Best Places to Start in Commercial Real Estate?

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Opposite of the other thread that was active in 2018 "worst places to start...", yet this time - what are the best places to start in CRE right out of college? Especially in today's environment.

The other thread seemed to be against: leasing, property mgmt, and valuations/appraisals as the first job out of college if you want to make it to the big leagues. Curious for everyone's thoughts.

Comments (45)

 
Aug 13, 2020 - 10:09am

Valuations/appraisals is hated on unfairly in my opinion. You learn about real estate from the ground up and are able to make contacts with brokers, buyers, sellers, etc. When using your network correctly, a valuation analyst can make the jump to REPE/capital markets if they wanted. I have seen it happen and I made a similar transition myself back when I was in valuations.

But yeah, agree with @C.R.E. Shervin" on the top roles to target out of UG

 
Aug 13, 2020 - 1:12pm

IB Real Estate Group at an bank with good RE deal flow then pivot to literally anything in the CRE space.

Array
 
Most Helpful
Aug 13, 2020 - 4:17pm

Alright, what I am about to say is probably "WSO Contrarian" but that has never stopped me before....

I think the best place to start in CRE is at the job you get!

I know that is not a satisfying answer, so let me explain.

  1. This industry rewards results, and doesn't really fixate on pedigrees/names the way the fin bros in the IB/PE/HF forums have to contend with. Thus, getting a "big name" job is now or later isn't really the major determinate of career success some think it is. It is what you can do, provide, etc.

  2. You need to learn a lot coming out of college to be useful/productive, this will take YEARS. So the best job is the one that trains and develops you the best. In all reality, you probably suck the first year or two, so might as well just get it out of the way.

  3. The CRE industry is very open to networking and thus job movement. If first job not optimal, moving along in a few years or so is easy.

  4. You probably don't know what you really want to do or will be best at coming out of college. It's easy to get fixated with acquisitions or investment banking, but really, until you are in the real world, you are guessing (and probably basing on the opinions of others).

  5. Earnings in real estate (all CRE roles) is far harder to figure out and less linear than in corporate or finance type roles. Some "small time" shop could out pay large/well known shops (not likely on day one, but by year 5, anything possible). Bonuses are more a factor of deals, portfolio, projects, etc. or even tied to fees/commissions. So a top player at a regional "no name" could earn more than an average player at a "big name" firm in a given market (in fact, this happens all the time).

So, don't stress, if you make a mistake you can correct. I had no idea I would want to do what I am doing today when I graduated from UG, so I wouldn't even know how to go back advice my 'young' self if that was even possible. Just learn, work hard, and seek forward progress.... everything else will take care of itself.

 
Aug 13, 2020 - 11:35pm

redever:

Alright, what I am about to say is probably "WSO Contrarian" but that has never stopped me before....

I think the best place to start in CRE is at the job you get!

I know that is not a satisfying answer, so let me explain.

  1. This industry rewards results, and doesn't really fixate on pedigrees/names the way the fin bros in the IB/PE/HF forums have to contend with. Thus, getting a "big name" job is now or later isn't really the major determinate of career success some think it is. It is what you can do, provide, etc.

  2. You need to learn a lot coming out of college to be useful/productive, this will take YEARS. So the best job is the one that trains and develops you the best. In all reality, you probably suck the first year or two, so might as well just get it out of the way.

  3. The CRE industry is very open to networking and thus job movement. If first job not optimal, moving along in a few years or so is easy.

  4. You probably don't know what you really want to do or will be best at coming out of college. It's easy to get fixated with acquisitions or investment banking, but really, until you are in the real world, you are guessing (and probably basing on the opinions of others).

  5. Earnings in real estate (all CRE roles) is far harder to figure out and less linear than in corporate or finance type roles. Some "small time" shop could out pay large/well known shops (not likely on day one, but by year 5, anything possible). Bonuses are more a factor of deals, portfolio, projects, etc. or even tied to fees/commissions. So a top player at a regional "no name" could earn more than an average player at a "big name" firm in a given market (in fact, this happens all the time).

So, don't stress, if you make a mistake you can correct. I had no idea I would want to do what I am doing today when I graduated from UG, so I wouldn't even know how to go back advice my 'young' self if that was even possible. Just learn, work hard, and seek forward progress.... everything else will take care of itself.

I agree with redever. I'll take his WSO Contrarian view one step further and say wherever you end up do the best you can, keep your reputation in tact, try to learn from each experience. Mastery of your career comes from piecing together life's randomness into a symphony. The big hope is your past, helps your present, which helps your future, but a future that is uniquely you based on your strengths and interests and goals/dreams. One cool thing about real estate is it can outlive is, come back to us, be envisioned and created, and so forth. Recognize that and find a way to make your unique place in the trade.

