Does Prestige in Commercial Real Estate Development Exist? Google/Blackstone/McKinsey equivalents?
Hey guys,
Is there a prestige that comes with certain development shops? I notice certain company names make people's eyes light up, like Hines, Jamestown, TCR which is mostly because of the renowned projects they have worked on. However, is it safe to say that, like going to a top school, working at a top development firm holds a level of prestige?
The only reason I'm asking is that I know Top MBA programs have feeder companies. Like tech, private equity, or consulting firms, Google, Blackstone, McKinsey, Etc.
Is there anything like feeder companies in development that top MBA programs like?
What do y'all think? CRE REAcquisitionsnyc cpgame REGuru RealEstateAK
Yes--but I don't think guys at top firms in RE wear it on their sleeve like Goldman I-bankers or the like. It's a great calling card, and is incredible helpful when one leaves said firm as you'll get an interview anywhere you want (though most who leave go to start their own shop).
I cant comment on MBA, but I started at Hines and that has helped me get interviews with anyone I have spoken with. I think it holds weight. When I am looking at resumes, the big names are important to me too. I know Hines was selective, so that is why it seems important to me.
Thank you for the insight! What other companies would you consider to be as well respected as Hines?
Blackstone?
I'm an admitted fanboy (I have a copy of Gerald Hines' biography that I read and a copy that's signed by him that I don't read) but Hines is in rarified air in the development world.
Can't comment with respect to the MBA, but other development shops that hold the same weight as Hines would probably be: Related, Brookfield, Tishman Speyer, and Trammell Crow
There is definitely prestige in commercial real estate, although I would say that it works slightly differently than banking or college or whatnot.
A mentor of mine, who is wildly successful, told me very early on that there are two things that really make your resume in real estate:
You don't need both, necessarily, but to really "make it" in a prestige sense you need to knock at least one of them out of the park. This of course discounts the fact that you can make tens of millions of dollars doing things like owning trailer parks, so obviously money factors into a successful real estate career, but on a purely prestige basis those are the two factors.
The flip side of this is that by working for a Hines, or a Related, or a Jamestown, or a CIM, or a Tishman, or a Blackstone, etc. you are more likely to work on impressive and/or impactful deals, or $XB amount of deal flow, simply because of the scale to which those companies operate. They don't do small or insignificant things, so by working there, you can a lot of times cross off both bullet points in one stroke.
Now, I just went on a rant about the importance of prestige, but I recognize that we live in the real world and, as REPESailor2020 said, certain things get noticed when one looks at a resume. Much like Harvard jumps off the page, Hines does as well to those in the industry, and it can certainly be helpful when you go off on your own to have that kind of pedigree and assumption of competence behind you.
Personally, I did my graduate internship at a TCR-level firm (so...let's call it second tier prestige? Third, maybe?) and then went off to join a startup that worked on a transformative project that won all sorts of awards and made tons of money. When I talk to people now, either in an interview setting or just a "who are you professionally?" type introduction, the company I work for doesn't do anything for anyone, but their eyes light up when I mention my internship and the above mentioned project. Additionally, to expand on my company, I almost always say where my bosses used to work before going out on their own - both relatively pedigreed companies - which also gets a reaction, as well as the most noteworthy projects they've built.
Do my bosses care that their current company is "less prestigious" than where they each used to work? No. They're making money hand over fist since it's actually their company. Did their positions at their former companies, and their track record, legitimize them to the point where their current companies "prestige" mattered far less? Yes.
In short, there is most definitely prestige in real estate, but it is not solely based on the company on your business card. Your work matters and certain projects or deals carry a certain prestige of their own, especially within your specific market.
I’ve been trying to figure out which shop you work for and I think I got it now. TP?
Nope. Feel free to PM me, but I'd prefer not to be outed publicly.
it's pretty easy to figure out (but i am not going to out him or anybody else)
For people that one day envision running their own investment and development firm, what do you think of starting out of undergrad at a smaller, well known shop where you have the opportunity to wear a ton of hats and take on more responsibility at a younger age?
