The lure of working in commercial real estate, more times than not, is the money. Or more specifically, the potential of making as much money as you desire. Often times I hear that the other attractor is the freedom of time. Wow, what a package! More money and more time, more freedom. It’s a wonder that there aren’t 150,000 commercial real estate brokers and agents, instead of the estimated 80-100,000.
So why aren’t there more folks in the CRE game? Certainly, income in commercial real estate is sporadic. It takes a lot of work to build and retain your personal practice and generally, there is little ancillary support like health insurance and training. But let’s take a hard look at the alternatives.
When I graduated with an MBA from Duke in 1987, my first job was with Arthur Andersen in New York City. Back then it was expected and desirable for young MBAs to go to New York City for their first “real job”. It was “the only place” you should work. I took a position in their consulting division. Basically, I was a computer programmer when it came down to it. And I knew nothing about computer programming.
Ironically, I wrote this blog on an American Airlines flight bound for a private, 2-day, Immersion event we were presenting for a boutique commercial real estate brokerage firm regarding securing prospect meetings, and the previous passenger left a copy of the New York Times classified in the adjacent seat. Fortunately, I haven’t looked at a classified section in quite a while, but I do remember those few times when I ventured outside of commercial real estate when I needed to. Upon reviewing the classified columns, I wanted to share some sample listings:
- Deloitte Consulting, LLP seeks a Manager in New York, NY and various unanticipated locations and client sites nationally to: Oversee daily performance of team members, to ensure project deliverables, handle large scale projects, evaluate findings, prepare reports, and make recommendations. Conducting workshops with clients, and planning internal team integrations, MS Excel MS Powerpoint, Bachelor’s degree required.
- Brand Specialist; requires 4 years’ experience in luxury retail or marketing position. Experience must include luxury brand marketing exp, visual merchandising, sale/retail of luxury clothing or accessories or fragrance lines, MS OfficePak and RetailPro retail mgmt. software required. Mail Resume to Fendi, NY.
- Accounting: Core Assurance Manager Price Waterhouse Coopers LLP. Examine financial and accounts receivable docs and tangible equip. of clients. Require bachelor’s degree or equivalent, and 6 years of relevant experience.
- Finance: Interested candidates send resume to Google LLC, …Develop financial and data models and tools that provide a platform for Google decision making, financial analysis, financial modeling, for operational projects, presentations of financial data to relevant shareholders, data analysis, data mining, data warehousing and business intelligence and tools. SQL, ETL, or Excel.
- Investor and Public Relations Specialist: provide info to and field questions about Co. from media, investors and potential investors through press releases and individual communications. Provide info to and confer with investor relations agencies in development of promotional campaigns. Update and maintain info on company website. Create stockholder and annual reports, newsletters, investor decks and fact sheets, and other publications. Arrange road shows, media interviews and appearances by executives…
Perhaps the first thing you will notice about these positions is they all require skill sets which are applicable to commercial real estate.
- Oversee project deliverables
- Oversee daily performance of team members
- Experience in marketing
- Data mining
- Financial analysis and financial modeling
- Interaction with potential investors and clients
The problem is each of these employment-based positions requires only a select number of skill sets. Commercial real estate requires mastery of many. Personally, I couldn’t imagine working every day in limited scope of responsibility and challenges. The allure of commercial real estate is more than the money. Knowing that every day will be different and present new experiences is what drives those of us who work in this arena.
These job postings noted above also are based on the “Time Economy” – you are trading time for income. For many employees, if not most, income is based purely on the time they provide to their employer. Work 9 to 5 get a pay check. It’s that direct, and although admittedly simplified, it’s that easy.
Commercial real estate is built on a “Results Economy” – the time you put into a project, representation, listing or finance opportunity is not directly correlated to the income you earn. In some cases, you will work months, or even years, on a project and for reasons beyond your control, you will not receive any income, or the income you receive may not be “reflective of the effort or time invested”. In other cases, you may only work a few hours and are able to connect a seller with a buyer, tenant with a landlord or owner with a lender, and the income earned may be considered outrageous for the time invested.
Time Economy-based positions are absolutely more secure than commercial real estate, commission-based (result-based) positions. Show up, do the job, get paid. Very stable and certainly has the potential to be rewarding, albeit a limited potential.
Time Economy-based positions (hell, let’s just call them for what they are – jobs) are based on the success of others. Results Economy-based positions are based on your own personal success. It’s not that you don’t depend on your team members and peers in commercial real estate, of course you do. It’s that your success is not dependent on theirs.
For example, with my first job at Arthur Andersen, I was paid for my time. However, without the sales of consulting assignments by the partners, I would not have had the opportunity to get paid. With commercial real estate, your success is based mostly on your efforts.
In commercial real estate you are awarded for your results. There is no trophy for second place. If you need the trophy, either win the assignment or move to a Time Economy-based position.
As far as that first job in New York, I lasted only 14 months. I worked my ass off and sacrificed many a weekend and late night, working for “the man”. Upon my annual review, my boss told me I had the highest rating of my peers and would be getting a 10% raise. I smiled, thanked him for the proposed raise and informed him I would be leaving the firm. I would take a job as a junior/ runner/ gopher for a startup commercial real estate firm in Tampa, FL. I told him the base salary would be less than ½ he offered, but the ability to make my own decisions and build my own business was unlimited. My boss, a senior partner of the firm, smiled back and replied, “good for you.” He, too, recognized the limitations of being an employee.
Commercial real estate is certainly a sporadic business for most. It can be downright frustrating. But ultimately success is available to anyone, regardless of your current level of experience or achievement.
With the right positioning, you can become the envy of your employed peers. They will go home and tell their spouses that they wish they had the freedom of time and money that you do. They will realize clocking-in everyday, answering to others and adhering to corporate structures, while stable and perhaps even comfortable, is a slow death. OK, maybe it’s not that bad, but it doesn’t beat the alternative of freedom that commercial real estate offers.
If you would like to ensure you are putting yourself in position to make the most out of your decision to live in the Results Economy, give us a call and let’s schedule a free consult to show you how we can start consistently making more money, and doing so in less time.