Which real estate role/discipline do you think will be more in-demand over the next two decades: development or asset management? I hold the mindset development will come back, but not convinced it will be as strong as the low-rate era of 2010-2021. If there's less overall development happening in years to come, even after things pick up (whenever that may be), do any of you think asset management would be a smart career pivot? Please say why or why not, what your long-term view is, and how it influences your own career outlook. Genuinely curious what you all think about the future of both disciplines.
Trending Content - Real Estate Forum
| +49 | What Is Your Backup Plan? | 21 | 2d |
| +36 | AvalonBay Equity Residential Merger discussion | 16 | 3d |
| +34 | Future of Real Estate | 9 | 4d |
| +32 | Long Game: Development vs Asset Management | 12 | 2h |
| +28 | Extremely Slow Ramp Up | 5 | 3d |
| +22 | CRE Banking @ Top 3 Bank or Asset Management at Public REIT | 13 | 1d |
| +19 | Most Correct Way to Grow Rents in MF Development Underwriting | 4 | 2h |
| +15 | PGIM investment analyst low pay | 12 | 21m |
| +14 | Midweek timing of resignation? | 7 | 2h |
| +13 | Future of Multifamily | 3 | 2h |
Career Resources
To add some of my own thoughts to start it off:
You just ended your own thread by answering your own question. Have a SB, I guess.
All valid points, side note your second paragraph opens with a paren and never closes it.
Here's my thoughts. Outside of industrial, which is less demographic dependent and more the whims of the global economy (but still demographic dependent), I think development will only get harder and harder to make pencil. The overall US population is going to decline, meaning there will be less demand for housing in general, and that in tandem with AI will likely mean a shrinking demand for office. On top of that, construction costs are extremely high at the moment and I don't see a world where they come down any time soon. So you will need substantial growth in rents across product types in order to justify the higher construction costs. I think that's 10+ years away so should you just focus on buying underperforming assets with a story behind them for the next decade versus learning how to buy and entitle land? Because only very limited, best of the best projects are going to come out of the ground for the next decade (in my opinion).
Making the obvious caveat that everything in real estate is market and submarket dependent. Sure, Texas is continuing to grow, but its so easy to build in Texas that its seeing no rent growth because supply is routinely meeting and even exceeding demand. But if you dial into Uptown Dallas, there's a lot of obvious tailwinds from the finance industry moving major operations there that will likely push rents in both the near and long term because those jobs can afford higher rents and don't need to move to Plano to find an apartment they can afford and are willing to splurge in exchange for a shorter commute.
Thanks for the thoughtful response. It does seem difficult to imagine development roaring back like it had been given the reasons you mention like slowing demographics. Agree with your caveat that there will be "pockets" where development will get hot based on one-off demand drivers that transform a single neighborhood or submarket, like corporate/industry clusters and relocations and what not (compared to a larger national trend).
The issue with pockets is that everyone in their mother will be in on it. Its too obvious. Easier to pursue underperforming neglected assets in good submarkets with good fundamentals than going through the long term brain damage of buying land, entitling it, value engineering it to keep costs down, etc.
I know its a meme but you don't want to be stuck in a back office role like AM, especially in this market
A shit market is arguably a better time to be in a back office role. Firms still need their properties to cover P&L while dealmakers are sitting on their hands.
It's not like you'd be missing out on massive earnings either, since no one is earning them.
Yes, from a job security view, you are right. But good luck ever exiting AM after being there for 3+ years.
I’d do 5 years of development just to get the skillset and experience (not to become a career developer). 50/50 time split in land acquisitions and project management; hopefully, a couple full cycle development experiences. I would skip AM and instead aim to be a CFO with development and capital raising experience in a growing industry that would value those skills (asset intensive industries are numerous). I look at AM being CFO of a property or portfolio, whereas CFO’s of actual companies benefit from skillset leverage (meaning their skills within the organization are rare and better rewarded) and the financial upside of a business is greater than properties, which are limited by units and square feet (and time and attention as an AM; more akin to an hourly professional vs someone who benefits from scale and leverage). There is more financial upside and learning. One thing that benefited me was I first started in Big4 audit and accounting was my focus before. If you like financial modeling, I think you might actually enjoy learning accounting. Learn accounting on the side (if you can sit for the CPA, do it) so you can manage an accounting team. That’s the easiest way to get paid and justify being on payroll. Then position yourself for reward season.
I think development can be a great learning opportunity (I do it myself), but 5 years is not going to be enough for a few full-cycle developments. Maybe you can get two in if you're doing quick industrial builds or SFH, but most projects are going to be 5-7 years from land acquisition to disposition.
Amet qui et nisi similique modi quo et sit. Voluptate et debitis debitis porro. Quo sit optio laudantium nulla consequatur deserunt. Quasi deleniti itaque dolor quos.
Enim est alias illo eius maiores. Deleniti nulla eligendi odit omnis.
Natus est id nulla qui voluptas. Et blanditiis id doloremque aliquid nihil numquam. Enim aperiam est cumque nobis maxime et doloremque. Illo dolore neque et qui magnam. Eius quo velit expedita recusandae.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...