Commercial brokers have long days, filled with structuring deals, sourcing financing and pulling market data. And all those hours mean it’s important for brokers to find a firm that’s a good fit, a corporate culture that makes that time spent in the office at least tolerable — maybe even somewhat enjoyable.
Money, of course, is what commercial brokers pay the closest attention to: Which firm offers the best commission splits? The most generous bonuses? But they also are on the lookout for other perks — from listings databases to Caribbean vacations — that firms are using to attract top talent and keep their brokers happy.
This month, The Real Deal set out to analyze the factors that influence workplace satisfaction in commercial real estate. To do that, we asked more than two dozen major New York City commercial brokerage firms to complete a survey detailing the amenities and perks they offer. Some declined to fill out the survey, but TRD asked current and former employees and others in the industry about working conditions at those firms. And we talked with veteran brokers for their perspective.
Read on for a closer look.
Most New York City commercial brokers work on commission rather than salary, so the commission split they’re offered by each firm is the biggest driving factor when choosing where to work. And splits vary widely by individual: At most firms, agents start at a 50-50 split, then graduate to higher percentages as they gain more experience and deal volume.
When teams work together on deals, the commission is divvied up between team members, with each broker’s cut determined by factors such as seniority, who did the most work on a given deal, and who brought in the client.
Some commercial firms have different approaches to compensation, however.
Brokers who work at the investment bank Eastdil Secured and Brookfield Financial, a subsidiary of Brookfield Asset Management, are not paid on commission; instead, they’re salaried employees. At both firms, commissions are pooled and distributed at the end of every calendar year as bonuses, with big-time brokers such as the Eastdil power team of Douglas Harmon and Adam Spies taking the largest cut. Eastdil declined to comment.
Eric Anton, co-head of U.S. brokerage at Brookfield Financial, said the salary model means a less-competitive work environment and more cooperation, since bonuses are based in part on being a good team member.
“You’re not keeping your arms around things and not sharing,” Anton said. “You’re trying to help each other, not hurt each other.”
Plus, being a salaried employee means Brookfield brokers get health insurance through the company, something most commercial brokers don’t have access to (see below).
Anton said the salary-plus-bonus structure has something of an equalizing effect, helping out brokers who have had a disappointing year but tempering the earnings of those on a hot streak.
“If everything you touch turns to gold,” he said, “you’re not going to do as well” with a salary rather than working on commission.
That’s one reason why many in the industry said they prefer the commission model.
“Our brokers love that type of system because it’s got unlimited upside to what they can make as the result of their own productivity,” noted Paul Massey, CEO of Massey Knakal, which pays its brokers by commission.
And bonuses are more subjective than commissions because bonuses are determined by managers and fellow team members, sources said.
Getting paid on commission means “I don’t have to wonder how I’m going to be rewarded by somebody making a subjective decision,” said Woody Heller, executive managing director and a top broker at Studley, which also operates on a commission model.
Jones Lang LaSalle previously paid its brokers with the salary-plus-bonus model, but found that it was too difficult to attract new talent without the incentive of commissions, sources said. The company has changed to a commission model for its new brokers, and now has brokers working under both compensation plans. When asked, the firm declined to comment.
Two of the city’s largest commercial brokerages, Cushman & Wakefield and Newmark Grubb Knight Frank, are trying out yet another method of compensation: giving brokers ownership interest in their companies.
Cushman did a private stock offering for its employees, including brokers, in 2006. And in 2011, Newmark instituted a mandatory policy for brokers — a percentage of each commission check goes toward buying stock in the company.
Cushman and NGKF declined to discuss the specifics of their compensation. But the idea, sources said, is that owning stock in the company helps morale and reduces competition by giving brokers a vested interest in their colleagues’ success.
Still, these stock-ownership programs have been met with mixed reviews from brokers, who said they would prefer to decide on their own what to do with their commission checks.
That may be one reason why NGKF has changed its program, which is no longer mandatory. Now, sources said, brokers have individual arrangements with the company.
To boost morale and attract new talent, Manhattan brokerages also reward their top producers with free trips, events and services.
In this category, Brookfield is a standout. The company’s sister firm, Brookfield Office Properties, has a national arts and culture program, arts>Brookfield, which aims to liven up public spaces in major cities in which Brookfield has a presence. In New York, the company regularly holds events and performances at its properties, including the office building Brookfield Place at 250 Vesey Street in the Financial District, that Brookfield Financial employees can attend for free. Last month, for example, Brookfield hosted an outdoor B.B. King concert at Brookfield Place as part of the Lowdown Hudson Blues Festival. Another event was “New Fish City,” a seafood festival with more than a dozen seafood restaurants and a beer garden. Brookfield also sponsors the Tribeca Film Festival, giving brokers the chance to pick up free tickets to premieres.
