Long-Running CRE Recovery Attracts Younger Brokers; Spurs Larger Firms Expand into Smaller Markets
August 24, 2016
The long-trending CRE up-cycle has created a mini-boom in broker ranks over recent years, with the larger number of younger, first-time commercial brokers reducing the median years of experience among all brokers, and also lowering average annual incomes for brokers.
The number of commercial members with less than two years of experience nearly doubled to 9% in 2016, from 5% in 2015, according to the National Association of Realtors’ 2016 Commercial Member Profile. And the median years of experience in commercial real estate dropped from 25 years to 20 years.
The 2016 NAR Commercial Member Profile was based on a survey of 2,048 members. Approximately 80,000 commercial real estate professionals are members of NAR.
“As the U.S. economy continues to experience strong, steady recovery, NAR has seen more and more members choose to specialize in commercial real estate,” noted NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, FL.
Lynn Drake, president and founder of Compass Commercial in Troy, MI, has experienced the effects of the broker boom first hand. In the last few years, she said she has hired 10 new agents -- eight of them were new to the business. None of them lasted.
“We tell the (new) agents they won’t see any money for the first six months. Then they get four months in and they say they have to leave because they aren’t making any money,” Drake said. “There seems to be a disconnect between what we tell agents to expect, and when what we tell them becomes reality.”
The lure of bigger-dollar deals is great, however, and she said new prospects keep asking to join her firm.
“I’ve had several residential agents approach me in the last 90 days about working for us because the inventory of for-sale homes is so low. They can’t make money in residential so they are looking to make a jump into commercial real estate,” Drake said.
According to NAR, the median gross annual income for commercial members in 2015 was $108,800, down from $126,900 in 2014. Brokers and appraisers reported the highest annual gross income at $145,800 and $130,800 respectively while sales agents reported the lowest at $67,300, which is in line with 2014 results.
Those with less than two years of experience reported a median annual income of $43,400 in 2015, down from $67,200 in 2014; and those with more than 26 years of experience reported a median annual income of $165,385 in 2015, up from $162,800 in 2014.
Compass Commercial's Drake tells prospects to expect to gross between $40,000 and $60,000 in the first year.
“That means they will take home between $20,000 and $30,000,” she said. “The upside is they should expect to double their business every year thereafter.”
The number of commercial members with less than two years of experience nearly doubled to 9% in 2016, from 5% in 2015, according to the National Association of Realtors’ 2016 Commercial Member Profile. And the median years of experience in commercial real estate dropped from 25 years to 20 years.
The 2016 NAR Commercial Member Profile was based on a survey of 2,048 members. Approximately 80,000 commercial real estate professionals are members of NAR.
“As the U.S. economy continues to experience strong, steady recovery, NAR has seen more and more members choose to specialize in commercial real estate,” noted NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, FL.
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| Lynn Drake, president and founder of Compass Commercial in Troy, Michigan. |
Lynn Drake, president and founder of Compass Commercial in Troy, MI, has experienced the effects of the broker boom first hand. In the last few years, she said she has hired 10 new agents -- eight of them were new to the business. None of them lasted.
“We tell the (new) agents they won’t see any money for the first six months. Then they get four months in and they say they have to leave because they aren’t making any money,” Drake said. “There seems to be a disconnect between what we tell agents to expect, and when what we tell them becomes reality.”
The lure of bigger-dollar deals is great, however, and she said new prospects keep asking to join her firm.
“I’ve had several residential agents approach me in the last 90 days about working for us because the inventory of for-sale homes is so low. They can’t make money in residential so they are looking to make a jump into commercial real estate,” Drake said.
According to NAR, the median gross annual income for commercial members in 2015 was $108,800, down from $126,900 in 2014. Brokers and appraisers reported the highest annual gross income at $145,800 and $130,800 respectively while sales agents reported the lowest at $67,300, which is in line with 2014 results.
Those with less than two years of experience reported a median annual income of $43,400 in 2015, down from $67,200 in 2014; and those with more than 26 years of experience reported a median annual income of $165,385 in 2015, up from $162,800 in 2014.
Compass Commercial's Drake tells prospects to expect to gross between $40,000 and $60,000 in the first year.
“That means they will take home between $20,000 and $30,000,” she said. “The upside is they should expect to double their business every year thereafter.”
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