Deep Dive: Careers in Commercial Real Estate
The real estate industry is enormous. In the United States alone, over 3.7 million jobs are tied to commercial real estate, 13% of GDP comes from the real estate industry, and the aggregate value of U.S. commercial real estate is approximately $16 trillion.
Yet, in spite of its impact and size, there is still a lot of confusion around what it means to work in real estate – not just from those trying to break into cre, but also those in the industry. So in this deep dive on CRE careers, we will explore the various careers in real estate and how to choose the right career path for you.
What is a Career in Real Estate?
Ask any layperson what a real estate professional does, and they’ll likely tell you a real estate professional lists and sells single family homes. I can’t tell you how many times I’ve mentioned to people I’m in real estate, and they immediately assume I’m a residential real estate agent.
But the real estate industry is much more than just your local real estate agent. It is a diverse group of well-educated professionals designing, developing, investing in, and managing the places where you and I live, work, shop, and play.
From development to property management, from portfolio management to acquisitions, the industry offers a wide range of highly lucrative, rewarding, and impactful careers in real estate. In this in-depth look at CRE careers, I’ll walk you through the various career paths available to help you choose the right one for you.
Browse our commercial real estate job board with 200+ job listings from some of the top firms in CRE. It’s free to browse and free to post.
A Note About Choosing Your Career Wisely
Your value in real estate, whether to employers or investors, is largely tied to how many deals you’ve done, or your deal seasoning. The more deals you’ve done, the more weight your assumptions and insights have on future deals. And thus, the more you can command in terms of salary and/or the easier it is for you to raise capital.
As a result of this fact, and I made this point in a guest post on Joe Stampone’s ASotREG blog, in real estate it’s easy to become pigeonholed into a specific the geography, property type, and role you work in.
If your seasoning has been in single-tenant net lease (STNL) development in Atlanta, GA for example. You will be branded as a developer of STNL deals in the Southeast United States.
And if you decide at some point that development, STNL properties, and/or Atlanta are not right for you, shedding that brand is a difficult task. So it’s essential to choose your career path wisely. The first step of choosing your path wisely is understanding the options that exist out there.
Career Paths In CRE – Roles, Property Types, and Firm Types
Choosing the right career path starts with understanding what options exist. If you’re new to this subject, you probably think of real estate either as brokerage or development. But there is much more to the industry than that. Real estate brokers and real estate developers make up only a small share of the total professionals in industry. In the next few minutes, I’ll talk about three decisions you have to make that will determine your career path:
- What real estate role do you want?
- What property type do you want to work in?
- What type of firm do you want to work in?
1. Real Estate Career Roles
There are numerous career roles in commercial real estate. When I refer to career roles, I’m talking about the type of work that you perform on a day-to-day basis and the role you play in the overall investment cycle of real estate.
So for instance, you’ve probably heard of real estate development. Real estate development professionals quarterback the development process. From sourcing the land, to the design and entitlement process, through construction and lease-up, until the ultimate sale or recapitalization (e.g. refinance) of the project. This role is highly sought out and widely known, however there are dozens of other roles that are as lucrative, rewarding, and less well-known than development:
Academia – Teach real estate at the university level. Real estate is a relatively new field of study. MIT, Cornell, Columbia, USC, and Harvard’s graduate real estate programs are all less than 35 years old, while the first graduate business program was founded 115 years ago. Because of this, the bulk of the career opportunities in real estate academia are concentrated in a small number of universities.
Acquisitions – Source, analyze, and close existing assets. In real estate, an acquisition generally involves purchasing an existing property with in-place cash flows. The acquisition may be under performing (i.e. value add) or performing (i.e. core or core plus), but always involves an existing property. Professionals working in an acquisitions role are responsible for sourcing, analyzing, and closing on a property after which responsibility for the property is passed on to an asset management professional.
Appraisal/Valuation – Make an approximation of a property’s value on behalf of a third-party. Firms regularly assess the value of real estate for reporting, lending, and strategy purposes. Appraisal firms and valuation groups exist to provide this service.
Asset Management – Manage the financial, operational, marketing, and strategic elements of owning real estate. Most real estate owners have an in-house asset management team that performs these duties. Asset management professionals typically take over responsibility for a property from an acquisitions or development professionals, and then manage the property until exit.
Brokerage – Act as an intermediary between two or more parties engaged in a real estate transaction involving one or more properties. Commercial real estate brokerage firms (e.g. CBRE, Jones Lang LaSalle, Cushman & Wakefield), offer a host of services beyond just transacting investment sales. The top brokerage firms provide research, consulting, investment banking, property management, leasing, debt and equity raising, and other services for their real estate clients.
