Hi all, I've so enjoyed reading everything here about working in CRE. I've recently had interviews with both CBRE and C&W and have been fortunate enough to be offered an entry level broker-in-training position at each. The CB job is in investment sales for a region and the C&W job is in tenant rep for a new market (new to me). How do I know which one to take? I'm totally new to CRE (background is financial analysis and program auditing) and would appreciate any insight anyone could provide. Which has better long term prospects in terms of growth and compensation? I believe the company culture of each is comparable, although C&W does seem a bit more relaxed (I don't know if that's a good thing or not). Looking forward to hearing your thoughts, thank you in advance!!
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Lots to think about here. Depends on your current and future aspirations in the industry. If you ever want to move on from brokerage to a more analytical role, go with investment sales. If you don't ever want to move on, go with what you will enjoy more. Both will begin with cold calling and be pretty much the same process. Make 50 - 100 calls per day and try to get meetings for your senior brokers. Your senior brokers will try to then win the assignment and close the deal and you will learn by helping and doing the work. Tenant rep you will work with office space occupiers finding them space. The hard part of the job is getting meetings and winning business. In investment sales you will be representing sellers of buildings. You will also be cold calling to get meetings with owners of buildings to determine their needs and help them when they want to sell. The reason I stated to go with investment sales if you ever want to move on is being although neither role will be extremely analytical in nature, in investment sales you will be exposed to basic underwriting of a building. You will most likely not see that in tenant rep. Another thing to think about is consistency in a cyclical market. Generally, when the market is down, commissions will be lower for agents in both tenant rep and investment sales, however, leases always end and therefore there will always be people needing to lease space in a down market. Commissions may be smaller because rents may be down and tenants may be downsizing, (could be one, could be both, could be many other things) but tenants will always need the space to conduct business. In investment sales, if the market is down, there will most likely be less sales. If there are sales, prices will be a lot lower and therefore, commissions will be too. In addition, at least in my market, leasing has a much higher volume of deals, and therefore the amount of commissions one has the ability to make is much higher. Because of this, if one is only in it for the money, do leasing.
Saying investment sales brokers make less than tenant reps is factually incorrect. Completely depends on the individual and his hustle/abilities. Don't take Tenant Rep job just because you think you'll make more money. Its not true.
cre123, I never stated investment sales brokers make less as fact. What I said was that overall, leasing brokers have the potential to make more due to volume. Yes, IS brokers can make millions more than leasing brokers, but due to volume, the average leasing broker has the potential to make much more.
For some reference, in my market, a $1,000,000 investment sale will gross a commission of $60,000-$70,000 (net $30,000-$35,000). Whereas, for a leasing deal, $1,000,000 per year in rent, for 10 years, will gross $320,000 in commissions (net $180,000). In my market, commission on leasing deals is 32% of first years rent for a 10 year deal, 19.5% of first years rent for a 5 year deal. To achieve this commission, you could do 1 deal per year, 20,000 sq ft at $50 dollars per foot for 10 years. You could also do 4 deals per year, 5,000 sq ft each, 10 years. These deals aren't terribly hard to find if you work hard because the volume is so high.
lol where do you find investment sales that go for $1M in CRE? Its probably a better comparing in this case to use a $10M sale which means more commissions than a leasing deal.
Thank you both! I was sort of thinking that investment sales would be a bit more resilient in an economic depression because of the regional focus, whereas tenant rep is so dependent on the economy and future of just one city.
I would actually disagree with this. Tenants need space to work in no matter what (even if its a smaller space, or a short term extension during tough times). Investment sales, on the other hand, can dry up completely in a downturn and you can be sitting on your hands for a couple years.
Completely agree with @talkaboutit. Leases always roll...a lease ending in 2018 will always end in 2018 but (assuming 2018 is a weak market for this example) the owner who plans to sell in 2018 may decide not to sell into a weak market. Although cash-flow for brokers in general is 'choppy' and 'lumpy' a leasing broker's cash-flow will be theoretically steadier because there is always business to be done.
I think there are two factors to consider: intellectual challenge and financial potential/stability. Intellectual challenge: Absolute no brainer, investment sales. Tenant rep brokerage can be extremely lucrative but is essentially commercial realtor business. Unless you are working with very large deals that involve complex scenarios like sale leasebacks, real estate tax incentives, etc. you will be dealing with office test fits, very basic rent calculations, and probably spending as much time learning about your client's business than thinking about real estate. Investment sales is a more sophisticated level of deal analysis because you are analyzing asset cash flows and contextualizing them to the capital markets. IMO, much more interesting and more likely you will be interacting with sharp sophisticated RE investors. financial reward: this can go either way. Tenant brokerage can be extremely lucrative--many top tenant brokers in major markets make more than their acquisitions, AM, development colleagues in the same market. Cash flow can be relatively more stable as there are more leases in a given market than sales. If you work in a market with 10 trades a year, it could be tough. But, if your team dominates, investment sales can be even more lucrative than tenant rep. i think lifestyle is important here too. a lot of tenant rep guys i know live ridiculous lifestyles...work hard when they are working, but have tons of flexibility to take vacations when they want, play golf during the day, etc. etc. i would imagine investment sales folks have similar flexibility but to a lesser degree.
