Commercial Brokerage possible exit options?

Hi All,

I am trying to gain a little insight. I am a senior in college trying to break into commercial real estate. I have not had any previous experience in the field before but I do have finance experience. I have been attempting to network into different positions (mainly acquisition analyst positions or development analyst), however, many of the positions that I have come across all ask for 1-3 years of experience in CRE. The easier path to break into the industry in my opinion would be commercial real estate brokerage. After doing brokerage for a few years, would it be possible to transition to development or acquisitions? Or, because brokerage is more qualitative, would that be an extremely hard switch?

Thanks all.

Comments (27)

Feb 1, 2014

I believe there's a thread lurking around somewhere on the RE forum asking somewhat of the same question.

But to answer your question.... Can you get pigeon-holed in brokerage? Yeah sure, but only if you choose to. If you would like to make the leap from brokerage to dev/acquisitions it is possible. However, it's sure as hell not going to be handed to you. In addition to building the technical chops needed on the buyside (which will not be used for most deals in brokerage unless they're bigger deals so you must learn this on your own time) you're going to have to network your ass off and pound pavement to establish good standing relationships with institutional buyers (REITS, REPE, & Developers etc etc) and from there you can leverage those relationships to make the jump.

As cliche as it sounds, for the most part you can transition to any role you would like should you chose to go above and beyond to get there. It just depends how bad you'd like to get there.

Feb 1, 2014

Completely agree with this. Along the same lines, a lot of brokers that I know (especially the old school ones) don't ever develop technical skills/underwriting knowledge; they are strictly salespeople. On most of larger/successful deal teams, there are typically 1-2 rainmaker brokers and they have a team of associates/analysts (the lines are a little more blurred in CRE, at least in my experience) that crank out all of the materials (both technical and marketing oriented) and actually execute the closing. So you are going to have to develop those skills in addition to trying to put deals together if you are starting out square one.

I would argue that many people in industry actually see brokerage as the end game, and that you are in the minority going the other way. If you start out as a sell-side analyst on a deal team or on the buy-side, you can build credibility pretty quickly so you have a good book of business when you make the jump to brokerage, and you will be more of a relationship manager than actually have to generate leads. But, as mentioned above, anything is possible.

Feb 2, 2014

Thank you all for your answers.

Feb 2, 2014

I think it depends on the prestige of the brokerage firm you're at and the team that you're on. If you're the analyst for Cushman & Wakefield's Mid-Atlantic multifamily group then your exit options are very good (although, if you landed that gig you might not be considering exit options). If you're a general analyst for some no-name local broker then your options are much more limited.

I would Google something like "top commercial real estate brokers" and become familiar with the elite firm names. If your prospective firm isn't on that list then I would step back and consider your options. However, it is far, far better to have a job and to develop skills then to not have a job. So long as you are at the brokerage gig for 2 years or less you will not pigeonhole yourself into brokerage.

I somewhat disagree with the assertion that brokerage is the target goal for most people in real estate. The target is development, IMHO. Brokerage fits a very narrow niche personality--either you have it or you don't. There's no amount of contacts or skill you can develop that will make you a successful broker.

Feb 6, 2014

I met with all the presidents of the top developers in my market prior to landing my job in brokerage. Every single one told me to spend a couple years in brokerage to gain exposure and deal experience and use those skills as a springboard into dev/investment. In fact, all shared anecdotes of themselves doing the exact same thing.

As far as brokerage being the end game, I disagree. To put it bluntly, most people in brokerage are not analytically inclined enough to pull together complex development deals from the ground up. Brokers are scrappy as hell--fighters--and smart at what they do. The top brokers could make ice out of air and then sell it to an eskimo (or at least make a deep relationship with the eskimo). I could very well get some flack for this on the forum, but even the top producers (pulling in $1.5mm+) at my office admit they don't have what it takes to develop.

Also, brokerage limits you greatly (long-term) in your marketability into other areas of business. You're a master of business development/relationship building in a small geographic location. You can't take those relationships with you if you want to leave.

The end game is what you make of it. If you want to be in development and can't find a job right out of school, Execu|Search for something in brokerage to gain experience. In the meantime, network and build rapport with developers in your market. Who knows, you might end up loving brokerage and want to stay.

