Commercial real estate is a huge industry. According to Edward Glickman in his book, Introduction to Real Estate Finance, the real estate industry contributed $1.9 trillion of U.S. GDP or 13% in 2010. The industry employs nearly two million Americans in professional and service jobs to develop, manage, and maintain commercial real estate.
When most people think about making a living in real estate, they imagine selling suburban homes or urban condos. The truth is that selling residential real estate is just one of the many options available. The places you live, work, play, and shop all have to be designed, constructed, bought, sold, and managed. Educated, talented, and creative real estate professionals are responsible for making that happen.
From sales and acquisition to portfolio and property management, there is a world of opportunity open to anyone interested in a lucrative, dynamic, and rewarding career in commercial real estate. I have put together a comprehensive list of a dozen plus career possibilities along with a description of commercial property types and earnings potential in a variety of fields to give you an idea of what is available.
Career Opportunities in Commercial Real Estate
1. Broker/Agent
Commercial real estate brokers and agents work with buyers and sellers to facilitate commercial real estate sales. To accomplish this, they must be proficient in researching and obtaining documents pertaining to leasing histories, profit and loss margins, taxes, surveys, market projections, and any other analysis necessary to complete the sale.
These brokers and agents may be required to research the cost of renovations, negotiate with financial institutions, and coordinate property inspections. A successful transaction may require the real estate professional to provide market demographics and environmental studies and cost analysis.
According to the Bureau of Labor Statistics, the average wage for brokers was $59,720, and $48,930 was the average commercial real estate agent salary as of May 2019. These numbers include residential as well as commercial brokers and agents. Most sources cite $85,000 as a more accurate annual wage for commercial real estate professionals.
Many commercial real estate brokers make well over $100,000 a year (I personally know several brokers who consistently earn six-figure incomes and also those who earn seven-figure incomes consistently). According to a 2016 survey conducted by the National Association of Realtors, the average number of annual transactions was seven, and the average size of the transactions was $2,000,000.
Typical Commission Structure for Commercial Real Estate Brokers and Agents
According to the National Association of Real Estate Advisors, for transactions under $5,000,000 the typical commercial real estate broker commission is six percent. Anything over $5,000,000 is typically structured downward until it reaches four percent. The listing and selling brokers divide the commission in half.
The broker receives a percentage of the commission based on a contractual agreement with the brokerage. Less experienced brokers typically receive fifty to sixty percent of the commission. Senior brokers can receive as much as seventy to eighty percent of the total commission.
Many brokerages require brokers to pay annual desk fees that can be as high as $50,000. The actual amount depends on how much the broker produces. Desk fees can be used to offset brokerage expenses or used by the broker to negotiate a higher percentage of the commission.
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2. Appraiser
Appraisers assess the value of real estate property. Commercial appraisers analyze properties like office complexes, malls and other retail establishments, industrial properties, hotels, and unimproved commercial land. To find value they must be able to collect all the necessary documentation, analyze financial statements and leasing histories, and compare them to the current market. Appraisers may be independent contractors or work with brokerages, financial institutions, or government agencies.
According to the Bureau of Labor Statistics, the average wage for real estate appraisers was $57,010 as of May 2019 (this wage reflects both residential and commercial real estate appraisers). However, many commercial appraisers make well over $100,000 a year. This area of real estate is expected to grow by seven percent through 2028, which is a higher percentage than average for any other occupation.
3. Developer
Commercial real estate developers oversee the purchase and development of commercial properties. They must be proficient in determining which markets have the potential to increase in value or are underserved when it comes to certain types of commercial development. They obtain the information by networking with industry professionals and analyzing growth potential, demographics, taxes, and even traffic patterns.
This is one of the most profitable areas of real estate and one of the riskiest. Most commercial real estate developers make between $49,000 and $205,000 annually, but the earnings potential can be upwards of a $1,000,000 in profits for the most successful (I personally know several developers who have made significantly higher than a million dollars in a year).
