Finance/JD - Tenant Rep & Developer Q's

First time poster, but been lurking around the site for a while.

Long story short, have a Finance degree (decent school, but no ivy league), a little restructuring work, and spent the past 3 years in law school focusing on corp law (M&A, contract drafting/revision, etc.) with solid experience in those areas. My goal 3 years ago was to enter corp law papering M&A/PE deals and then exit over to biz side, but Ive realized that I want to skip that and jump straight into investment world, pref RE.

While it may seem like a wasted degree (correct me if I'm wrong), I'm looking at tenant rep and have some info interviews set up at the biggest shops (CBRE/JLL/etc) with some high-up individuals at their office. One even said he is going to have me meet a couple others while there.

(1) They know I have no RE experience, so will much be expected of me quantitatively speaking?
(2) How should I prep for this? I'm quite good at the legal info interviews, but this is new territory for me
(3) Is showing I can BS with anyone really what I need to sell? (hoping for this)
(4) Alt: How interested would development firms be in me? Interested in this side too.

Sorry for the longwinded post, but any help would be greatly appreciated.

Comments (24)

Mar 30, 2015

Tenant rep can be very lucrative, but you will not learn how to analyze numbers. Just starting out, you will be cold calling and if you are lucky your senior team members will put you on new deals they originate to learn the ropes. It is usually, though not always, a 2-2.5 year cycle to get up and going / making good money.
In reference to your questions:

1) You won't need any quantitative experience. Yes, it will help to understand a spreadsheet and which lease is more cost effective, however, that can easily be learned on the job. Most likely, there will be analysts / a consulting department that will do analysis for you. You will tell the analyst what type of analysis you want.

2) To prep, just be able to answer why you are interested in tenant rep / leasing. It will be based upon fit. Also, they will want to determine if you can make 50-100 cold calls a day for the next few years. Note, cold calling never goes away in tenant rep, you just gain clients and your day becomes more varied.

3) I wouldn't say BSing, but I would say just be able to show you can talk / get along with anyone.

4) You could eventually move to a development firm in their leasing department. This would be a much easier move than a quantitatively focused position. With that said, for brokers who move to more than that, many either start their own investments with commissions they have made or they move to an important position because of their stature within the industry. Tenant reps understand what tenants want in a building and understand how to leases work. This will teach you about lease up risk. But you will not learn any real quantitative skills.

If your goal is REPE (and to have a more quantitative job) I would say go for investment sales. Or try to become an analyst within an investment sales team. If your goal is to work for a developer and you don't care what you do, tenant rep is fine because you can move to the leasing department. But once you get into leasing, it can be harder to get out.

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Mar 30, 2015

Thanks! Had a couple follow-up Qs ... (1) REPE one day would be great, but I think push come to shove, Id choose tenant rep over IS if I had comparable offers. Sounds like IS is more number crunching and behind the desk, no? I like the talking to people, chumming up business, etc. From my limited knowledge, it sounds like money opp is great in both; both dependent on hustle.
(2) Sorry for being unclear in my development question before, but how would development firms view me right now? Your previous answer was helpful though that I know where tenant rep can take me down the line in terms of CRE development.

To be blunt, I want to make money (after a couple yrs) while not sitting behind a desk crunching numbers all day every day, BC that would kill me internally. Tenant Reo and development seem to be the most in line with this ... ?

Mar 30, 2015

In investment sales you need to know the numbers, but with that said, from my understanding, you will still have people (analysts, internal consultants, etc) to run the numbers for you. It is a sales job. Your main goal will be to sell and be with people. Yes, in investment sales you will need to know and be able to speak about / have an interest in, the economy and where the market may be heading, but it is a sales job. Your goal will be to have meetings. In both, you will start your career cold calling and eventually have your own clients to service plus cold call new ones or network to find new ones.
Depending on the IS team you work on, your job may differ. Although it will all be sales, if you were to join a team at a CBRE / JLL / Cushman, you may be fed business and support the senior team members. However, some shops you will be told go find your own business to service. This could occur at a CBRE / JLL / Cushman etc, but because of the size of deals that they chase, a new broker will most likely not be tapped to run a sale of a $100,000,000 dollar sale.
Opportunity is great in both and money is great in both. Leasing is generally where the money is (at least in my market). This is because volume is greater in leasing than in investment sales. Therefore, one can do a larger amount of volume in leasing and therefore make more money. For examples, in my market, from commission schedules that I have seen, a 10,000 sq. ft. lease at $50 per foot for 10 years is a $160,000 gross commission (before splits). Whereas a $500,000 dollar investment sale is a $30,000 gross commission. To do a $160,000 gross commission investment sale, you need to sell a building worth around $2,666,666.
Lastly, leasing is not as cyclical as investment sales. Leases always roll (end), but if the economy tanks, no one is selling unless they need to. Leasing is still cyclical, but less than investment sales.