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Best Response
May 21, 2014
coolhandlucas:

As far as brokerage being the end game, I disagree. To put it bluntly, most people in brokerage are not analytically inclined enough to pull together complex development deals from the ground up. Brokers are scrappy as hell--fighters--and smart at what they do. The top brokers could make ice out of air and then sell it to an eskimo (or at least make a deep relationship with the eskimo). I could very well get some flack for this on the forum, but even the top producers (pulling in $1.5mm+) at my office admit they don't have what it takes to develop.

Also, brokerage limits you greatly (long-term) in your marketability into other areas of business. You're a master of business development/relationship building in a small geographic location. You can't take those relationships with you if you want to leave.

The end game is what you make of it. If you want to be in development and can't find a job right out of school, Execu|Search for something in brokerage to gain experience. In the meantime, network and build rapport with developers in your market. Who knows, you might end up loving brokerage and want to stay.

So are you saying that while the guys making millions a year actually getting the deals in the door, that they lack the ability to be an excel monkey and aren't as smart as the analyst who is doing the grunt work making $100K a year?

This website is crazy to me - a bunch of people striving to be analyst. I hope everyone knows that the real money - be it in IB, CRE, F500 - is made by the guys who make the deals happen - not the guy crunching the #s.

The world is filled with number crunchers - they are disposable. But you can't replace a guy who has deep entrenched relationships with people and bring in the dough for the firm.

My 2 pennies.

    • 5
May 22, 2014
gregt14:

So are you saying that while the guys making millions a year actually getting the deals in the door, that they lack the ability to be an excel monkey and aren't as smart as the analyst who is doing the grunt work making $100K a year?

He said they admit they don't have what it takes to be a developer. And no, they might not be as smart as the analyst grunt. But who said you need to be smart to make millions? Intelligence aside, it is still a fact that they didn't devote their careers to developing the skills that someone at Trammell Crow did.

Let's say you are a well-heeled institution with a site that you want to put self-storage on. Rather than JV, you want to pay a developer a fee to built it, and the going rate for such a fee is in the millions. Who do you engage on this project, an expert on the intricacies of managing a self-storage development? Or some asshole "BSD" broker who "knows everybody in town" but has never had the patience or put in the gruntwork to learn the details/complexity of the development process?

This website is crazy to me - a bunch of people striving to be analyst. I hope everyone knows that the real money - be it in IB, CRE, F500 - is made by the guys who make the deals happen - not the guy crunching the #s.

The world is filled with number crunchers - they are disposable. But you can't replace a guy who has deep entrenched relationships with people and bring in the dough for the firm.

A bunch of people striving to be an analyst is because the posters on here are like 19 years old.

The best developers have deep relationships and are good at raising money, sure, but some of the best developers also started out as an analyst. Let's say you are at the very beginning of your career and want to go work for a developer (Trammell Crow, Hines, Related, etc.). What will you start out as? Something in construction, or architecture? No - you want to start as an analyst.

Regarding your example, even something like i-banking, the guys at the top have ALL spent years eyeballs-deep in financial models. The exception is someone like Rudy Giuliani ("Giuliani Capital"), but do you think F500 CEOs describe him as a respected, brilliant investment banker?

At the end of the day, though, I won't argue with you too much because, especially in something like real estate, your overarching point is true.

Feb 6, 2014

I agree with this and can see how my response can be misleading. Good point.

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Feb 1, 2014

To argue that development doesn't limit you geographically as well is misleading. There are lots of nuances and regional knowledge that a developer needs to know just like a broker. Even large, national developers have regional groups that handle all of the deals in those regions, or if they don't they bring in someone who knows the area for the deal.

My viewpoint is coming from an institutional perspective as opposed to MM or small cap deals. Albeit I'm fairly new to the industry, but I know a heck of a lot more brokers that have passed the $2mm mark than individuals on the buyside. Do a good number of them get into the principal side after? Sure, but I don't think their lack of technical skills would or does keep them out. At that point in your career, are you really going to be cranking out an Argus/Excel model yourself (not saying that you wouldn't review/teak it)? That's not to say that you can't make more money eventually on the buy-side, but I definitely think that median or mean annual income for a broker at what I'll call a 'decent' group is higher than what you'll see for most other mid-level gigs on the buy-side.

DC, definitely agree with you on the prestige of the individual group. I think there is generally a huge misconception of brokerage that is out there. There are two types of brokerage houses that I've seen so far:

1) Grindhouse, where you basically join up and it is a total war of attrition to get leads/deals done (this is where the above scrappiness/lack of technical skill assumptions come into play). Lots of brokers drop out or linger while being ineffective, and only a very rare few succeed based on pure grit/savvy (rare personalities).