I'm in a JLL/CBRE type company in IS. Entry level IS at these companies is ALL modeling, analysis and OM writing. No cold calling.
The best brokers in the biz are at a CB/JLL, they don't need to cold call to land a sale since they have great relationships with funds, reits.... I'd say at most 20% of our biz comes from cold calls from the industrial IS specialist broker, since those properties are more likely to be owned by smalled groups.
M&M type companies that don't have that pedigree will make you cold call as they realize that 90% of wannabe brokers will fail, and the good ones will leave for a better house. Its a completely different game than CB/JLL since they won't invest in you with a salary and training.
If you have the chance to be in IS at CBRE do not pass that up.
Should prob throw Eastdil in there too for the best. Also that depends on market.
You're right - mainly modeling and underwriting analysis. It would include some cold calling, but not buyers - owners as prospective sellers, which I think would be very easy. One question since you are already in IS - how much attention to detail is required in general? I just ask because I'm very much a "big picture" person and not very detail oriented (I could never be a CPA for example). For your last sentence - that was sort of my thought - I know there aren't as many IS people in CRE, especially in top firms as there are tenant rep, so I really shouldn't pass it up. But I'd love to hear your thoughts on whether it could still be a good fit for a non-detail oriented person.
memcre, cold calling sellers is still hard. You need to figure out who the correct person to call is if the ownership is an LLC. And then you need to convince them to have a meeting with you.
In regards to attention to detail, I cannot comment on IS, but, Tenant Rep, although attention to detail may not be, let's say, working through a model and correcting it, you need to be attentive BC it is work and a job. You need to have a high emotional intelligence and be perceptive as to how people are talking to you and notice small things. It is a people business. For instance, you cold call a business owner who may need your services, he won't meet with you but he isn't hanging up the phone either, his answers are vague and he can't really explain why he won't meet with you. In a situation like this, you need to figure out how to hook him / her and what to say and how to say it. For all you know, he may actually be speaking to brokers and just doesn't want to add another to the mix. You need to understand and perceive why people are staying on the phone with you. You would need to be attentive and perceive where and how to keep pushing until he says come to my office for a meeting 1 week from now.
Don't pick a job just because you prefer big picture. In my opinion, in leasing, you won't normally see the whole picture because it just doesn't matter. To get a deal done, you don't need to understand anything except, I have a tenant willing to pay the right price and their credit is good, therefore let's get a deal done. Many brokers, even some of the most successful ones, can't think past this thought process.
I'm in Investment Sales with a top 5 firm specializing in office and industrial properties. While you have to be able to see the big picture and ultimately be able to discern how you will create a market for an asset you need to be very detailed to be successful at investment sales at the highest level. If you want to eventually represent institutional equity or PE you had better know how to disect and prove up a market, analyze returns and financing scenarios with detailed cash flow models, and properly model leases, etc. Small mistakes can wreak havoc on a marketing process and cause big issues when you get to the closing table - no matter how smooth of a talker or big picture of a guy you are. IS is a great place to start if you ever want to move over to the principal side of the business.
OP please read this reply. The guy who said you would be cold calling all day at CBRE is an actual clown. I'm also at a JLL/CBRE type company as a capital markets analyst and it's almost all modeling, analysis, and memo writing. Research the brokers on the CBRE and CW teams to find out if they're legit (this is more important for M&M type shops since CBRE and CW brokers are typically already well established).
Also, I see a couple comments on leasing earning more than IS and wanted to address this. You are an analyst so you will not be earning straight commission. Base plus analyst pool bonus plus tiny percentage of commission is typically how comp is structured. Don't compare what the brokers earn because you are not a broker lol. For what it's worth, the majority of JLL/CBRE IS analysts earn more than leasing analysts. I say the majority because of course there are some leasing brokers with crazy volume that pass along a sizable bonus to their analysts.
Experience wise, the CBRE IS role will open many more doors. Think of it as M&A for properties instead of companies and much less complex. This type of experience is huge if you're interested in acquisitions at a REPE fund and will also open doors for just about any other CRE role. The leasing role is also great but probably harder to explain if you ever leave the industry.
It really depends. Also very dependent on market and you could be too dependent on that region's economy. However, the nice thing is that you guy get a piece or should get a piece every time a tenant renews its lease.
For investment sales, right now is the best time to be in this business. Its a sellers market and these guys are able to sell some pretty crappy stuff that they wouldn't normally be able to. I think both firms are good, but CBRE has a pretty big presence everywhere.
Again, do you want to sell properties or get them leased? If your goal is to just be rich, you could accomplish that in either role as long as you hustle.
