Is NYC multifamily oversaturated with brokers?
Seems like every multifamily owner I call gets 100 calls a week from brokers. Is this normal or is there an abnormal amount of new brokers and brokerages right now?
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Wouldn’t say abnormal amount. I think it’s more common now because it gives you an upper hand if you are going to be an analyst/associate at a brokerage. More opportunities to lateral.
It was like that in NYC years ago, can't imagine what it's like now. Barrier to entry is ridiculously low, which encourages bottom-feeders, supply is super tight, which encourages price inflation, and pie in the sky is promised to the junior guys, which keeps the phones ringing.
Was a broker in NYC last year, this is all true. Was not at one of the big 3 shops but a pretty well known and some guys in my office were legit idiots closing deals. Had no clue what a cap rate was, barely knew what you would do with the deal ("it's a cap rate deal" "this deal is for a developer" and that was it no actual analysis). All that matters is getting in front of people, having confidence in your answers even when you're wrong, and making the calls to get deals. Of course you'll never have the $100mm+ deal that harmon, spies etc are working on but that doesn't matter to a majority of these guys.
Promise of "oh you'l make so much money year 1" when in reality average guy is making $0 and might hit $50k. The barrier to entry is insanely low.
What was the average broker making at your shop?
Yes, because the barrier to entry is being a 1099 and them not paying you. Then when you quit as 80% of the brokers do, the principals get to keep the leads.
This sentiment is true about the brokerage industry universally in all markets (leasing, investment sales, D/E placement, residential).... it's a low barrier to entry business with potentially high profits (if you get/close deals), so no shortage of people/firms out there.
Partially why being outside of a "big name" firm (or on established team at smaller one) can be very difficult as a new broker.
I think in NYC the catch is that because even small deals have very high purchase prices, there is a lot of incentive to get in the industry. If you live in a secondary market where multifamily (since it's the only asset I know) trades at 75-100k per door, you still have to hustle just as much for business as you do in NYC where that same product trades at 350-400/door. That's a much bigger payday for only marginally more work
I lived in a secondary market for a long-term... saw plenty/tons of brokers (even random ReMax agents) going after everything. Now in NYC, and sure, tons here too, but not sure it is all that different..
Will note this.... people come from around the world to try to get into the NYC real estate biz... so that may make NYC more crowded, but I think people are fee hungry everywhere
Can you talk about the advantages of being in NYC CRE vs other major markets (SF/LA) assuming your agnostic about location? To me, it seems a bit overblown but would love to hear another perspective.
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