Intern Insights: Rookie Mistakes about CRE Brokerage
As a marketing intern at Sperry Van Ness International Corporation I had the opportunity to attend last week’s Broker Boot Camp in Chicago. Now, let me be honest — I knew next to nothing about commercial real estate brokerage going into this training. Since I’m just about as “rookie” as it gets, speaker John McDermott’s “Top 10 Rookie Misconceptions” about the brokerage business provided me with a much-needed wakeup call about the industry.
I’ll admit it — I was guilty of falling for each of the CRE brokerage myths John mentioned, so I’m going to share my 3 favorites with you. It’s time to dispel some rumors…
The Intern’s Take on the Top 3 Rookie Mistakes
1. “It looks easy.” Well, it’s not. If CRE brokerage were easy, everyone would be doing it. Good brokers can often work up to 80 hours a week building their businesses. Since brokers rely on the commission-only “results economy,” the pressure is always on and the work is never done. You can always be making more cold calls, setting up more meetings, adding more information to your database… the list goes on.
2. “I can do it online.” Perhaps you can, but you won’t be making any money. It’s impossible to “do” brokerage well if you’re sitting at your computer, because the majority of the job involves going out and meeting prospects and surveying properties in person. To all my fellow millennials out there: nothing replaces face-to-face interactions, especially in the brokerage business. Sorry, but no one is going to tweet you your paycheck.
3. “I don’t need to cold call.” Oh, yes you do. Although cold calling is intimidating, especially for avid texters like me and my generation, it’s proven to be the single most effective way of reaching a prospective buyer or seller. Look at it this way: you only need to cold call each contact once. After that first time, the person already knows you, so that awkwardness of cold calling subsides. By the way, as a broker you should aim to make 250-300 cold calls a week. So hop on that phone and get calling.
Clearly, you don’t have to know much about commercial real estate brokerage to get something out of the Sperry Van Ness® Broker Boot Camp. Anyone can learn something useful, especially complete rookies like me.
To see how you can break into the brokerage business, visit our Careers page here.
To find out more about the SVN Broker Boot Camp, click here.
advisor who may lack in years in the business, but does not lack in tools, resources and initiative. Note that in commercial real estate, the term “junior” doesn’t necessarily refer to the age of the broker or advisor, but more likely the years in the industry. Many of our own top SVN advisors already had successful careers in completely different industries. Why work with a less experienced advisor? First of all, most established firms are relatively selective about who they recruit, so the odds are that you’ll get someone pretty good. Second of all, that advisor should be desperate to do a good job so that they can build their resume. They will give your deal much more attention than a more experienced advisor will. (We note this also works when selecting attorneys!)
plan to sell, it is best to sell with ten years left or a minimum of five years. If you have less than five years remaining, you may need to hold until the renewal or be prepared to take a significant discount. It’s important to have a plan in place when you purchase a NNN investment as to how long you will hold and when to exit the investment. A real estate investment professional can help you evaluate the best time to dispose of an investment in light of the market conditions.
One of the mistakes I often see both new and seasoned investors make is to not properly define their investment parameters before getting started. This is important because it sets the course for the strategy and allows you to execute the plan more efficiently; and ultimately be more successful, because you have a baseline to which you can compare your investment portfolio.
Once you have defined investment parameters, the next step is to educate yourself. You need to study your respective market, in the particular product type niche or niches you have chosen. Research sale comparables and what properties are on the market for sale. This is where teaming with a trusted real estate advisor, like those at a Sperry Van Ness office, can greatly enhance the success of implementing your strategy. Picking a great commercial real estate advisor who specializes in the niche product type is critical to being able to quickly get up to speed and accomplish your goals (see our other post “
Every commercial real estate deal needs to have an exit strategy. It’s important to think about this exit strategy early on; in fact, before the purchase is even made. Granted there will be times when the exit strategy will change, due to rising or falling market conditions, or supply and demand, and you will have to adjust your exit strategy. The main point here is that an exit strategy needs to contemplated in the beginning, not the end of a commercial real estate transaction. If you buy an office building at an 8% cap rate that is 70% occupied and your plan is to spruce it up, apply aggressive leasing tactics with a CRE advisor, and increase the revenues, only to find out later that the market for those types of investments are trading at 8.75% cap rates, due to the smaller tertiary market the property is in and the smaller, shorter term leases, then your exit strategy is flawed because the market will not pay you for the work you have done. Of course, this is a simplified example. The point is, have a defined strategy to exit the investment at the proper time, and always be willing and able to review your exit strategy and make adjustments. In the words of a favorite Kenny Rogers song, sometimes “you got to know when to hold ‘em and know when to fold ‘em, know when to walk away, know when to run!” Hope is NOT an exit strategy.
