Q&A: VP Level Industrial I-Sales Broker - Core Market
There's been a couple of these, but have not seen one focused purely on IS by someone currently in IS. A lot of topics being posted about IS confusion lately, especially analyst level, so figured I'd try to help.
Long story short, since my Junior year internship I have been on an industrial IS team in one capacity or another. Graduated about 7 years ago, got my start at the holy grail as an analyst out of college. Stayed there for 2-years, switched firms and markets to get into pure IS/cover a broader spectrum of deal sizes. Currently at the VP level - have been everything from Analyst, Associate, SA, to VP. I lead a regional infill team covering multiple markets - 4 associates below me, 4 analysts/researches below them. All report to me, I report to our MD.
Fire away. Or don't and I'll feel like an idiot. Either should be humbling.
Thanks for doing this. A few questions:
• How do you add value relative to your competitors? Is it all about your network of potential buyers, or are there other factors that you feel distinguish your work product? • For residential brokerage, core markets are much more liquid and efficient and it seems that brokers face greater threat of disintermediation through technology. Do you feel any pressure now, or foresee any in the future, from any technologies? If so, which ones? • What are some of your favorite aspects of your job? • What are your least favorite aspects? • Can you tell us about a time that you succeeded that had you thinking "I am never going to stop doing this"? Also, do you mind sharing a moment (if ever) where you thought "I need to do something different"? • Lastly, where do you want to be in 10 years professionally?
Again, thanks for doing this. I have enjoyed your posts recently and feel that we need more broker input in the community so I am looking forward to reading your answers my questions as well as others.
+1, these are good ones.
Not to hijack his thread, but while waiting on him, you want to take a crack at answering those Edifice ? I believe you have alluded to/mentioned being a broker in Manhattan and I'm sure everyone would appreciate your take on the questions above.
1 - a lot teams pride themselves on relationship, relationship, relationship. As a team we try to recruit as diverse as possible - not strictly race/creed (sorta impossible) but more this guy is great on the phones with clients, this guy is great at modelling, this person kills research. I don't focus on differentiating from any other firm, I focus on the TEAMS I know I'm competing against. The most important question is always "who's the competition". The corridor I'm most focused on is very broken into 4 dominant teams, and as we've all started chasing infill deals we find ourselves competing with the locals as well. Our "value pitch" is being a big boy, with a very local presence. We work up and down the deal size, so we feel like we have the acumen across the board on a very micro level paired with a large corporate backing to run a good process. We are very well staffed, I have triple the juniors my next competitor has - that gives a lot of insight into super local asset level information. We also know the deal teams from top to bottom - we cover EVERYONE. Our analysts ping theirs, our associates ping their associates, my level is all over my corresponding level - up to the MDs. 2. No I don't, maybe for REOs/auctions, but I feel like there will always be a need for someone to market deal intricacies that a computer just cant. Tough for a computer to argue chopping up blocks of space, or any kind of value add proposition. Maybe, but is far less commodity than residential. 3. Favorite aspect is that aside from my MD, I really don't answer to anyone else. I also love the firm I'm currently at because it allows me to work across markets. This allows me to work on whatever I view as cool, whenever and wherever (to an extent) that I want. The biggest gripe I hear from the other side is "i love these deals but IC won't approve them" - I don't get that ever. 4. Least favorite aspect is, honestly, is the stigma surrounding brokers and their stupidity. It is well deserved, most brokers are idiot "relationship guys", but we pride ourselves on super dense research/new age shit as much if not more than relationships. We're a pretty young team, without that legacy ego, so that helps as we push for data driven pitches instead of "that's how it's been". 5. I remember receiving the first RFP for a very hot deal addressed to me from a very large industrial owner that we had been chasing on a corporate level. That was the first time I've felt "ok i'm accepted in my space". This was huge. I could care less about the money, honestly, but feeling like people were starting to take note of my presence was a HUGE moment for me. As far as the "I need to do something different" - almost every single week still. Had 50% of my pipeline wiped out over this COVID shit. A lot of those were my first rounds of truly running point on portfolio level transactions for some funds and it's been tough. The life of a broker is very manic, Xanax is your friend. The worst time ever though - when I had two consecutive deals fall out the day DD ended on consecutive weeks - that hurt very bad and was in my second year of production which is easily the hardest.