4. Property Manager
Property managers oversee the day to day operations of properties such as shopping malls, office buildings, hotels, and other types of commercial properties that generate revenue. They are required to lease space, collect rent, hire contractors to maintain the property, meet with clients, and network through professional associations.
According to the Bureau of Labor Statistics, the average annual salary for a property manager was $58,760 as of May 2019. This number reflects both residential and commercial property managers. Other sources report an average salary for commercial property managers of $99,454. This area of real estate is growing at a rate of seven percent which is higher than average for other occupations.
5. Asset Manager
Asset managers handle commercial properties on behalf of their clients. It’s the job of an asset manager to decide what properties will most successfully grow their client’s portfolios. To do this they must be able to read the market, predict (based on careful analysis) trends, and keep up with the latest news in the areas of financing, economy, and politics. They are responsible for making sure investments don’t depreciate and that risk exposure is mitigated.
The average commercial real estate asset manager salary is $77,336 annually with the high end being $138,000. These figures reflect information found in job advertisements for the past 36 months and salary estimates from 25,803 employees.
6. Acquisitions Professional
Acquisitions managers make purchase decisions for their companies. They negotiate with brokers and sellers in making those purchases, including sale prices and the terms of the contracts. Acquisition managers must have strong analytical, negotiating, and financial skills. These individuals also create long term property purchase strategies.
The average annual salary for a mergers and acquisitions manager according to a survey of 264 employees and job advertisements over the past 36 months is $104,384.
7. Consultant
Real estate consultants provide expertise to their clients. The expertise may in the areas of portfolio strategies, property management, tax advice, and corporate property acquisition strategies. These individuals are employed by outside firms to advise third parties.
The average commercial real estate consultant salary is $71,953. Consultants in the top 10% make in excess of $184,000.
8. Corporate Real Estate Manager
Large corporations often own real estate that must be purchased, managed, and in some cases disposed of. These corporations depend on professional real estate managers to do the job for them. Real estate managers may be required to purchase property for business expansion, investment purposes, and to divest properties that become unprofitable or no longer fit the long term corporate strategy.
Senior corporate real estate managers make an average salary of $110,000 per year. The national average is $85,811.
9. Dispositions Analyst
Individuals and corporations that have significant real estate assets in their portfolios often employ disposition analysts to create strategies for divesting particular properties. It is common for these individuals and corporations to continuously recycle capital through divestiture and acquisition.
Annual salaries for commercial real estate disposition analysts run around $69,035. Senior analysts can expect to make over $100,000.
10. Loan Servicer
Loan servicers process loan payments, manage escrow accounts, and track principle and interest. Under certain circumstances they may initiate foreclosure proceedings. Loan servicers are not necessarily mortgage lenders. Mortgage lenders loan borrowers the money to purchase property. Loan servicers manage the loans.
Loan servicing is not one of the highest paying real estate jobs. The average annual salary for a loan servicer specialist is $38,415.
11. Portfolio Manager
Portfolio managers are researchers who make investment decisions for their clients. They must meet with analysts, real estate researchers, and stay abreast of the financial market and corporate objectives in order to successfully buy and sell investments in a changing market.
The average annual salary for a commercial real estate portfolio manager will range from $53,000 to $140,000 according to an individual reporting survey dated July 14, 2020.
12. Government Real Estate Acquisitions Specialist
The United States government owns millions of real estate parcels throughout the country. It regularly purchases, divests, and renews leases on these properties and uses real estate professionals to handle the transactions. Acquisitions specialists can expect to make anywhere from $66,000 to $104,000 annually. The U.S. Army is the Number Two acquisitions specialist employer in the country.
13. Non-profit Real Estate Manager
Many non-profit organizations have real estate holdings that must be managed. There are even non-profits that are created specifically to invest in real estate.
Salaries can run from $53,613 for a residence manager to $102,926 for a development director.
Types of Commercial Real Estate
There are basically six types of commercial real estate. Successfully buying and selling each of them requires a specific set of skills. Extensive knowledge of marketing, the hospitality industry, and operational management is required for hotels, restaurants, and other service oriented properties. Retail properties require a proficiency in leasing to appropriate tenants and quantifying credit risk. Each of the six commercial property types has subsets.