It’s the perfect role. The vast majority of the Ted Lerners and Steve Rosses of the world started as relative nobodies who took huge personal risks and snowballed it from there. You really do have to be an entrepreneur.
Not entirely sure what you mean by feeder companies here, but yes, top MBAs who are interested in real estate end up at developers like Hines and Brookfield, REPE firms like Blackstone and Carlyle, big time REITS like Boston Properties and Avalon Bay, etc.
That reminds me -
There is also prestige within job roles/company types and within certain markets - specifically in the brokerage world.
There are "brand rankings" like this that are always interesting (Markus & Millichap at #17 but Hines is #21 and Blackstone is #22 lol) but within each market, and often within each product type team, brokerage firms have reputations and "prestige."
In my market and product type CBRE, JLL, and C&W are the main players. HFF used to be up there before the JLL/HFF merger. CBRE has an extraordinary debt team - easily the best based on the main guy - and the person who runs their investment sales platform also easily the best, but they've been slipping in that regard because that person is highly detached from the day to day. Over the past few years, JLL has really dominated the high end stuff (fewer deals but more expensive) yet C&W can legitimately say they do more deals than anyone, so there's a repetitional benefit to that too. BUT - every important person on the JLL team just up and left for Newmark like two weeks ago, and Newmark hasn't had any prestige (or success, frankly) here at all, so do those JLL big hitters take their reputation with them? Of course. If Newmark now one of the top shops in my market and product types? I could only imagine.
Point is, I suppose, you can think about this all a million different ways. All you can really do is try and get the best job you can.
Great points. One nit is that you're totally selling the W&D guys short... they're head and shoulders better than the C&W team (in the class A & B space). Northmarq (former HFF folks) are a distant 4th, despite being awesome people. Agree on the CB assessment (although I'd put W&D Atlanta debt team up against CB's any day).
I guess those nits further your point though that you can skin the cat a million different ways. Put more simply, teams/groups that do big deals and a lot of them are prestigious and will open doors, and the inverse is also true.
ES doesn't compete with CBRE/JLL in your market?
What would be considered a “prestigious role” among these companies? I notice that 99% of people ask “where were you before?” when I first meet them.. so yes I think if they have any recognition with projects or companies they will instantly form a judgment from that
Anything front office (so development, acqusitions, etc.) is typically thought of as an ideal role
Prestige absolutely exists in the industry but it is different and CRE nailed it.
The difference boils down to an industry more rooted in merit when compared to other industries on this site. School and firm pedigree absolutely carry weight and come with advantages--especially when climbing ranks or looking for a foot in the door--but they aren't mandatory.
I don't know about specific feeder companies other than those already mentioned but really any well regarded big name that people know. Its a conversational advantage when you mention a name or deal and people know it and it has the same effect on a resume. For the purpose of a top MBA, prestige likely carries more weight. I don't have direct experience (I went MSRE) so others might add or offer better insight than I accurately can...but for top mba programs I would generally expect prestige to act a bit more as a qualifier, where it is viewed more as a differentiator in the CRE industry as a whole.
would you rather be buying ugly assets and making a ton of money or buy/build trophy assets?
As an owner (which I think is what you're asking) I would of course love to buy trophy product but that just isn't feasible for 99.9% of us out of the gate, if ever. As an employee/broker I absolutely prefer to work on trophy product.
I think the most important thing for me (and this is why I love real estate) is an opportunity to make something better. I love the satisfaction of being the reason that something improved and being able to physically see that change. As a broker I like being a part of that process even if I'm not the one directly handling the project. As an owner there is nothing more satisfying than making something better and then getting paid as a byproduct of that process.
No because commercial real estate is not prestigious. You ever heard the expression "dumb as bricks"? How smart must one be to finance bricks and mortar exactly?
Is this a troll or are you just a dick?
Little bit of both. And yes, I do indeed have a perfect hairline AND a god tier MBA.
