I could not find a specific thread on this topic, so curious to hear yalls input. I'm very interested in getting into investment sales but I do not know which asset type would be best. I am leaning towards retail since I kind of already have a few connections in that area, but don't want to rule out anything yet (especially since I do not even have a job lined up). Thanks in advance.
| +82 | LP coming into deal at higher land basis. How to model returns to GP? | 18 | 1d | |
| +76 | Increasing RE Industry's Cash Compensation, Collectively | 43 | 22h | |
| +73 | Major Decisions | 13 | 1d | |
| +33 | Niche down to an operator or stay an allocator | 10 | 50m | |
| +24 | Breaking into CRE late 20s | 7 | 4d | |
| +23 | Thoughts on joining an early-stage REPE fund | 7 | 21h | |
| +22 | Self Storage ECRI | 9 | 3d | |
| +20 | Doom Loop or Creative Urban Reemergence? | 3 | 6d | |
| +19 | How to get good at RE Modelling? | 17 | 2s | |
| +18 | 3 Hour Condo/Rental Excel Test - What Can Be Expected | 2 | 4d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Sorry if this is a bit sloppy, writing on my phone. Here’s a quick answer.
i think it’s ideal to work on multiple asset classes for the broadest exposure, or at least work on multifamily + one of the other 3 for experience with both ARGUS based and excel based modeling.
I’ve worked on all 4 in IS and personally found multifamily to be the most enjoyable by far since I thought using Argus and reading/abstracting leases for the other 3 was very tedious (but still good experience To have). I also generally thought multifamily was the most fun since most people are naturally interested in it (I.e. there’s an entire tv channel called HGTV for people to just look at living spaces and learn about renovations etc).
The basic pros/cons of the other 3 are:
Office: typically the largest class A buildings (and largest $$$ deals) in a market are office. You look at any city skyline and it’s all office buildings. Get to learn about local businesses and their needs. Get to use ARGUS but will have to spend a lot of time tediously reading leases and other financial reports to input into ARGUS.
Industrial: very active rate now, some of the lowest cap rates and also large $$$ deals in many markets. Learn more about the logistical needs of businesses (storage/production/distribution) and learn about ecommerce and stuff. Not as tedious to model since most properties only have 1-4 tenants. The actual buildings themselves are the least interesting by far since they are typically just big ugly boxes out in rural areas. Expect lots of driving.
Retail: Tenants are the most familiar since everybody knows all the retail brands more so than office/industrial tenants. Can be cool to see what stores are expanding and doing well and synergize with other stores vs dying and becoming obsolete. For larger malls, the modeling can be extremely painfully tedious. Execution is very unpredictable since the industry is so in flux and nobody can really agree on pricing like the other 3 classes, so you may have to bust your ass on deals that either don’t trade or or take a very long time to trade or trade lower than you were hoping. Overall will have the highest caps and lowest $$$ amount of the 4.
Maybe I'm just a weirdo, but I think industrial is incredibly interesting in its current form, and the future looks even more interest. It, by far, has the most opportunity to innovation in the next couple decades. There is nothing boring about a four level, 2.5M+ square foot, distribution center that is over 10 stories high.
I don't disagree, I think it can be very interesting and look forward to all the innovation in the years ahead, I just think in general the typical industrial building is not that exciting.
To be a stud IS broker you usually have to dedicate your time specializing on one asset class. There is no way to be a true expert across various asset classes with powerful networks in each in the IS world. It can be done in the debt space.
If you think of a cap rate as a risk premium, it would make sense for retail to have the highest cap rates due to having the most uncertain/risky outlook. Many retail properties have declining sales and inefficient/obsolete layouts/locations which require redevelopment due to e-commerce growth and traditional anchors going out of business. I’ve seen tertiary retail centers with declining sales trade for 10-20%+ caps. There are also plenty of retail properties doing fine but they tend to trade less frequently.
Specialization will vary by office. Some offices have a shared pool of analysts doing everything while others will have specialized analysts assigned to each broker. The pooled approach gives analysts a broader experience, more balanced work load, and causes less disruption if somebody leaves. The specialized approach allows them to develop more expertise so the broker can give them more responsibility / less oversight (and tbh sometimes brokers just don’t like sharing resources with each other).
FYI - the retail guys are charging higher sales fees due to the turmoil. We were selling $50-60mm apartments for 50 bps fees without flinching while retail guys were asking 100 bps to spend time on same size power centers due to execution risk...
Fair point as well. I don’t think my firm charged higher fees for retail but we definitely should have since the process was usually a lot longer and more difficult.
If you're investment sales, your day to day for the foreseeable future will probably consist of hammering the phone to drum up business. It is a sales job, on a commission only salary, where a large part of your day is facing constant rejection on the phone and chasing down empty leads.
You need to pick an asset class that excites you. Do big office skyscrapers turn you on? Do remodeled value-add opportunities in gentrifying neighborhoods get you hard? Or do you get off on a single tenant KFC in Alabama?
Ultimately, decide for yourself what gets you up in the morning, to get in your car and drive to the office to make 100 calls, and work your ass off understanding everything about that asset.
i never made a single cold call as an I-Sales analyst
Your deal flow probably came from the senior agent / broker on your team then right? I mean at some point in an investment sales career you have to pickup the phone and makes calls.
Damn dude.. the double doink was legit crazy and i know the Bears let you go and all.. but didn't think you would do a complete 180 and shift to CRE!
If there's any justice he won't find work in CRE either.
If you for sure want to be an IS broker, network trumps everything at the end of the day. Leveraging connections in the space goes a long way. If you want to end up on the principal side long-term, try to get exposure to multiple asset classes so you don't pigeon-hole yourself.
In terms of retail - I think the large strip-center and neighborhood retail space is pretty healthy and ripe for positive transformation/redevelopment. It's going to get uglier in the mall/power center space in most markets before it gets better.
Aut provident commodi dolorem impedit. Voluptas quia qui ut quo molestias. Ut doloremque nostrum quos omnis dolor temporibus perspiciatis eum.
Voluptatem voluptatem molestiae aut rem quod. Eius ducimus fugit autem ut similique aut quisquam. Ad ut rem dolore est. Rerum dolores odio rerum ad.
Et voluptas sed aut natus fuga consequuntur rerum vel. Illum error qui nihil sed ea iste voluptatum exercitationem. Vel omnis non veritatis possimus. Autem quo recusandae ut esse autem sapiente.
Fuga est ut eligendi eaque dolorum. Eos quia et veritatis voluptatem quia.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...