Capital Raising – Raise equity capital for a real estate investment or fund, either on behalf of a third-party of for your firm’s own account. Real estate firms will often have professionals in-house responsible for sourcing equity capital to fund its real estate investments. Additionally, brokerage firms and capital advisory firms offer capital raising services.
Construction – Manage the construction process. The largest construction firms in terms of revenue include Bechtel, Fluor Corp, Kiewit Corp, the Turner Corp, and CB&I.
Consulting – Provide real estate expertise to third parties. Several major professional services companies offer real estate consulting services (e.g. PWC, Deloitte, EY) in areas such as real estate tax advisory, portfolio strategy, corporate real estate strategy, project management oversight, etc. Additionally, numerous real estate focused advisory firms with greater market knowledge and depth, such as Green Street Advisors, exist to offer more niche services to their clients. Appraisal firms are included in this category.
Corporate Real Estate – Manage the real estate operations of a non-real estate focused, for-profit organization. Large non-real estate related companies own millions of SF of real estate. It’s where their employees work, their products are produced, and their customers shop. Corporations have a social and financial duty to manage this space effectively and efficiently, and so they hire real estate professionals to help them acquire, plan, manage, and dispose of the space they use.
Debt Origination – Raise debt capital for a real estate investment, either on behalf of a third-party of for your firm’s own account. Real estate is a capital intensive investment, often requiring the use of debt to execute. Senior, subordinate, and mezzanine debt are provided by a range of capital sources, and the field is siloed into several sub-fields: CMBS, Gov’t/Agency, Insurance, Bank, Private. Some of the larger players in real estate finance include Deutsche Bank (CMBS), Fannie Mae (Agency), MetLife (Insurance), Wells Fargo (Bank), and Goldman Sachs Real Estate Mezzanine Partners (Private).
Development – Manage the development process. Real estate development is the most profitable, and also most risky field of real estate. The developer acquires bare land or under-utilized property, and strives to create a higher and better use for the property. Some of the larger, more well known U.S. developers include Hines, Trammell Crow, and Related Companies.
Dispositions – Execute strategies for selling real estate assets for your firm. Larger real estate owners will have an in-house dispositions team responsible for managing the process of selling properties. This is an important role as large real estate owners are constantly recycling capital through dispositions and subsequent acquisitions.
Government – Manage the real estate operations and strategies of a government entity. The United States government alone owns or leases hundreds of millions of square feet of real estate in all 50 U.S. states. The government is regularly signing new leases, acquiring or disposing of property, and managing its existing holdings and needs professionals to handle these duties..
Investment Banking – Act as an intermediary between two or more parties engaged in a real estate transaction involving real estate enterprises (e.g. the sale of one real estate company to another). In real estate, the line between brokerage and investment banking is often blurred, but generally speaking investment banking involves enterprise-level transactions whereas brokerage involves property-level transactions.
Investor Relations – Manage marketing to and communications with real estate investors. Real estate firms with outside investors hire professionals to handle the relationship with those investors.
Loan Servicing – Manage the administrative aspects of a real estate loan. Lenders either service their loans in-house or hire a third-party to service loans. Either way, a loan servicing professional collects debt service payments, monitors and reports on borrower requirements under the loan, collects borrower reports, etc.
Non-Profit – Manage the real estate operations of a non-profit organization. Many large non-profits manage owned real estate and some non-profit firms are expressly created to invest directly in real estate.
Portfolio Management – Manage the financial and strategic elements of a portfolio of properties. All real estate firms must develop portfolio-level strategy to drive overall firm/fund performance. Portfolio management professionals help develop, execute, and report on that strategy. If property management involves day-to-day management and asset management involves month-to-month management, then portfolio management involves quarter-to-quarter management of a basket of real estate assets.
Property Management – Manage the day-to-day operations of a property. Property management companies handle the day to day operations of a real estate asset. These companies will often handle tenant relations, cleaning, maintenance, repairs, collection, and other asset level management responsibilities. Commercial properties generally require more sophisticated property managers, and each property type requires competencies unique to that property type. Large brokerage firms such as JLL and CBRE offer property management services. Local property managers also exist, offering market-specific knowledge and expertise.
2. Real Estate Property Types
Each property type in real estate has its unique nuances that make seasoning in that property type important. For instance, underwriting tenant credit and creating the right tenant mix is essential to the success of a retail property. In contrast, strong operational management, marketing, and hospitality is essential to the success of a hotel property. Thus, the more seasoned you become in your property type of choice, the more you’ll understand the subtleties that make or break the profitability of that property type.
