Multifamily Development: Small Firm vs. Large Firm

I'm currently working for a small multifamily development firm and just curious what it might be like working for a larger developer with a stronger pipeline, and better connections to deal flow. Located here in the Southeast and wondering if any one has any insight on what working for firms like Pollack Shores, Greystar, Alliance, Trammel Crow, Wood Partners, Mill Creek, etc. are like. I just want to make sure that I'm not stunting my growth in terms of developing stronger skillsets if I were analyzing more sites and managing more on-going developments. Here I do feel like I am actively putting myself in the shoes of a developer, as I chase down sites, underwrite, and am continuing to learn more and more about the pre-development and construction side of the business. However, I think the downside is that we're not a firm who is going to compete for a high profile site or has much sway with any of the brokers who are marketing off market sites. instead were left with looking at very few sites, that are very suspect, and we end up putting way to aggressive assumptions together to make a deal work. I think those points can also be looked at as positives since if any one of us analysts working in development currently were to down the road start our own projects were going to have to start small and really dig deep to find sites that others aren't aware of. I'm just not sure which is better for setting myself up as it regards putting together a track record and learning the most. Is doing one deal a year where it's you and one other guy basically running the show better or is being part of a large development team that are known for being experts at what they do and being a smaller part of that bode well for becoming a much better developer.

For instance there were two guys who recently started a firm called PENLER and both came from long tenures at very active firms. It seems that they are being backed by some sort of family office if i'm not mistaken. Looks like their both around 40 years old, and I'm just curious what their deal structures would look like as they are pursuing acquisitions and development opportunities. If anyone is familiar with these guys I'd love to know how their planning to go about pulling this off and what the firm structure would look like. Are they getting paid salaries from the family office to stay alive, and how much of the deal do you think these guys are able to get as I'm assuming their net worths aren't probably that substantial at their age.

Also interested to know if anyone on here works for firms like Davis Development, South City Partners, Westplan, etc that are much leaner development shops, but are very well respected at what they do and what it's like working in this environment.

 
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I have done both, and IMO the smaller shop is a much better learning experience overall. Generally speaking, the big institutional developers silo you a bit--if you are a development guy, you will be chasing sites and securing entitlements, but not negotiating GMPs and digging through construction means and methods, etc.

However, I would caveat that by saying the big shops are a great place to establish some routine skills and understand the mechanics of a how a very well-run institutional shop operates. There are a ton of different internal processes these groups run that you would internalize over time, and which would definitely service you well later in your career when establishing your own means and methods.

Also, keep in mind where we are in the market cycle. One deal a year is not terrible for new development, and the big shops generally tend to hang on to people through moderate ups and downs. A smaller shop may not have the financial bandwidth to keep everyone on payroll, if you have sensitivity to that kind of stability.

 

Ricky Rosay knocked the big vs. small argument out of the park, so I have nothing to add there, but knowing what market you're in from the firms you listed, you wouldn't go wrong with any of them. I would also add Crescent, Terwilliger Pappas, Walton, and some others to your multifamily list - there are a lot of strong players here.

Penler are two MDs who left Pollack Shores because they realized they had reached their ceiling working for someone else. Both are excellent and well respected. I believe they have 3 deals underway. I don't know their internal comp structure and that would be a bit inappropriate to ask, but I wouldn't downplay their net worths either. This cycle has been very good to people who have ridden it from the beginning - I wouldn't be shocked if each had a couple million in the bank.

Something to remember is that regardless of the total headcount at these shops, the development teams are lean at all of them. Some have property management and accounting and construction in house, which makes the overall company huge, and some have absurd pipelines that necessitate larger teams, but the development personnel to deal ratio is always going to be lean. That's how every one of these firms operate.

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