I work on the principal side and I can tell you that those leasing brokers are f*cking bastards. The kind of fees they charge for the amount of work they do is truly obscene. We own a few office buildings in some areas hard hit by sequestration and the tenant and landlord reps, in some narrow circumstances, are literally making more money on a lease than we are after factoring in tenant improvements, leasing commissions, and a discount rate. It's a complete racket. And we love it when a tenant defaults halfway through the lease term and the brokers keep 100% of their commissions. And I love how they all want to sign exclusive rights to lease so when we bring in our own tenants we still have to pay the brokers. Also, price fixing is a grossly illegal practice, and yet somehow in my market virtually every leasing broker charges the same commission. Whether it is or isn't, it sure as heck FEELS like a conspiracy.
If I were getting into the lease brokerage business today I'd be a little concerned that in 10-15 years the market is going to evolve in a way that "re-balances" what I see as a total mis-pricing of services. I have NO CLUE what that could look like, but a key principle of an efficient market is that rent seeking is generally dealt with by some market force. Of course, I can imagine the market having trouble dealing with collusion.
DC I agree that the tenant/landlord rep industry is due for a shakeup. Good point about not wanting to be in the industry when that happens.
I am familiar with that market and can tell you that tenant rep brokers have double the commission rates of leasing brokers.
RE Investment Sales VS Tenant Rep (Originally Posted: 06/11/2017)
What career path would be more lucrative investment sales or tenant rep in a secondary but growing market in the southeast?
DC makes a great point that yes, technically, it is wrong to say brokers in market X charge Y. But the fees are what is generally given to the client and then it is all negotiable from there. When leases go above 100,000 square feet, many times tenants can receive rebates of the fee from 20%-50%. This rebate will then lower the price of their rent. Note, in my market, and I am not sure if this is standard across the country, landlords are expected to pay the fee for the tenant representative.
Yes, we landlords have to foot the bill in almost every case for the commission of the tenant rep.
You are ruining the business if offering fee rebates... Have some pride in your value to the tenant and collect the full fee.
From a tenant rep company, I heard 200k; investment sales total incomes are reported on places like glass door as peaking around $150k on average, which probably applies to the southeast.
Investment sales (even in the southeast) certainly doesn't peak at 150k... I wouldn't put much stock in numbers found from glassdoor on a commission based job
Depends on way too much. I've seen people in both positions kill it.
I think it depends more on what you like, I hate driving around showing properties, so tenant rep is something I avoid.
Yes, I can confirm this too, landlords have pretty much always foot the bill. Hence the leasing commissions. Although DCD, I rarely hearing them keeping the whole piece if a tenant defaults through, they will work with you on getting it re-leased for a fraction of the cost or nearly free of charge, depending on how early the tenant leaves. Thats why you want to deal with a reputable rep who will want a good relationship with you.
Uhh, that's NEVER happened in our 50 years of leasing office buildings where our landlord rep will refund ANY money in the event of default. And of course the tenant rep wouldn't refund any money. Maybe that's market by market, but that's never happened with our organization, and why would it when brokers are constantly moving from firm to firm and where the brokerage firms are constantly getting bought and sold?
I never said refund any money. However, if you gave a single firm a ton of business and that broker has stuck with them, they should work with you on their fees. We had this happen only a handful of times and maybe our situation is different because the tenant rep has known us for a long time.
The answer is CBRE, @memcre. Best platform in brokerage that there is.
Eastdil too. C&W in some markets.
Eastdil is a great place, but it's a little different from a full service CBRE/JLL/Colliers platform.
And I'd pick CBRE over C&W in any market
I would pick CBRE IS. You state that you are not a detail oriented person. Become one when it comes to your broker packages and models. Do not be the broker who slaps shit together and prays - nobody wants to work with that broker.
Real estate is all about reputation. It is easy to screw up your reputation early and people in CRE tend to be lifers and have long, long memories, especially in the institutional world.
At one former employer,I know brokers in major metros that are blackballed because they screwed a deal up 20 years ago.
(For the future since this forum is old) Another thing to look at is deal flow. If you have a team who knocks out a ton of smaller deals, you'll be able to follow the process from the beginning and get a couple different variations. If you have a group who doesn't do as many deals, but does larger deals you might not get to follow the process. In saying that, you would have more time to read over the paperwork and all of the due diligence stuff to get a better grasp. Just depends how you learn really. Lifestyle will vary depending more so on office rather than speciality. @CRE has mentioned he used to wear a suit a lot (I think) at his brokerage office, while I'm at a similar office and have seen barely anyone wear a suit.
I see people move from leasing to dev/investing all the time. Most shops like to see a few years as a broker. It's similar to IB in that people on the buy side view it as a a rite of passage. So either opportunity will open doors if you know the right people.
Ten rep is a hard business to start in without a network. Your success is tied significantly to your team/fit. Sell, sell, sell.
IS is way more technical and less sales oriented. Much more similar to IB analyst role but with better lifestyle (probably a bit lower pay than IB though).
Speaking from experience at a top 2 firm as a former ten rep broker: the IS guys make significantly more money when the going is good. Both leasing brokers and IS brokers will scrape by in down years.
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