How to Explore Careers in Commercial Real Estate?
Many people consider getting into commercial real estate (CRE), and when you take a closer look at the business, it’s easy to understand why. There’s a lot of money to make as a commercial real estate broker, but there’s a tremendous amount of work as well.
If you’ve been wondering about careers in commercial real estate, you’re not alone. Keep reading to learn how to get into CRE, how much commercial agents get paid, and the top jobs in commercial real estate and companies for whom to work.
Why Work in Commercial Real Estate?
It takes a particular type of person to work in commercial real estate. Unlike most residential agents who sell homes to the general public on the MLS, CRE agents specialize in much more complex transactions.
For example, CRE agents work in different niches, varying from office and retail, apartment buildings and mixed-use developments, industrial and distribution property, land sales, and property management.
Commercial agents could also represent commercial real estate buyers or sellers, landlords or tenants, high-net-worth individuals, private equity firms, large institutional investors, real estate investment trusts (REITs), and asset managers.
How Commercial Real Estate Agents Get Paid?
Compensation for commercial agents usually follows one of four different models:
The traditional straight commission model where the commercial brokers only get paid when a property sells or leases.
Companies may pay hourly compensation to beginner agents (along with a small commission split) while a new agent learns the ropes.
Recurring retainer or fixed fee compensation models often occur when the commercial agent’s work is not transaction-based, such as property management.
Hybrid compensation models sometimes exist in repositioning projects, such as converting a hotel into a multifamily property. The agent receives an hourly rate plus a commission on each transaction when the development is brought to market.
Average Earnings of a Commercial Real Estate Agent
The average commercial real estate salary in the U.S. is $100,578 with base plus commission, according to Salary.com (as of March 2021), about double what a residential agent makes.
Compensation for commercial real estate workers ranges from $84,026 to $112,230 per year. By comparison, residential agents earn an average of $43,012 per year, roughly half of what a skilled commercial agent earns.
Of course, some markets are better than others for making maximum compensation. The top 5 highest paying cities in the United States for commercial brokers are:
New York City
How to Get Into Commercial Real Estate
Now let’s talk about exactly how to get into commercial real estate, a field of lucrative potential. There are five general steps to follow if you’re interested in becoming a commercial agent:
1. Get your license
Each state requires new agents to take a certain number of courses and pass a state exam before being awarded a real estate license.
The Association of Real Estate License Law Officials (ARELLO) publishes a state list of real estate agency licensing contact information. The required courses and hours vary by state and range from less than 80 hours in New York to nearly 200 hours in Texas.
Most states also require continuing education each year. After passing the test and getting your real estate license, you can select continuing education classes focused on different asset class niches.
2. Specialize in a niche
There is a wide variety of asset classes and subclasses in CRE, including medical offices, neighborhood strip retail properties, transit-oriented mixed-use development, extended-stay hotels, and last-mile distribution centers.
Commercial agents who specialize in a niche develop a deeper knowledge about the niche and find it easier to target clients and build a reputation as a specialist in the chosen field.
3. Join a professional organization
Networking is the name of the game in commercial real estate, with the best agents understanding that the business is as much about who you know as what you know.
Commercial property investors look for trustworthy agents to help minimize risk, boost deal credibility, and act as a guide to making the best investment choices.
Some of the best trade organizations include:
International Council of Shopping Centers (ICSC)
Building Owners and Managers Association (BOMA) International
Certified Commercial Investment Member (CCIM)
National Association of Realtors, Commercial (NAR)
NAIOP Commercial Real Estate Development Association
Society of Industrial and Office Realtors (SIOR)
National Multi-Housing Council (NMHC)
Commercial Real Estate Women (CREW) Network
4. Market yourself
Creating a plan to market yourself is another step to take when you’re getting into commercial real estate. After choosing a niche, identify the properties and target clients, your unique selling point (USP) that differentiates you from the other CRE agents, and a marketing plan budget and guidelines.
5. Find a commercial real estate firm
Some new agents join a real estate firm so that they can handle both residential and commercial transactions. Residential deals are more frequent and easier to close, so they can provide income while you work on more lucrative commercial transactions.
The drawback is that clients and other CRE brokers may not prioritize you as a credible broker when you work for a firm that sells homes. As such, many new agents choose to interview with one of the top brokerage firms in their market.
Is a Career in Commercial Real Estate Right for You?
There are some significant differences between a career in commercial real estate and working in residential. Educational requirements and training are more specialized, properties are more complex, and while transactions are fewer, prices are higher. The clientele base in commercial real estate is very different from homebuyers. Commercial agents work with clients buying and selling property as a form of investment, including retail, industrial, office, and multifamily assets.