Regional developer vs stay at f500 reit
Hi All,
This has probably been a post here before. Currently at a F500 REIT, doing FP&A and capital work, major market, HCOL city. I have a chance to enter into a development role at a regional developer that has upside, a couple vertical. It is a secondary/tertiary city but does develop beyond it's region. Pay is a bit more, everything else is the same. I'm wondering, does changing to a smaller developer in a secondary market potentially prevent you from going back to one of the major markets in the future. This gives a chance to do something different and broaden my skillset, but is that at a cost of being able to break back into a major market down the road?
I'm in late 20s for reference.
So, there are tons of "it depends" in this type of question (aren't there always!!!).
- One "it depends" is asset type, it is easier to move market for multifamily and retail than others generically
- If you are the local market/entitlement person, it will be harder to translate to other markets (the finance person, and even construction person moves easier)
- Development is more "local/regional" by nature and its easier to go from major market to smaller market than other way around (general truth) - going from secondary to secondary is marginally easier (especially if they are considered "similar" or close markets - i.e. Tampa to Orlando or vice versa)
So, I mean, taking this job gets you into development, which I gather is your goal. Subsequent jobs in development will have a lot to do with the type/scale of projects you do and the rep they develop. Could you go back to the "majors", sure, I won't say impossible.... BUT, it may be a really really poor career decision. Your experience and thus value will be maximized where you are and doing similar stuff, so moving "back to majors" may mean lateral at best or worse, a downshift. Also... for development, more opportunity in secondary/tertiary markets in general (clearly varies a lot market by market), whereas big cities are just more competitive (for deals and jobs).
Overall, this move sounds like a "win", and if you want to jump from REIT FP&A to development (NOT an easy jump, and with pay bump no less), this sounds like a great opportunity (from what limited info you give). So, if you want do development, I'd probably say take it. If you are not wanting to leave the major market for personal reasons, then maybe don't. Just, if you take it, do it with the mindset that you are not going back (if it happens that you do, consider it a luck/bonus) and frankly, will not want to.
Very much appreciate your input (and agree it depends!). I always find your insights as helpful and this ties together many of the thoughts I was having about the trade-offs, and especially the mindset to take going in.
Agreed. Redever is Master Yoda of the RE forum.
Quick question - is the skillset portable? Meaning, is what's learned at a company doing development deals, with a pipeline, recognized as valuable in the marketplace? Or is it something that puts you at the bottom of the food chain and requires several years to be able to handle things on your own before a market potentially rediscovering value in you. Reason I ask - the epitomical WSO question - is say the career acceleration isn't there, is learning development at a GP (modeling, diligence, etc skillset) a likely to be valued in case you need to exit? And would LPs be basically off the table at that point?
TBH, I'm not entirely sure I understand your question. I mean, there are many "skillsets" that can/are developed working for a development shop, it is a very interdisciplinary business by nature. Some firms, teams/individuals develop more broad skillsets by going life cycle with each deal, others encourage (or even force...) more task/area specialization (like acquisitions, entitlements/pre-dev, planning/design, construction, leasing/asset mgnt, etc.). So, it is nearly impossible to say from what you have provided.
That aside, most people generally see development as the "top of the food chain" in real estate. Most difficult, most risky, and potentially most rewarding piece of the real estate industry. So, I don't think you see people looking to leave development shops for investment mngt shops all that often, but I mean I guess if you wanted to, just don't know why you would (I mean, I get networked with people from private equity shops all the time looking to transition to development, so I think the flow is generally one way by choice).
So, I mean skillsets are clearly portable within the development industry. It's hard to enter as so many seek people with prior experience (pretty much all our associate hires come from other development shops, sometimes from closely associated fields like brokerage or architecture, but it is fierce competition for roles a big/well-known devcos). As they say "development is the exit op", and your skillset is likely to be most valued within it. Thus, moving out of it may be sub-optimal on a personal level.
I'm sure lots of LPs would love people with more direct real estate knowledge, clearly can have value in investment decision making. Maybe there is a crowd of people making that move, but every time I see someone leave a devco its seems like its always to another devco. Firms poach each other all the time in this industry. Get known for working on a successful project, you will get plenty of invites for coffee.
If you've got some kind of network of people you already keep in touch with in the major market, I don't think coming back would be a problem. I could actually see bigger advantages in going to a secondary market, much more career momentum over a shorter period of time that can easily make you more marketable because of less competition all around that major markets tend to attract.
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