From the winter issue: Commercial real estate is plugging along, neither doing abysmally nor posting much news to write home about.
Overall, sales activity has slowed from 2015 highs, but rates in some commercial sectors, like industrial and office leasing, are up.
TRD spoke with industry veterans and dug into public records to get a sense of wages earned. With commission-based occupations, income can vary by the size of deals conducted, how fees are structured and level of experience. Other jobs in real estate offer salaries, which can also differ hugely from firm to firm.
Here’s what we found.
The commercial markets are churning along, albeit at a slower pace than in recent years. The rate of retail leasing deals was down in the third quarter, according to a report from JLL, but the office leasing market remained strong over that time, according to a Cushman & Wakefield report.
Commercial brokers say overall activity is slowing down. “But it’s not stopping, and there is no crash coming our way in the foreseeable future,” said Jim Fried of Sandstone Realty Advisors in Miami. “Sales activity continues at healthy pace, just not at a breakneck pace.”
Real estate professionals who work the commercial sector most often have a commission-based income, but brokerages differ on how they structure the splits. The bigger the firm, the more ways the fee is split, often with market research and support staff also getting a share, sources said.
In 2016, 20 commercial sales closed for more than $100 million each in South Florida, Fried said. The broker or team selling a $100 million property could earn a commission of about $1 million. However, commercial sales brokers can at best expect to close a handful of sales per year — in a good market. And then they have to split the commission with the brokerage and the rest of their team.
Most new brokers start out by providing support to senior brokers and typically earn a base salary. Eventually, the broker will ease into a commission structure. By the third year, the agent should be in the six figures, Fried said.
There are many more leasing agents than sales brokers, and in leasing transactions, the agent gets paid at the origin of the lease and again at renewal. “The agent and/or their firm may get 6 percent on initiation, 3 percent on renewal and 1 percent on the next renewal; however, it’s all negotiable,” Fried said.
Managers of commercial firms are typically compensated with a base salary plus a bonus based on the office’s performance. “In a significant market like Miami, that usually is a six-figure salary. It could be $150,000 or as high as $300,000 or much higher,” Fried said.
Click here to read more of “Making bank?” from The Real Deal South Florida’s winter issue.