Have compassion as well as ambition and you’ll go far in life
 
Aug 13, 2020 - 9:15pm

Working for your Father's development shop being groomed to take over. If you're not the son of a prominent real estate developer, then Acquisitions at Blackstone.

Array
 
  • Associate 2 in RE - Comm
Aug 17, 2020 - 1:34pm

Just have to get in at a shop and make a good connection with a senior. This is common at smaller companies and even larger corporate environments if the team you're on is smaller, usually with low turnover. With that said, it obviously won't be the same level of attention as if you family owned the place

 
Aug 13, 2020 - 9:33pm

Break it up in two buckets:

(1) Principal Side (Development, Acquisitions, pure-play REPE)
- Here you have the most upside (equity)
- Here you will work the most hours
- Most people see this as the end-game/goal

(2) Getting to the Principal Side
- Real Estate Investment Banking (offers most flexibility and more direct route to (1))
- Lending (Bank, Debt Funds, LifeCos)
- Investment Sales / Mortgage Brokers (Eastdil, CBRE, etc.)

There are a lot other roles that fall into (2), for example, appraisal roles, leasing, etc., but the road to (1) from such is much harder.

Really anything listed in (2) is a great place to start if you're not lucky enough to find (1) right out of school. Finding (1) out of school is very hard because there are very limited opportunities and outside of very large firms everyone else wants somebody with experience in (2).

 
Aug 13, 2020 - 10:37pm

Fair point. My background is in finance and admittedly I am biased towards that side of the business. I would just add, however, that at the end of the day real estate is just another asset that people invest in. I've worked with development guys that just don't understand the finance side enough and it hurts them. I feel like understanding the economics is the keystone/foundational skill-set so to speak.

 
Aug 14, 2020 - 9:30am

Principal side:

Best place to start would be a shop that has an analyst pool like Crow Holdings. Their analyst work on modeling everything from multifamily to convenience stores and split their time between acquisitions and asset management. Doing both acquisitions and asset management that early in your career in my opinion would give you a leg up on the competition. It also allows you to figure out if you enjoy one or the other more.

Brokerage side:
Somewhere like the old HFF where you work in an analyst pool as well. The old HFF would have their analyst work on all asset classes. After 2 years you are able to model any and every asset class.

In a nut shell- Best places to start would be a shop with a good track record that lets you wear a ton of hats. After a couple years you have good experience and you are able to drill down on what you actually enjoy.

 
Aug 14, 2020 - 6:46pm

press107:

Their analyst work on modeling everything from multifamily to convenience stores and split their time between acquisitions and asset management. Doing both acquisitions and asset management that early in your career in my opinion would give you a leg up on the competition. It also allows you to figure out if you enjoy one or the other more.

In a nut shell- Best places to start would be a shop with a good track record that lets you wear a ton of hats. After a couple years you have good experience and you are able to drill down on what you actually enjoy.

I think this is especially important, not just when starting out your career, but in general when you are breaking into a new industry and don't have much prior experience. I've been able to do something like this and it's helped a lot, it would have been difficult otherwise to figure out what I like (and dislike) more.

Quant (ˈkwänt) n: An expert, someone who knows more and more about less and less until they know everything about nothing.

 
Aug 14, 2020 - 2:11pm

Investing in commercial real estate is not as difficult as it may appear. With more and more listings coming on the market, there will be much more competition starting in early 2020. You deserve a better way to invest is real estate and a better place would be Houston. Enriched Real Estate, property shark and co-star can help you find properties.

 
Aug 14, 2020 - 8:17pm

BB finance teams/CMBS or brokerage. Or investing side for an actual analyst class... which is rare. Ppl love being on the equity side, but there are less opportunities out of college and many that exist have very little learning experiences/on the job trainings... while a CRE finance team has more of an analyst group (similar IB sell side role/training to PE if that makes sense vs PE out of the gate). I'm partial to bank finance/CMBS team but would agree that top broker groups are also solid starts. Massive deal exposure, all asset classes, locations, potentially debt and equity exposure/stretched capital stack, and most likely an actual analyst program (Argus training, seminars, more junior peers... associates/vps to lean on, etc). One would learn a ton and could effectively move to any group debt/equity/dev from here, after some experience. Also obviously getting strong brand name, networking opps, etc

 
Aug 17, 2020 - 9:33am

Land Brokerage can be a great door into development. If you want to be a local developer focusing on one MSA or region (JBG-DC), establishing a network with local land owners and gaining experience with obtaining the rights to land would be one asset/skill every developer needs and typically the MBA types don't possess or pursue.

