A lot of questions have been asked about CRE brokerage in general, but I'm looking for much more specific discussion. I currently work at a well-known asset manager (real estate FoF; one and a half years in) and am looking to make a move to real estate brokerage, specifically investment sales. I would be looking for an analyst role at either an HFF or Eastdil. From my understanding, pay is typically salary + bonus.
I'm mostly concerned about what the pay and job security looks like at one of these shops during a downturn, as I think it's inevitable we'll be exposed to one in the next couple years. Could you expect the bonus to entirely be wiped out? Were good brokers in top markets still doing deals? Were these shops laying off analysts who weren't able to bring relationships to the table? What about debt sales?
Any help would be appreciated. Trying to determine if it's the right time to make the jump - nothing ever goes wrong with attempting to time a market, right?
These guys will be fine. Bonuses may get skinnier in a downturn, but those dudes will still do deals.
My understanding is that the base/commission split for IS is more heavily weighted toward base salary at Eastdil while HFF pays a larger % of total comp as commission. You might consider this when making your decision if your conviction on an imminent market downturn is strong.
I can see managers looking to exit asap and realize gains which means no slowdown for top brokerages
During a downturn, people will be buying
Buying from Eastdil ;)
But then, won't less people be sellers? I had this conversation with a couple of our transactions guys recently, wondering how things change for them once the market goes south and transaction activity slows. According to them, they definitely do a lot more reading/research. They look for more off-market deals, and get more creative with how they find/underwrite deals. They still underwrite deals, but one guy mentioned that PM's in particular get skiddish about pulling triggers because they don't want to buy anything at X if they feel prices will keep dropping to Y.
Having worked in IS at a major brokerage in a major market, I can tell you first hand that the amount of food on the table (read: total team commissions for the year) will decrease dramatically. At least, it certainly did in 08-09. Head brokers were always mentioning "saving for the rainy day fund" and "making hay while the sun shines" when talking about how busy they've been in these past bull market years. I don't think the next downturn will be as dramatic, but I'd say it just depends on what market you're in/how hard it gets hit, and how the fees are spread around. If there's much less transaction activity, the team is less busy, less money to go around. Unless you're already a BSD like Doug Harmon or Adam Spies, if they're going to let anyone go it'll certainly be the last person who walked in the door.
This is exactly what I was looking for. Thanks for the candid response.
Do you have any insight into how debt brokers were doing in '08-'09? You see a lot of research about the looming CMBS maturities in the next few years and that debt will need restructured/refinanced regardless of market turbulence. I would imagine they would have a lot of potential volume and be less affected than the IS guys.
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