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How the Gold Rush of New CRE Agents Flooding the Market Impacts You

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Last week, I read with great interest Mark Heschmeyer’s article Gold Rush: Swelling Numbers of CRE Brokers Making for Tougher Competition in the Ranks Long-Running CRE Recovery Attracts Younger Brokers; Spurs Larger Firms Expand into Smaller Markets.

Mr. Heschmeyer addressed, based on the NAR 2016 Commercial Member Profile, the number of new agents joining the ranks of commercial real estate professionals. In fact, as cited in the article, the number of those with less than 2 years of experience have almost doubled as a percentage of total commercial members (9% in 2015 compared to 5% in 2014).

While I expanded on the commercial compensation elements of this article in my blog earlier this week, it is no surprise that this influx of new agents also resulted in a decrease of average compensation of commercial real estate practitioners – the median gross annual income for commercial members in 2015 was $108,800, down from $126,900 in 2014. Note the median gross annual income from 2006 was $115,600. Thus average earnings growth has been basically stagnant over the past 10 years.

More importantly is the shared data that there are approximately 80,000 commercial practitioners in the market today. If you recall, back in 2007, the number of commercial real estate professionals was estimated at 100,000 to 120,000. Then as of 2009, the mass exodus of commercial real estate professionals resulted in a significant reduction in the number of CRE professionals to an estimated 50,000 to 60,000. Even with this gold rush of new agents, we are still far from our high number of 2007.

So what does this all mean to you:

  • If you were practicing commercial real estate in 2006 – congratulations, you have proven you have the ability to sustain a major decrease in velocity;
  • If you have not seen a substantial increase in your income in the past 10 years, you are not alone. Part of this may have to do with growing competition in the market place.
  • If you have witnessed a significant increase in income, you are at the top of income earners within your peer group. You have handled the increased competition and found a way to grow your business.
  • Most market growth is seen in the new to business sector, and a majority of these folks will not have the sustainability to survive the next market downturn.

In summary, the market is getting more crowded; and individual income, on average, has not risen over the past 10 years. If your income has risen, great – just be prepared for more competition. Competition from both new agents entering the profession and technology creating efficiencies to trim the fat amongst your peers.

If your income hasn’t increased significantly, or if you are not positioned for increased competition, I invite you to schedule a free consultation with us today. The only thing you have to lose is to your competition. We are already coaching 100’s of them to win more assignments and continually out-earn their peers by 7X.

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