“Capitalism: God’s way of determining who is smart and who is poor.” Ron Swanson

 
Aug 26, 2020 - 6:33pm

I second this. I work as a land broker and see a very direct path to the principal side when I decide to make that step. Even cooler about land is that it is an underserved area of brokerage in most metros, and provides an unmatched opportunity for a young guy to step right in and get incredible deal exposure/experience and network with all of the developers in the market. Additionally, a good land broker will gain the connections, knowledge, and experience necessary to run/manage the vast majority of the pre-dev process (entitlements, financing, architecture/design, etc), and will get exposure to the full range of development and developer types (all asset classes, all sizes of developers, flip or hold, greenfield, brownfield, infill, etc). 

 

Land sales typically take the entire entitlement period to close (9-12 months), and so the broker is involved the entire time. We will assist in resolving any issue that could possibly come up and blow up the deal. We assist in the capital raise, underwriting, site design, zoning/land-use issues, environmental issues, and anything else that could come up. While I don't have the benefit of getting direct experience managing a specific site and project, I do have broad exposure to the full range of development types, philosophies, and issues that can arise during this period. Gives me much more exposure to the many potential pre-development issues in a much shorter time frame than working only a few sites every 2-4 years.

 
Aug 17, 2020 - 10:24am

As others have said, you can make your way anywhere in this industry from almost any position. Just knock it out of the park in whatever role you're in.

I work in the affordable space, and one of the huge problems we've had in this industry (totally self inflicted, of course) is that whenever the firm I'm at or any of our competitors finds a smart, motivated city or state level employee in the housing space, they are immediately snapped up and hired into the private sector. Which is great for them and for the firm that gets them (and proves that even coming from government/bureaucracy you can move up in this industry), but also means there is a steady drain on talent from the agency side to the private sector, which means fewer motivated, smart people to help push deals along that end. Not totally relevant, but interesting.

Likewise, I've seen plenty of good property management folks get snapped up into an asset management position at big name owners. Real estate development/ownership has a lot of moving parts and a lot of people helping stir the pot - do a good job and you can lateral almost anywhere. I've seen mechanical engineers get hired into development roles on the back of the fact that they can help with the pre-dev.

 
  • Analyst 2 in IB - Ind
Aug 26, 2020 - 6:23am

Would be best to start at the most prestigious real estate investment banking groups at BBs (BAML, MS, GS). Gives you the best name-brand & most optionality down the road

 
  • NA in RE - Comm
Aug 28, 2020 - 3:48pm

Investment Sales and/or Debt/Equity Brokerage for a high volume group. You'll learn how to underwrite everything, get exposure to buyers, sellers, lenders, learn about the sales process, due diligence, closing, etc. IMO, the BBs aren't close enough to the actual asset if you really like CRE.     

 
Sep 3, 2020 - 7:33pm

I think saying high finance traditional PE like ex-IBers so must be better is a poor reason on its own.

However I do believe IB is better than investment sales due to versatility and being able to look at investments across the real estate four quadrants (note: my background is pure REPE). If you move from IB -> REPE you can build the traditional asset experience at the REPE shop and you're already well versed in corporate finance. It's harder for a RE investment sales person to pick up corporate finance than it is for an IB-er to pick up the asset stuff. 

At my shop we can look at public & private real estate. Having underwritten RE public companies & worked with juniors with and without IB experience it's actually quite painful bringing an investment sales person up to speed. I can't help but think they'd be more take-privates in the RE sector if there were more people who were comfortable underwriting a corporate acquisition.

RE isn't rocket science at the end of the day but having a holistic understanding of real estate, corporate finance, financing, legal, market awareness etc. will help you succeed in the industry.

In terms of original question - I think Blackstone Acquisitions would hands down be the best training (real estate IP & solid corporate finance training).

 
  • NA in RE - Comm
Aug 28, 2020 - 6:04pm

Well perhaps you can educate me a little bit here but I think that's because the job is much less RE than it is PE. Absolutely a killer job, but 99.9% of jobs in commercial real estate require intimate knowledge of the asset, local expertise, boots on the ground experience, operational expertise, relationships with bankers/brokers, etc. 

This isn't the IB forum, so I don't think everyone here is concerned about prestige/exclusivity. Probably lost that chance when we went to state schools, lol. People get into CRE because they're interested in what I highlighted above, not managing a fund that happens to have real estate assets in it. 

IS/Debt jobs prepare you much better for a true CRE role. Megafunds are great but so much of the industry goes on below the $100 million level.             

 
Aug 28, 2020 - 7:48pm

I think if you want to make it to the "big leagues" it does make sense that appraisals, leasing and property management won't get you there, at least not as quickly compared to other paths. In my mind, big leagues refers to mega funds or institutional firms being able to work on big deals, acquisitions and developments in major city centers where they're kind of doing landmark deals. Good places to start for these would be in IB, debt/equity placement, investment sales, lending. Its actually possible to head to an REPE shop out of undergrad as an analyst. 

You could also be a "heavy hitter" later on in life by running your own shop/deals in a less competitive market, or one that neighbors a primary one. There are deals to be done everywhere with untapped potential.

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