Unless it’s paired with a good undergrad, good mba’s aren’t very prestigious imho
A lack of class though. Sad you can't buy that with internet boasting.
It was a joke. I'm going back to the IB forums because you Real Estate guys take it too seriously and it kind of kills the fun. I did not mean to make you sad my friend. Also, good looks on gentrifying Brooklyn.
Yes, go back to the IB forum and talk about intern recruiting, BB rankings and circle jerk techniques. The big boys in RE have more important things to discuss.
That's right, go back to the endless ranking and re-ranking of bulge bracket investment banks, and answering questions from high schoolers who want to know if their crappy GPA + random extracurriculars will hold them back from getting a job at GS.
We'll keep discussing actual industry issues and deal-relevant shit.
Worked at 3 firms.
1st A firm everyone on this planet has probably heard of/ been in one of their properties (Exluding those who have never lef Asia/Afria). We owned 3 of the biggest developments in our food group at one point all 1bn+ development/re developments. Everytime I interview I get asked about this job the most even though I was entry level and tbh didn't do anything important or cool there. however, the projects I worked on were all well known staple projects in NYC/SF/LA.
2nd firm literally had no name, no website, nothing, but we had a very unique source of capital and owned some pretty cool deals. Every now and then a broker/developer would recognize the name of my smaller firm and be like oh shit you work for them, how do you guys pull this stuff off and I would just laugh it off. Because we kept it very low key but cranked away at massive deals. Easily the most profitable shop I've ever worked at on a Proft per capita basis. (hint: we had under 5 employees)
3rd firm is a major player in a less cool space. People know who we are and what we do, but there isn't a big mystery around how we pull it off. Networking isn't as fun because people know what we do, and know we are out of their league or in it ect. Tons of dealflow but staffed to handle it and a more normal office setting with stuff like HR and Happy hours, no crazy firedrills which may or may not make it less fun. Really smart people here which make it a great environment.
Interesting how my career went from most prestigious down, but only got better in terms of comp/professional progression/Leadership legacys (1st firm had some big legacy names but was mostly nepotism by the time I got there) /deal flow. My 2nd job probably was the most prestigious in theory because "Prestigious Firms' would drool over meetings with us, but the average person in the real estate industry had no idea who we were or what we did. Even industry professionals were sometimes out of the loop and it wasn't worth explaining. As soon as you start bragging about your firm at a confrence/happy hour you get brokers bringing you deals that you didn't want or would never do in the first place.
So in the end, RE comes in all shapes and sizes you could be at a really prestigious firm but a different food group and then no one cares all of a sudden. Or the other way around, hard to tell. Biggest things are more how the leaders of your firm are recognized and if the projects your firm does makes the news, and ultimately if your track record is turning up record numbers every year or people wonder how you get by.
Kind of a jumble of thoughts here, probably will edit later.
Agree with all this.
Real estate is weird. A lot of the shops doing the coolest shit aren't interested in advertising about it. Yes, the tech-adjacent startups and the brokers and loan originators are well known, alongside some major nationwide development shops like Related or Extell or Hines or [insert here].
But a lot of the time the most interesting and profitable deals are being done by smaller or mid-size players in local markets or specific niches. Shops with good deal flow and good margins don't need to puff out their chest and advertise the volume they're doing; the people who need to know them, know them, and they make a lot of money out of the public eye. At least in NYC, I often feel that the more you hear from someone or the louder a shop boasts about what they're doing, the less they're making.
So yes, there is a ton of "prestige" in working for Trammell Crow (for example), in the sense that being hired there, especially early on, is a good validation of a skill set and will set you up to go pretty much anywhere else afterwards. But this isn't banking, where the only actual difference between any of the major players is brand name. Different shops have different strengths and will deliver products of vastly differing quality, unlike your average bond underwriting desk at Goldman vs Jefferies. Being an MD at Goldman is probably a more surefire meal ticket than being an MD at Jefferies - in real estate you win deals and get paid based on far more quantifiable results, so being in a position to have carry at a shop like Jonathan Rose could be far more lucrative and interesting than being in a similar position at, say, Related (which isn't to shit on Related, at all).
