalizes and sell deals etc, but not hands on with the GC): Analyst, Associate, Senior Associate, VP, SVP, Principal, MD, SMD
Development Management Track (Construction management and assists on entitlements/design/bidding): Project Coordinator, Development Manager, Senior Development Manager, VP, SVP, EVP
As an aside, it is still so weird to me that companies are structured that way. Development is both of those things, not one or the other. People can progress through their entire career now, become incredibly successful and wealthy, and still not really be developers. It's a bit surreal.
Agree with this, at my firm we have project managers that are essentially development managers dealing with the GC, bidding, entitlements etc. Then there's the investment team that handles acquisitions, capital markets, capital formation, incentives, ppp literally any negotiations etc. Sometimes we step in to strong arm consultants or the GC when tensions are high. We have many project managers, but I'm the only investments guy alongside the CIO. None of the PMs have equity and are viewed as replaceable.
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