1. Retail
- Free standing buildings (single tenant)
- Malls
- Strip Centers
- Outlet Centers
- Grocery-anchored Neighborhood Centers
- Power Centers (three or more big box stores)
2. Industrial
- Manufacturing
- Warehouse/Distribution
- Flex (air conditioned and non-air conditioned space)
3. Hospitality Service
- Full Service
- Select Service (budget/economy hotel)
- Limited Service (no banquet or restaurant hotel)
4. Office
- Suburban
- Central Business District
- Medical
5. Multifamily
- Senior Housing (independent, assisted, memory care)
- Military Housing
- Mobile Home Parks
- Student Housing
- Affordable Housing
- Market Rate Housing
6. Niche Properties
- Unimproved Land
- Agricultural Acreage
- Entertainment/Sports
- Parking
- Single Family Rental
- Special Use (hospitals, schools, marinas, churches)
Commercial Real Estate Earnings Potential
Commercial real estate salaries real estate professionals earn varies widely. It all depends on the experience they have, the types of properties they buy, sell, and manage, and where in the country they work. Education and market conditions are additional factors. In addition to salaries or commissions, many individuals also receive incentives and bonuses.
Residential real estate brokers and agents generally see more frequent paydays than their commercial counterparts because selling homes is usually much less complicated than putting together a commercial transaction. On the upside, the commissions made when a commercial transaction is finally completed are often much more substantial than residential commission sizes.
The following information on the highest paying real estate jobs and commercial real estate salaries was taken from a survey of nearly 400 companies that provided earnings data for 2019. This survey, which has been conducted every year for 20 years, was done in conjunction with the National Apartment Association and the National Association of Office and Industrial Properties.
Corporate/Executive Positions
CEOs
Low: $389,600
High: $660,100
Average Bonus: 182.4% of Salary
Chief Investment Officer
Low: $292,500
High: $488,600
Average Bonus: 116.8% of Salary
Industrial/Office Positions
Senior Executive
Low: $238,900
High: $447,000
Average Bonus: 105.4% of Salary
Senior Asset Manager
Low: $216,700
High: $351,000
Average Bonus: 57.6% of Salary
Senior Property Manager
Low: $166,000
High: $292,000
Average Bonus: 51.2% of Salary
Senior Leasing Executive
Low: $152,400
High: $292,100
Average Bonus: 107.5% of Salary
Senior Development Executive
Low: $223,200
High: $385.800
Average Bonus: 75.5% of Salary
Retail Positions
Senior Executive
Low: $254,700
High: $477,600
Average Bonus: 120.6%
Senior Acquisitions Executive
Low: $200,800
High: $477,600
Average Bonus: 120.6% of Salary
Senior Asset Manager
Low: $214,600
High: $372,700
Average Bonus: 78/4% of Salary
Senior Property Manager
Low: $173,000
High: $274,500
Average Bonus: 46.2% of Salary
Senior Leasing Executive
Low: $154,100
High: $327,400
Average Bonus: 96.1% of Salary
Senior Development Executive
Low: $216,400
High: $396,400
Average Bonus: 70.0% of Salary
Investment/Advisory Positions
Senior Portfolio Manager
Low: $193,600
High: $271,200
Average Bonus: 53.9% of Salary
Senior Transaction Executive
Low: $225,700
High: $302,400
Average Bonus: 83.9% of Salary
Conclusion
As you can see, a career in real estate doesn’t have to be one of selling suburban houses or urban condos. The possibilities in commercial real estate are endless, and the rewards for those who work hard can be great. If you’re wondering if the world of commercial real estate could be right for you, my advice would be to find people who have made successful careers in the areas that interest you. Talk to them about what it takes to succeed, and take the advice they’re willing to give you. Here is a book that I highly recommend all aspiring commercial real estate candidates to read in regards to commercial real estate basics to know (especially before an interview). Don’t be fooled by the silly cover, this book will give you the general knowledge you need before breaking into the CRE world!
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