Yeah, seems like the whole "Prestige" thing especially in RE you need to take with a grain of salt. Most of it is marketing. For brokers its because their name is their business. For developers it is to get money from institutional capital to take fees on and then in turn as soon as institutional capital comes in you get more "rules" and then you need more internal box checkers that a small firm wouldn't need hence more low level positions.
Not saying that huge firms are just a bunch of box checkers, but if you are going to get the CPPIB, CALPERS, Insurance type money you need a firm that has a real staff of people or big firms wont get approval from their IC to write you a check for your LP capital.
And if you want an example of how the coolest shops aren't advertising just look at some of the capital stacks of cool developments. There is typically someone in there that just makes you go "Hmm that not what I expected" wonder how they ended up in here. Then the next time you see a cool deal you see some of those same names, and you begin to realize there are a ton of low key guys running major real estate operations.
As with any other industry, of course there is a level of prestige associated with any firm. The relevance of the prestige will depend on what you want to do with your career.
The teams that care most about this are the RE arms of traditional PE firms, or hedge funds. Outside of these groups, in general, prestige holds less weight to future employers in this industry relative to others.
On the development side, as others have mentioned, Hines, Related, Tishman Speyer, Brookfield, and some others will catch eyes and open up doors (recruiters will target you), but then again, you could have an outsized experience at a few-man shop and ease into buying your deals sooner than if you were at a larger shop, as you are involved in all aspects of the deal process.
I would say RE firms (true for developers, but also for brokers and owner operators) are more often sorted by scale - which really means size, geographic reach, and to some lesser extent number/diversity of property types they own/develop.
Any developer that operates in tier 1 markets (like NYC, LA, SF, DC, CHI, etc.) and builds high-rise urban projects will be viewed as "top" (to anyone silly enough to care, more on that later). If a developer, like those referenced in this post (Hines, Related, etc.) can do this in many markets simultaneously, then they are in rarefied air (especially if global or on both coasts).
Regional developers would be the next "rung" (again, who would care is tough to know), those working in a multi-state region. A lot of powerful apartment developers are like this. They won't be as well known, but they really do not deserve any less respect. RXR and Silverstein are major, high-prestige firms in NYC but do little outside of the tri-state region (each has some sporadic projects outside the area). If you live in NYC, you know these firms and think a really well of them; outside of NYC, they are honestly not very well known at all (unless you are a 9/11 truther/BS person, but that has nothing to do with RE).
Finally, there are the many small to medium local developers that work out of one or a small handful of markets. These firms can really be "unknowns", and their prestige (if any) will come from their projects reputations. Still, the people who own and work in these firms (often family owned) can be super rich (even billionaire status).
Thus I conclude, real estate development (and RE in general), is far more meritocratic based on actual deals and successes (or failures) than firm prestige like in IB or even PE. In IB, rankings actually do help them win business ("We are Number #1 in All the Deals We Participated in"), but no prospective tenant or buyer of commercial property would give a shit about the "ranking" or even "prestige" of the broker; they care about the quality of the asset and how it fits their needs. That said, some developers will have the rep for high quality designs, fit/finish, sustainability, etc. while others gain the rep for cutting corners or building cheap; but they control it. So again, the RE world really doesn't care like the finance world, it's not the same.
For career advice, I would generically say that all else equal, working for a better "known" firm is better in the early stage of career; it will open more doors if firms/recruiters have heard of the firm listed on a resume. But all else is rarely equal, the actual role, advancement potential, and even degree of training/mentoring all out pace "firm name" IMHO. I've seen people hating their job at some of those big name firms listed in this post, who left for a smaller, less known firm to have a better career (may or may not be for pay reasons).
This is why RE is so fun, a no-name firm with grads from low-ranked, non-target schools can come in and blast a top tier one out of the water on deal by deal basis. The name of the firm or the name of school really won't help when actually doing deals. This is why such ranking debates don't come up that often in this forum.
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