When it comes to rewarding its top producers, one stand-out company is the national investment services firm Marcus & Millichap, which has roughly 85 agents in its Manhattan office. Each year, the company provides an all-expenses-paid trip for all senior brokers who have done in excess of $2 million in gross deals. This year’s destination: California’s Napa Valley, where brokers went wine tasting, golfed and played tennis, according to J.D. Parker, a first vice president in the company’s Manhattan office who went on the trip last month.
Similarly, about 15 top brokers in Studley’s New York office receive an all-expenses-paid winter trip abroad each year. During the trip, the firm gives out its annual “Numero Uno” award, which recognizes the top producer during the past year. Past destinations have included Paris, Berlin, Florence, Tokyo and the Caribbean. While that trip is reserved for the elite brokers, Studley also pays for all its brokers to attend an annual summer retreat, usually to a U.S. destination like Florida or California.
Massey Knakal also sponsors a yearly trip for its top producers and their families. This spring, about 100 brokers attended a retreat at the Boulders resort in Carefree, Arizona. Brokers can bring anyone they want, including partners and children — all expenses paid.
“I got a thank-you note from one of [the] spouses when we came back from our most recent trip,” Massey said. “She said, ‘It’s not like a work trip. It’s like I’m hanging around with good old friends.’ ”
Closer to home, Massey Knakal also hosts an annual company picnic; this year it was held in June at the Larchmont Yacht Club in Westchester County.
Other companies offer smaller-scale extras to make work more bearable for its agents.
At the investment property sales firm Ariel Property Advisors, healthy snacks from online grocery company FreshDirect are delivered to the office once a week, and breakfast — featuring fruit, yogurt and whole-wheat wraps with egg-whites and vegetables — is catered twice a week. Brokers at Cassidy Turley get discounts at local gyms and retailers where the firm has relationships, including Brooks Brothers, Levenger and Dell.
Office facilities and equipment
While residential offices are often ground-level storefronts to attract passersby, commercial brokerage office spaces have a more corporate feel.
Perhaps the most impressive brokerage offices belong to major national firms, such as CBRE and Jones Lang LaSalle, which boast well-appointed spaces in Class A office buildings in Midtown. CBRE’s 141,000-square-foot space at the Met Life Building at 200 Park Avenue, for example, has interactive white boards in all conference and training rooms, plus a dining room and terrace. The space was designed in 2011 by the California-based design firm Gensler, and reportedly cost more than $30 million, or $225 per square foot, to build out.
When it comes to facilities, one area where firms differ is their approach to private offices. Large firms such as CBRE and JLL have private spaces for their senior brokers and executives, but some firms prefer to have their top brass sit among their more junior colleagues. Firms that take this approach, including Ariel, Massey Knakal and the retail brokerage Ripco, say it encourages more collaboration.
Massey sits in “the bullpen” at his firm’s 275 Madison Avenue headquarters along with co-founder Bob Knakal. The configuration, he said, gives newbie agents greater access to managers than they would have otherwise. And, he said, the trading floor–style atmosphere impresses clients who stop by the office.
“We position them in the conference room so as that they’re sitting right next to the trading floor,” he said. “It drives a big message about how collaborative our people are.”
Cassidy Turley and Lee & Associates encourage collaboration with so-called “living room” spaces, rooms with comfortable chairs and sofas. At Lee’s 600 Madison Avenue office, which houses about 40 brokers, the living room space also has a ping-pong table, and brokers use the room for informal meetings and office celebrations.
Commercial real estate brokers are required to be licensed before they start working on deals, which involves taking classes and passing a written exam. Some firms hire directly from real estate schools. Still, brand-new brokers aren’t always ready to jump right into deal-making.
Commercial firms take a variety of approaches to training their brokers, from mandatory courses to mentorship programs.
At Eastern Consolidated, new brokers are required to take part in AdvanceTrac, a 12-month training program. The program includes weekly training sessions on subjects such as marketing, real estate analysis, local market knowledge and technology, as well as mentorships with senior brokers. Also as part of the program, newcomers work on deals with several senior brokers, rather than being placed permanently on a team.
Mark Schnurman, director of sales and training, drew on his experience of training programs at one of his former companies, investment bank Morgan Stanley, to create a custom program for Eastern. The program, he said, allows newbie agents “to partner with the best brokers in the industry on a deal-by-deal basis, as opposed to being tied up with one or two brokers.”
One graduate of the program closed a deal within six weeks of completing the training, Schnurman said, and another one got “four exclusives in 10 weeks.”