2) Managed houses (some of the larger firms are moving towards this now) where teams are structured like an IB group: you have analysts/associates cranking out all of the underwriting/financial models and pitch books/client materials, then you have senior associates/VP's at the mid level, then you have the senior brokers acting like a director/relationship manager that actually sources business.

The latter is more effective in most cases because they 1) recruit people that are multi-faceted (soft skills and technical) and 2) get more referred business built on company brand and relationship management, therefore having to spend a lot less time prospecting.

I don't argue that the above two posts outline valid paths, but I think the whole 'sell-side ---> buy-side' route is not as uniformly practiced/sought after/accepted in CRE as it is in what I'll call "traditional high finance" for lack of a better term.

No matter how you slice it though,the above "The end is what you make of it" is well said.

OP, good luck in whatever you end up doing.

    • 1
Jun 19, 2014

There are a lot of threads on this same question--use the search bar.

The biggest driver for the nature of exit opportunities is likely whether you work in leasing or investment sales.

May 22, 2014
Ricky Rosay:

There are a lot of threads on this same question--use the search bar.

The biggest driver for the nature of exit opportunities is likely whether you work in leasing or investment sales.

Thanks for the feedback.

I'm currently installing a copy machine in the office of a professor of real estate at Oregon State. What's the best way to leverage this connection into an offer with a $1+ BN repe in nyc?

Jun 19, 2014

Principal side should be easy if you're at one of the big firms. I would go straight to the equity side if I were you. No use in trying to get into CMBS (which I think is what you're angling for) to then try to go the equity side. CMBS bubble is gonna pop brah.

Jun 19, 2014

You might already be aware but some of the larger pe shops have dedicated people to source their debt. That seems like it would be a fairly natural transition.

Jun 19, 2014

Thank you for all the input!

Jun 19, 2014
PBswimfan:

Thank you for all the input!

Seriously, once you're in real estate, and thus "show interest in real estate," you can more or less do anything. My career is relatively short, and I have bounced around between:

  1. Commercial market analysis
  2. Commercial office leasing (top 3 platform)
  3. Multi-family property management
  4. Commercial (hospitality) construction project management
  5. Commercial financial analysis
  6. Multi-family acquisitions and development work

It all kind of ties into each other and it's very easy to "spin" in an interview.

Feb 2, 2014

Thank you everyone for your insight. I am currently deciding between a leasing brokerage position at a CBRE / JLL / NGKF / Cushman or an investment sales position at Marcus and Millichap / other firms that specialize in sub $100 million investment sales. Does anyone have any advice?
Thank you.

May 17, 2014

pudding, I would say that they're two very different fields even though many people work both sides. Leasing tends to be viewed as less sophisticated among investment sales professionals but it's probably a lot more stable with a lot more deal flow.

I know many leasing brokers who also do sales, but most tend to be mid-market guys or targeting smaller deals. It's much harder for these guys to break into institutional level assets. Those are usually pitched on by groups with the technical capabilities and sophistication to underwrite them.

As for the investment sales position, it really depends on what that particular group focuses on. You may get pigeonholed easily into one kind of asset depending on the group. Deals may also be a lot harder to come by in contrast to leasing.

May 21, 2014

Some good comments already on the board...Agree that investment sales brokers and financial intermediaries are regarded as MUCH more sophisticated than leasing brokers. Also, prestige of brokerage firm matters a great deal. JLL, Eastdil, or a high quality boutique like Ackman Ziff is head and shoulders above the rest. In summary, if you want better exit opps, work on the investment sales side or debt/equity placement side AND get in with one of the more prestigious firms.

Feb 2, 2014

Thank you rainoffire and atwoodt. My current thought process is that although investment sales is seen as much more sophisticated, I should go with the leasing job because it is at JLL / CBRE / Cushman type firm. Additionally, I see understanding leasing as a major part of any commercial real estate investment. Understanding the tenant mix, how to attract good tenants, and what to set your leasing rates at is still important. Additionally, it all plays into the value of a building.
For the investment sales position, I don't know what group I would be put into. It could be office, multi family, industrial, etc. For leasing, I know who I will be working with and learning from, and for a first job, I think that is the most important - especially learning about the industry. If I decide to move later on to investment sales, I can, and if I want to move to development, I feel if I do it early enough in my career, it is still possible.
Would you all agree that my thought process is correct?

May 21, 2014
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Feb 2, 2014