About Carlton Dean – Carlton has nearly 20 years of experience in the commercial real estate industry, with a special focus in the retail and multifamily sectors. Carlton is based in Tallahassee, Florida, but serves clients throughout the entire Southeastern US. 
In addition to boasting some of the top tourist destinations in the United States, Central Florida has cultivated a thriving technology cluster in a 23-county region spanning the breadth of the state. Joint programs by regional universities and community colleges cover a wide range of technology fields, from microelectronics to biotechnology, modeling and robotics, aerospace, wireless technology and digital media. The growing workforce of highly skilled, young professionals is attracting tech employers and fostering startups, adding a significant and expanding source of well-paid residents to help drive retail sales. Tampa and Orlando share a similar overall retail vacancy rate of about 9.5 percent, but Tampa’s malls have outperformed with a vacancy rate below 4 percent and average mall rents of $25 or more per square foot. In Orlando, mall vacancy is 200 basis points higher and average rent is closer to $15. Tampa’s weak spot since the recession has been excess vacancy at strip and neighborhood centers, but falling rents in those subsets showed signs of flattening in late 2013. Orlando in particular has benefited from resurgent tourism that will increase as the economic recovery takes a firmer hold in U.S. markets this year. Investor confidence in Central Florida’s outlook has driven strong demand for net-leased retail since 2011, and would-be buyers are now showing greater interest in multi-tenant properties with below-market rents that offer good upside potential.
SVN Auction Services, a provider of date-specific sales and special asset solutions, has launched its popular and highly anticipated 
This year’s SVN Q4 event includes a wide variety of quality office, industrial, retail, land, hotels, multifamily, and NNN properties, including a historic hotel in Hot Springs, Arkansas, a fruit packing facility in Orange Cove, California, a former FedEx headquarters campus in Memphis, Tennessee, and a church and school in Oklahoma City, Oklahoma. Assets feature a $500,000 minimum value, up to a value range of $14,000,000.
Let’s start this with a two question quiz:
Social media matters in commercial real estate in much the same way email and telephones matter. It’s a form of communication. Whether you use it or not, doesn’t stop others from doing so, which means you might be left out of some of the conversation. This may matter more or less, depending on where you are in your career.
Nearly 2 percent annual population growth and a diverse employment base are propelling San Antonio’s economy at a healthy clip, but the market lags the performance and rising profile of the other major Texas metros of Houston, Dallas/Fort Worth and Austin. San Antonio’s longstanding strength in the military and aerospace sectors, coupled with close proximity to Austin’s high tech cluster, has fostered an important cyber security sub sector. Located less than an hour’s drive south of Austin, the Alamo City has also captured a large piece of the Eagle Ford Shale energy boom emanating from South Texas, while its business-friendly climate, thriving tourism and manufacturing jobs attract new residents and fuel home sales. Office tenants were still giving back space in 2012 but absorption turned positive here in 2013. Delivery of several new office projects slowed rent growth and pushed the office vacancy rate into the middle teens last year without softening conditions enough to hamper rental rate growth. More construction is likely to begin in 2014. For investors who missed the opportunity to acquire office assets in Houston, Dallas or Austin at the bottom of the market cycle, San Antonio offers acquisition and development opportunities in a market that is in the early stages of appreciation.
Q: What inspired you to create the 5050 By 2020 movement?