At Massey Knakal, new brokers are required to participate in a 90-day “Initial Success Training” program, with classes led by industry professionals from both inside and outside the company, on topics such as underwriting, transaction management, closings and maintaining relationships. After that’s completed, optional continuing education is offered at no cost to all brokers at the firm.
Another popular form of training is mentoring. Marcus & Millichap has a different take on the concept: Junior brokers interview senior executives, then choose their own mentor. Often, the junior broker then joins the senior broker’s team.
The program “leverages senior brokers’ skill sets and track records and accelerates the learning curve” for junior agents, Parker said.
In fact, he attributed the firm’s retention rate of approximately 75 percent, which he said was high in the industry, in part to that policy.
The mortgage bank Holliday Fenoglio Fowler, which has an investment sales and capital markets advisory arm, also stands out for its educational offerings. Besides mentoring and educational workshops, HFF pays up to $4,000 per year toward any college or post-graduate class, to help its staffers earn MBAs and other degrees. The company also reimburses employees for education courses that are not applied toward a degree, such as business certifications.
Health care and benefits
Most commercial brokers are independent contractors, which keeps them from getting benefits such as health insurance or paid vacation time.
Indeed, many companies purposefully don’t offer these benefits so the Internal Revenue Service doesn’t categorize their brokers as employees.
But both CBRE and Cushman & Wakefield offer a package of benefits to commission-based brokers. At Cushman, brokers receive benefits similar to those offered to employees, including medical, dental and vision insurance as well as disability coverage, a company spokesperson said.
Other firms pay a percentage of their brokers’ insurance premiums. Massey Knakal, for example, pays 50 percent of the premium for its brokers’ medical, dental and vision insurance. HFF brokers pay the same rates as all other employees at the company — between 25 and 30 percent of the overall costs.
Almost all Manhattan firms provide their agents with access to a variety of software programs and online subscriptions to help them navigate the market.
Those programs generally include CoStar, Loopnet, LexisNexis, Land Vision, MapNet, PropertyShark and Real Capital Analytics. Most companies also maintain their own listings databases, which are updated by agents as deals are made.
Consistently ahead of the pack is Marcus & Millichap, which has been ranked by InformationWeek magazine as one of the top 100 U.S. companies for technological innovation. Marcus & Millichap has an online property search program that allows agents to browse through more than 3.3 million properties for new listings, inventory and closed sales. The company also has gained recognition for its Smartphone app, which is reportedly the first of its kind to allow investors to communicate directly with the agents representing them.
Plus, Marcus & Millichap agents are given software to maintain their own databases, Parker said, and if a broker leaves the firm, their information goes with them. At other brokerages, by contrast, the information gathered by brokers is considered company property.
That’s a selling point for brokers thinking of giving Marcus & Millichap a try, Parker said.
The office culture of a commercial real estate firm is largely determined by whether a firm is privately owned or publicly traded, sources said, as well as the system that brokers operate under.
Public companies tend to be pressure cookers because they have to report to investors, brokers said.
“When you work for a publicly owned firm, you have to report quarterly,” said Studley’s Heller, who worked at publicly traded JLL. “That’s a very different mindset, which imposes certain pressures and short-term thinking, which are difficult to work with. At the end of the year, or the end of the quarter, I’d have people walk into my office and ask, ‘Is there any way to accelerate the closing of this transaction?’ That may not be the right thing to do for the transaction.”
At privately held Studley, by contrast, “We don’t report to anybody but ourselves,” Heller said. “That gives us a lot of flexibility to do what we think is right.”
Heller also noted that many of Studley’s managers are themselves brokers who are working on their own deals as well as supervising others. He considers that an advantage.
“All the managers are brokers and understand what brokers need and want,” he said.
Other managers who are also top brokers include Massey Knakal’s Knakal and Mary Ann Tighe, who is CEO of the tri-state region at CBRE.
But other firms have a different take. Marcus & Millichap prefers that its managers not do deals, Parker said, to “make sure that [managers] are aligned 100 percent with the agents.”
Another factor that impacts brokers’ happiness is the system for how deals are divvied up. Some firms, such as the retail brokerage Winick Realty and Massey Knakal, divide the New York metro area into geographic territories. The idea is that the client is better served by brokers who know the area inside out and can underwrite or evaluate properties more accurately.
Plus, it helps encourage “collegiality and order,” Massey said.
While some brokers thrive under the territory model, others said the system is restrictive for brokers who would prefer to work all over the city.
Other firms have more flexible models. At the retail firm Ripco, brokers can do deals with colleagues on other teams and in neighborhoods outside their regular stomping grounds, said Richard Skulnik, a partner at the firm.
“We don’t block anybody from certain listings,” Skulnik said. “[Our system] allows you to take part in leasing throughout the city instead. You’re not forced just to work in one neighborhood.”