Also, if you think leasing is really what you want, also look into agency teams. Agency teams represent landlords. You won't need to worry about building your book as quickly, and can learn the ropes without worrying about business development. You will have more client contact from the start because you will be giving tours to potential tenants and meeting their brokers which is great networking. It will be a slower route to making money, but your team will have to pay you from the start because you will be working on all new prospects / deals. With that said, as you learn / get promoted, you can start going after tenant rep deals. You will know what you are doing at this point and not need to share your commissions with anyone. In addition, you will have the more consistent income of agency deals keeping you afloat, and you can use the tenant rep deals to increase your income. Agency representation gets a smaller commission than tenant rep, but the cash flow can be more consistent. In addition, if you were to go work for a developer, in house leasing is more akin to agency rep than tenant rep.

I can't really help with how development would view you right now as I am not a lawyer nor have I been to law school. Others may be able to chime in though. With the desk job thing though, you will still be behind your desk as a broker. Most brokers are out maybe 30% of their time once they get going. You may be dealing with people as your business, but your day will consist of lease review, lease analysis, cold calls (lots of cold calls), creating surveys (if you have clients), and creating marketing decks for new client pitches.

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Mar 31, 2015
pudding:

Opportunity is great in both and money is great in both. Leasing is generally where the money is (at least in my market). This is because volume is greater in leasing than in investment sales. Therefore, one can do a larger amount of volume in leasing and therefore make more money. For examples, in my market, from commission schedules that I have seen, a 10,000 sq. ft. lease at $50 per foot for 10 years is a $160,000 gross commission (before splits). Whereas a $500,000 dollar investment sale is a $30,000 gross commission. To do a $160,000 gross commission investment sale, you need to sell a building worth around $2,666,666.

Who in their right mind is doing $500,000 deals at CBRE/JLL/Eastdil....... No one goes to brokerage to do half a million dollar deals. Even when you're just a junior. There are 2nd years juniors in my office that will have listed and closed over $15M by this years end.

OP go for gold and do IS. If you're going to a top shop. I think the exits would better suit your long term interests.

Mar 31, 2015
makecents:
pudding wrote:



Opportunity is great in both and money is great in both. Leasing is generally where the money is (at least in my market). This is because volume is greater in leasing than in investment sales. Therefore, one can do a larger amount of volume in leasing and therefore make more money. For examples, in my market, from commission schedules that I have seen, a 10,000 sq. ft. lease at $50 per foot for 10 years is a $160,000 gross commission (before splits). Whereas a $500,000 dollar investment sale is a $30,000 gross commission. To do a $160,000 gross commission investment sale, you need to sell a building worth around $2,666,666.

Who in their right mind is doing $500,000 deals at CBRE/JLL/Eastdil....... No one goes to brokerage to do half a million dollar deals. Even when you're just a junior. There are 2nd years juniors in my office that will have listed and closed over $15M by this years end.

Makecents, it is an example to show similar value deals. 10,000 sq ft at $50 / foot for 10 years is $500,000 per year. So to keep it similar, I did a $500,000 IS. In addition, if you start in IS at a cb/jll/cushman, chances are you won't originate deals by yourself. The size these firms chase are too large. If you go to other firms, such as a marcus and millichap, you will be doing deals those size to get started. Also, we don't know the market the original poster is in, in many markets that is a decent size deal.

Mar 13, 2017

Th two transactions you used as example are pointless to compare. The value of that lease on a ten cap is $5mm, obviously the commission will be greater. What market are you in where the average lease rate is $50/sf and the average investment sales transaction is $500k?

Mar 31, 2015

Thanks for all the info again. Given your latest info, I think I'm def more interested in tenant rep as opposed to IS. Can't comment on how the team would be and my role within (if I even get a job), I just know the ppl I'm meeting are chasing huge deals at the Tier I firms in a major market. Who knows if I actually placed under them though ... one can dream though.

Your agency info is interesting, def going to check that out.

I know desk work is involved, but coming from an industry where it's 100% (transactional law so no court), 70% sounds beautiful.

Anyone else have thoughts on Development?

