Most Lucrative Property Type for Broker
I know the most lucrative or potential to be the most lucrative is multi family followed by net leased retail due to there simply being more to sell. With these property types also comes more competition though. For someone who's just getting into the commercial brokerage industry , what property would you try to get into (under the assumption it is a top 10 market)? How would you go about deciding what property type to get into? What do you think matters the most when deciding what type you are going to sell? Is who you are working with more important than the type you're selling?
I would appreciate any response or opinion; I'm just trying to gauge and challenge my thought process with other's perspectives.
Thanks!
I think the guys I know that make the most money do F500 tenant rep.
I hate this answer, but it depends. Class A office tenant and landlord reps kill it, but of course there is survivorship bias toward the tiny few who can succeed in the industry. Sales/purchase reps for large and/or Class A buildings also make a killing, but it goes back to survivorship bias.
I'm not a brokerage expert, but the law of supply and demand suggests that the top people across all brokerage should be making about the same amount of money. If one avenue were earning the top people substantially more, that area of brokerage would get profits competing downward.
Certainly depends, but I would say office leasing. Think of how commissions are calculated:
Total SF X Adjusted Rent X Term - Concessions X 4% (tenant) 2% (landlord). Fee percentages vary. If you do a deal with a big client (lots of SF), a long term, and/or in a high rent building, you are going to make more money. Combine all three variables (public company signing a 15 yr deal for 50,000 SF in a baller building) and you are going to make a ridiculous fee. Successful leasing guys may do 100+ deals a year (landlord rep) or 30+ (tenant rep)--volume adds up.
Long term career wise, this compensation structure has to be due for a correction. Would be interested to hear other's thoughts on how that will evolve. IMO commercial brokerage is the most overpaid business in existence--and that is coming from a former broker.
I think the correction will come from consolidation of the industry. I think we're going to end up with like 5-6 mega firms that have bought out so much of the industry that they don't need to make all their money off of brokerage commissions anymore and will start to compete on fees. I bet brokerage begins to move towards a low salary/ high bonus type structure and multiple teams within an office will consolidate into large "groups." Probably not too dissimilar to investment banks.
The evidence that drives me to this conclusion is:
a) CBRE has already done this, JLL has followed suite and the whole Cushman mergers thing has effectively made three megacorps. b) Cushman and NGKF are probably going public in the next year, most likely to raise capital to purchase more small companies c) All the large firms are ramping up the valuation and advisory sectors. d) Go on Loopnet and click the "get financing" button under the price. Look at where it takes you.
I agree that leasing brokers are grossly overpaid but I tend to think a good listing broker on an institutional sized sale is worth his weight in gold.
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