Appreciate the dope questions dude, keep em coming if i missed anything.
+SB for number 4. Greatly appreciate good brokers, those who try to elevate the role from just salesman to consultant / advisor. I'm also as data-heavy as I can be. Smart owners have most of it already, but you can provide a lot of value by helping show them what it means for them specifically.
Do you invest in deals yourself?
You know i want to, but what I know best I cannot afford. I'd love to flip a house or some shit like people do, but IDK how they have the time and I'd have no idea what to do. I'm very in the markets, with a lot of help from wealth manager/buddies, but not RE itself.
What size deals do you do?
Who are the big players that you see operate in your space?
What cap rates are you seeing properties and portfolios trade for?
How has volume changed over the past few weeks as a result of coronavirus?
All over the board - I work infill industrial so our deal sizes can get small even with the institutions/funds as a lot of them are portfolio aggregating. We have someone on the team that covers anything from $3.5-250mm, though each tranche is staffed much differently. I have to cover my juniors so I can get into smaller shit, which is a ton of fun and you learn so much about the market doing - but my wheelhouse is $20-70mm infill shallow bay deals.
Competitors? JLL, Cushman, CB, NKF. Some local guys will get some nice middle-market stuff that is purely relationship based, but mostly the big boys. We're one of the above, but have been focused on shallow bay for years now, so seeing a lot of the others start to get out of bulk and start chasing infill harder. So last mile heating up has kind of been a double edged sword for us, as it flooded the pool of competitors. That said, if we hop into a secondary we could bump into anyone from Colliers to AY - it's so market dependent.
Typically sell value-add BX type business plan and/or portfolio aggregation - that said most value-add infill funds are aggressive with exits and assumptions and for them to get through IC they need to be at a 14-16 levered IRR.
Fully discretionary funds with the capital are bottom feeding, PFAs are scared still for at least 2-weeks, REITs are value-add focused a lot of core buckets are on hold. If the deal is hot, it will be bought. But the buyer pool is much thinner.
A friend of mine at a top IS group thinks the automation will eventually displace them. That feels cynical to me, but what do you think?
Maybe net-leased, like i said above - can't see it going to product types that need the messaging/tours.
Et tu, logisdics? The AMA-amnesia spares no man.
You think he'd have some extra time on his hands, given everything
My bad - COVID
Hopefully I redeemed a little here - they really should inform you better when your AMA is posted/not do it during a pandemic.
Appreciate you taking over a little, keep replying on top of me - we can both add a lot to this.
Thanks for your responses up top, awesome stuff. If you and Edifice don't mind I have a few more below
• Why did you choose investment sales over buyside? I personally think brokerage is just as great a career as REPE/development, and that it just depends on the person. I ask because you are clearly a top performer who likely could have made the switch, so what made you feel that you'd rather market properties than build/buy them?
• What do you like about industrial real estate? It sounds like you have a unique experience in that you are dealing with an asset class that has become extremely competitive and sought after in recent years and you are doing it in a core market (lots of capital and smart minds behind it). Anything innovative strategies in that space that excite you?
• You seem to have a robust team. While it also sounds like they have different skill sets (research, modeling, phone calls), what do you look for in junior that you want to end up moving into production?
• I imagine you make good money, what do you spend it on to treat yourself?
• In addition to splurging with your money, what are you happy to spend your time on outside of work? Any hobbies or interests (these might be lame, but I like to run and work out, in addition to read history, for example)? Family?
All good, hope you meant you were dealing with Coronavirus-related deal complications and not personal health complications!
What strategy’s would you use for a new broker reaching out to buyers/sellers during coronavirus ?
Thanks for the great insight on the previous questions @Edifice and @Logisdics. As an incoming analyst to a HFF/Eastdil/CBRE type shop in Europe with limited experience working in CRE, I was wondering what are some tips you would give to someone starting out in IS to make a strong impression other than the usual grinding the technicals? Thanks in advance!
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