Mar 31, 2015

I also wanted to add, if you think development is somewhere you want to be, IS brokers have an easier time investing their money themselves because they have the sole job of finding buildings to sell. If they find a building they like, they can buy it. In addition, in terms of development, if you find something to sell that you see potential to develop, it will be easier to do in investment sales as your job is to find the buildings. In addition, in terms of working for a developer / landlord, if you do agency rep, you can sometimes get a slice of equity to align your interests with the owner. This is a little known fact that many people outside the industry don't know. With that said, many tenant rep guys invest in real estate also, but if your sole job is to find buildings to sell, aka IS, it might be easier to do as an investment sales broker.
Many top leasing executives at large office developers did cut their teeth as leasing brokers though.

Mar 31, 2015
pudding:

I also wanted to add, if you think development is somewhere you want to be, IS brokers have an easier time investing their money themselves because they have the sole job of finding buildings to sell. If they find a building they like, they can buy it. In addition, in terms of development, if you find something to sell that you see potential to develop, it will be easier to do in investment sales as your job is to find the buildings

With that said, many tenant rep guys invest in real estate also, but if your sole job is to find buildings to sell, aka IS, it might be easier to do as an investment sales broker.

You seem to have discouraged him multiple times in this thread. He sounds smart, he sounds like he knows what he's talking about and knows what he wants. So many douchebag leasing agents out there without any great skills under their belt. The leasing business needs more guys like the OP.

I'm not sure what you're talking about when you say that an investment sales guy could find a building to develop. An investment sales guy focuses on marketing high-quality stabilized assets to buyers at a certain cap rate. An investment sales guy is NOT focused on finding dirt.

A much more likely scenario I envision is that of a tenant rep developing an excellent eye for a site that works for his tenant. I also could see that tenant rep ending up with an equity stake in a build-to-suit deal because of his relationships.

Mar 31, 2015

Prospie, I haven't discouraged him at all, I am providing a full picture to make an informed decision. In addition, different perspectives sometimes help people make a fully informed decision.

You are correct that IS brokers find stable assets to market, however, being in the market each and every day means that not every asset you find will be stable. Many, as a matter of fact, will be assets that need work and value - add components.

A tenant rep broker will find deals that work for their tenant, and there are some investors / developers that I can think of that made the switch from leasing to development and could do so because of their understanding of the market. However, they were at the top of their game for 15 years as a top leasing broker in the market with relationships with more than just tenants. More likely, I would see an agency rep getting an equity stake because of their know - how and relationships. Although possible, I don't see an owner giving a tenant rep an equity stake because they have relationships. In that case, they would hire them as an agency rep.

As a tenant rep, you learn leasing, but you learn nothing about investing / developing. At least in IS, you learn why investors are buying / selling. You see both ends of the pictures. I received advice prior to starting my career from one of the largest developers in my market that if I wanted to eventually own / develop, I should start in investment sales if I was starting in leasing. The reason being you will build relationships with investors (who could one day be your source of capital) and you will see why investors buy / sell. In the opinion of this CEO, understanding why investors buy or sell was much more important than having the relationships with the tenants because you are searching for value. You can always hire a solid tenant / agency rep.

Lastly, from my experience, many more IS guys own stakes in buildings than tenant guys.

Mar 31, 2015

Thanks for the input everyone. I don't feel the need to hide my mrkt .. Chicago (born and raised). Everyone has certainly given me a lot to think about. So far, the ppl I'm meeting are tenant rep. This is largely because the first guy I contacted was here and then the referral game took shape - plus this side originally caught my interest (big risk : big reward) . Given this new info on IS, certainly going to need to do my homework in that area though.

Equity in the future would be nice and exactly what I'm hopeful for. I know a lot of tenant rep guys scoop up rental properties on the side, and this was what I was thinking. Rental props in Chicago are easy cash flow. With a down pmt, you can have a renters pay a 10yr mortgage for you and own the unit outright. Comm. equity, I can admit I have no clue on how best to obtain this outside of the above postings. Sounds like it really comes down to what path I want to go (tenant v IS). Obviously if I were to become a successful tenant rep, I would stay in that game because I found a sweet spot ... big IF though.

Somewhat cavalier question... How do lifestyles compare? I know the reputation of TR ... IS similar or whole dif game?

Appreciate all the comments for this noob. Also, everyone feel free to give honest opinions - won't discourage me. Don't want to mess up this decision as it sounds like the paths fork in dif directions

Mar 31, 2015
TheGreatOne99:

Equity in the future would be nice and exactly what I'm hopeful for. I know a lot of tenant rep guys scoop up rental properties on the side, and this was what I was thinking. Rental props in Chicago are easy cash flow. With a down pmt, you can have a renters pay a 10yr mortgage for you and own the unit outright. Comm. equity, I can admit I have no clue on how best to obtain this outside of the above postings.

Rental properties have nothing to do with anything. If that is your goal, you could be a high school dropout working in an oil field and buy rental properties.

Mar 31, 2015
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