Nepotism in CRE
Since CRE is regarded as a highly nepotistic industry, I’ve been wondering what percentage of individuals actually make it without any connections? How much nepotism is there in your opinion? Also, how did you get your career started?
Quite a few can make it by starting in brokerage or through a firm that does on-campus recruiting. If you're a late-comer to the industry it's tougher.
I got in through good old fashioned networking.
What do you mean by "make it"? Break into the industry? End up in a top role?
Your not going to find many extremely high profile. successful, and young real estate professionals who get there without help. Jed Walentas or Sam Nazarian or Jared Kushner.... those guys are in the positions they're in because they have a family firm that installed them in a ranking position.
On the flip side, it's not super difficult (relatively) to go to business school, or get an MSRED, and end up making decent money. But people get into this business because they want to have their name on a door and be a principal, or at least have significant carry, and the privately-held, family nature of many shops means that's not possible in a lot of instances. It requires entrepreneurship and risk, which not everyone is equipped for.
I went to a complete non-target and broke in through cold-emailing and cold-calling
5-10% of roles are through straight nepotism, as in “Steve” is the son of so and so. There has been one at every company I’ve been at, and some more than that.
I'd agree with the 5-10% number. It's not an enormous percentage of the workforce, but most firms are going to have at least 1 or 2 junior guys who are there because of family connections.
I think this is a pretty narrow definition of nepotism. Hiring your golf buddy's son? That's nepotism. I'd say the real number is a lot closer to 25-30% and probably higher. Frankly, half of networking is just watered down nepotism.
It is "narrow" as in provable. You know who the son of Steven Roth is...etc. And I have stories of spoiled little shits(not him just an example), who had an offer at a major REIT have his dad write a letter why he should be paid more as a 1-year analyst. I wouldn't say networking is nepotism, cause it is on you to impress the other person enough for them to want to hire you.
I think people like helping people, people at the top know how hard it is to get where they are and want to extend the latter down. Now I think that if you hire an immediate family member, that is crossing the line, if it is a quid pro quo, that is crossing the line.
This gets overblown, and is sorta subject to the logical fallacy of "if all Bs are As, then all As are Bs" (meaning, while sure, nepotism helps many get jobs who have the family connections... it does NOT mean the vast majority has such connections or needed them to get a job in this industry). And I'll add, while it may help with getting interviews (and to some extent, getting hired), it will not carry one much further than getting the interview (granted, that is A LOT). Each person still has to perform.
As to "percentages"... have no idea how to guess that one. Plus, many "juniors" legit go to "top" schools, take real estate courses, get good grades, etc.... Meaning, that even "junior" can stack up equally to normal people (I know... this gets overlooked...). TBH, I think much of the advantage they have is simply knowing about the industry from an early age, and thus they prepare to enter it from an early age, and likely know more about it on background from an early age. Name ID helps as does daddy making calls on behalf of someone, but I think that matters less than people realize.
Also, I think it only really serves as a major advantage in SOME sellside shops/businesses... YES having family connections will help you get a job in brokerage.. this is very quid pro quo, they want the business!!! If you have other connections to some new business (like prior work history or whatever), you might be able to get same advantage. Buyside roles probably care a lot less, but it could help get the interview, and in fairness, that can be enough.
I will observe, it also seems to help with internships more than entry level and def a lot less on experienced hires (again, that internship can be critical and path setting, so it is still legit).
So those are my two cents... my story (very tl:dr version)... top student from state school (what WSO people like to call "non-target")... networked to a small shop doing CRE financing (pre-08 world stuff), then leveled up via networking, connections, and proof by track record/reputation (i.e. the classic way we all can). TBH, that is the majority story of those I know personally (do work along side more "targets" these days, but I paid A LOT less than them for my degrees so I win!!!), and even those with family connections have to do most of the same to succeed.
In my experience, I found the opposite to be true for more institutional / bigger shops. My old firm managed $3B+ in real estate funds and the partners were terrified to trigger any SEC or Investor pressure. Nepotism isn't illegal, but not worth the headache or optics to some.
Family offices are called family offices for a reason.
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