There are five major property types in real estate:
Beyond the five major property types, there are numerous sub-property types and niche property types:
- Affordable rate
- Market rate
- Senior housing (independent living, assisted living, memory care)
- Student housing
- Military housing
- Manufactured housing
- Strip center
- Neighborhood center (i.e. grocery-anchored)
- Outlet center
- Power center
- Regional mall
- CBD (core business district)
- Limited service
- Select service
- Full service
- Agriculture and mining
- Bare land
- Car wash
- Single-family residential income
- Special purpose (e.g. school, religious facility, marina, hospital)
- Sports and entertainment
3. Real Estate Firm Types
The more time you spend in a given role or working with a given property type, the more difficult it becomes to transition to a different role or property type. This is less so with firm types since the skills learned in a given role or property type are largely transferable between firm types. What really differentiates one firm type from another is the culture and investment thesis.
Most real estate firms can be placed into one of three categories:
Limited Partner – A limited partner is a passive, in terms of management responsibility, partner in a real estate investment. The limited partner (or partners) typically brings the majority of the equity capital and only weighs in on critical decisions. Most limited partners only invest a specific percentage (i.e. allocation) of its overall investment capital in real estate, allocating the balance to other asset types (i.e. bonds, stocks, commodities, etc). Examples of limited partners include life insurance companies, pension funds, endowments, high-net-worth family offices, sovereign wealth funds, etc.
General Partner – Also referred to as a sponsor, the general partner is responsible for finding, acquiring and managing the real estate investment. The sponsor generally brings market and property type expertise and plays the primary management role, whilst third party investors (limited partners) typically take on a more passive investment role.
Advisory/Services – A real estate adviser/service provider is an individual or firm that provides third-party services to an owner or lender of real property. Dozens of third-party firms are involved in the various stages a real estate asset’s investment cycle. These firms may include contractors, construction managers, appraisers, investment sales brokers, leasing brokers, property managers, asset managers, research firms, tax consultants, and many others.
Compensation in Commercial Real Estate
Typical compensation (salary + bonus) in real estate depends on the role you perform and the property type and firm type you work with. It also varies based on your depth of experience (i.e. deal seasoning), level/quality of education, where you’re located geographically, and other exogenous factors. Additionally, the compensation package of real estate professionals often includes incentive pay and benefits on top of the base salary. Nevertheless, what you’ll find is that all careers in commercial real estate are quite lucrative compared to other industries.
Here’s a brief overview of compensation for various role types based on our annual article on real estate salary and benefit:
Compensation – Senior-Level Real Estate Professionals
At the senior executive level, but below the c-suite level, professionals with 20+ years of experience working in institutional real estate earn a base annual salary between $230,000 and $430,000 with total compensation after bonus and other incentives of $470,000 – $880,000.
Compensation – Real Estate Acquisitions Professionals
Professionals in real estate acquisitions earn anywhere from $110,000 total annual compensation at the senior analyst/associate level to $490,000 in total annual compensation at the managing director level.
Compensation – Real Estate Asset Management Professionals
Asset managers make slightly more than acquisitions professionals on average, with asset managers at the associate level averaging total compensation per year between $140,000 – $240,000 and managing directors in asset management making as much as $530,000 per year.
Compensation – Property Management Professionals
The widest range in salaries exist at the property management level where assistant property managers make $60,000 on the low end in total annual compensation while the top executives in property management make as much as $430,000 per year.
Compensation – Leasing Professionals
Compensation for leasing professionals range from $150,000 per year for leasing managers to nearly $580,000 in total annual compensation for top leasing executives.
Compensation – Real Estate Development Professionals
For development professionals, pay ranges from $70,000 annually for development analysts to $650,000 in total annual compensation at the managing director level.
Concluding Advice + Career Resources
Working in real estate is more than just selling houses or developing shopping centers! Career options in CRE are vast and rewarding. If you’re new to the industry and looking to transition from one role or property type to another, my best piece of advice to conlude is this: start reaching out to people today in your desired role type and property type. Ask them what they do on a daily basis, what they like and don’t like about their job, and for any advice on how to get to where they are. You’ll be amazed at how willing people in CRE are to take your call and help you along the way.
To further help you as you plan your career, we’ve developed a variety of career and education resources here at A.CRE that we’ve found valuable as we’ve blazed our own career paths (see below). Also, don’t hesitate to reach out to Michael or I with any career-related questions you may have. While we’re very busy and may not get back to you immediately, we enjoy connecting with and helping driven individuals in need of advice. You can contact us here.
Career Resources at A.CRE
- A.CRE Commercial Real Estate Job Board
- Day in the Life Series
- General Content on CRE careers
- Help with CRE interviews
- Careers in CRE Audio Series (Coming Soon)
- Library of Real Estate Technical Interview Exams (Coming Soon)