As much as real estate loves its greenbacks, people tend to keep quiet about the paychecks its players take home. The Real Deal sifted through the records and shook the grapevine to figure out what one can make in the business, from the bottom of the corporate ladder to the top.
The median president or CEO of a real estate investment trust, holding what are among the most lucrative roles in the industry, made $5.95 million last year, according to an analysis of compensation data from 150 publicly traded firms. That’s up 17 percent from 2020, with the majority of the increase coming in the form of fatter bonuses. While CEO salaries rose just 2 percent in 2021, bonus compensation jumped 42 percent. CFOs netted almost identical increases.
Prologis CEO Hamid Moghadam has become king of the REITs during the pandemic, scoring the most money of any REIT CEO or president in each of the last two years. Moghadam earned $24.9 million last year, less than the $34.4 million he pulled down during 2020, when his particular sandbox, last-mile warehouses, saw a giant boom. He can attribute the vast majority of both years’ gains to his equity bonuses; the shares given to Moghadam in 2021 were worth $22.3 million at the time they were granted, and Prologis stock jumped 69 percent last year.
Stock is nice, but as retailers are now apt to say, people want experiences. Vornado executives evidently took a joyride last year, as the firm reported spending $750,000 on cars and drivers for four of its top executives. Founder and CEO Steven Roth earned $9.8 million last year, but Roth’s salary is even less fixed than most — for the last three years, he has taken 80 percent of his salary in stock, making a full 98 percent of his compensation last year tied to the REIT’s performance. Vornado shares are down about 50 percent from the start of 2019.
Other big earners last year included SL Green Realty CEO Marc Holliday ($21 million) and Boston Properties CEO Owen Thomas ($12.9 million).
Last year marked a return to normalcy after firms spent much of 2020 debating not just how to survive, but how to compensate their executives without creating a public relations nightmare.
“Salaries in many cases were reduced temporarily, maybe by as much as 50 percent,” said Rami Glatt, a principal at compensation consultancy Semler Brossy. “The higher you paid, the more risk you were taking on.”
Some executives argued that, even though the early days of the pandemic sent returns cratering, they had performed well given the circumstances and saved their companies from much worse fates.
Not that salary means all that much to the real estate C-suite anyway: The vast majority of executive compensation comes as long-term equity grants that vest over years, not months. Take Anthony Malkin, Empire State Realty Trust’s CEO. While his overall compensation last year totaled $7.9 million, just $626,000 of it — less than 10 percent — came as salary.
Leslie Hale made history in 2018 when she became the first Black woman to lead a publicly traded REIT. The base salary for the CEO of hotel owner RLJ Lodging Trust amounted to $840,000 last year, but she had $16.3 million in total compensation, including long-term equity.
Across the board, salary accounted for just 13 percent of the median CEO’s compensation at publicly traded firms last year. To make it to the real estate boardroom, you need a stomach for risk. But even a Vegas card shark might fold if he saw those odds.
As an added kink, some companies bind their execs with golden handcuffs. While exact ratios vary, most leaders are required to hold a multiple of their base salary in stock. Douglas Elliman CEO Howard Lorber, whose salary last year was $3.4 million, has to hold at least three times that amount in Elliman stock, which is down about 50 percent since its IPO on Dec. 30. Don’t feel too bad for him, though: Lorber also gets a car and driver, club membership and up to $200,000 in private jet usage.
Proptech firms face particular jeopardy from stock-market declines. In order to compete with Silicon Valley for talent, some firms followed in tech’s footsteps by paying their more junior employees in stock. That’s great for the employees when the share price is high, but if the shares plummet — like just about every proptech company’s have this year — they could be left to make up for the differential between the dollar amount promised and what those shares are actually worth.
Real estate firms are prone to use discretionary models to determine executive pay, which gave them options to get creative even as the pandemic upended the business. But as the economy shows signs of a slowdown, that variability can have its downsides.
“If I’m a shareholder and I’m suffering, then to some extent I’m expecting you to suffer too,” Glatt said.
Brokers making bank
Among brokerage bosses, it’s tough to beat Elliman’s Lorber, whose compensation after bonuses and equity grants reached $32 million last year. But Compass’ Robert Reffkin knocked the competition out of the water, at least on paper. The firm’s co-founder and CEO received stock worth $89 million last year, though both he and Lorber have seen the realized values of their shares drop dramatically in the past year.
On the commercial side, Howard Lutnick pulled the reward of a career in 2021. After a record year, the Cantor Fitzgerald CEO and Newmark chief received a one-time $50 million bonus, set to pay out over four years. He took home the first $20 million earlier this year, but will have to remain in his current roles as chief executive and chair to receive the remaining $30 million, broken up into three annual payments of $10 million.
CBRE CEO Robert Sulentic earned just shy of $13.9 million last year, and Cushman & Wakefield’s executive chair and former CEO, Brett White, took home $19.9 million.
Things are cushy in the executive suite, but back on the ground, how much does a broker bank? More than any other job in real estate, that depends on how hard they’re willing to grind.
More than 150,000 Americans have become agents in the past two years, with television shows and rise-and-grind gurus painting the profession as a path to riches. But only a fraction of them will actually make a living selling homes, and even those agents face an uphill climb.
Before agents can surrender half of their earnings to brokerage fees, they need listings. To get a head start and build a network, early-career agents have increasingly opted to join brokerage teams within agencies.
Under a team’s umbrella, new agents still have to give a cut to the brokerage and team, but they gain steady deal flow, taking on the less lucrative listings until they have the connections to generate their own. For most, it’s anything but the “Selling Sunset” lifestyle. Commission advance firms like Ryan Serhant-backed RLTY Capital have built entire businesses on the proposition that fledgling agents often don’t have the cash they need to pay their bills or expand their businesses.
As agents close more sales and hit certain levels of deal flow, they can negotiate better splits with their brokerage. If they reach the selling stratosphere, they can draw up to 90 percent, as well as perks like assistants, all-expenses-paid vacations and chauffeur services.
Most agents contacted by TRD declined to discuss their splits or income, but we can still do some back-of-the-napkin math for a rough estimate.
The Eklund-Gomes team at Douglas Elliman was by far Manhattan’s biggest seller last year, according to TRD’s annual ranking of New York’s residential elite. The group sold at least $492 million worth of properties in the borough, which works out to somewhere between $9.8 million and $29.5 million in commissions. If the team kept half of that after splitting with the buyer’s agent, then at a 70 percent split, that would leave $10.3 million. The team didn’t respond to a request for comment, but with operations in Florida, California and Texas, even that rough estimate leaves plenty of dough for the team’s piece of the pie.
The Sabrina Saltiel team at Elliman, Manhattan’s 10th-biggest seller, closed $208 million worth of deals last year. Depending on commission percentages, that could yield anywhere between $4.2 million and $12.5 million. After the splits and the splits of the splits, Saltiel’s team could walk away with somewhere between $1.5 million and $5.6 million before marketing and other expenses.
The Aaron Kirman Group, which closed at least $1.3 billion of sales in Los Angeles in the past year, topped TRD’s L.A. agent ranking. An affiliate of Compass, the Kirman Group likely generated somewhere between $20 million and $41 million in commissions, assuming a 50/50 split with buyers’ agents. At a 90 percent brokerage split, that could pencil out to as much as $36.5 million. In the same time period, Tami Pardee sold $841 million worth of L.A. properties. That could yield up to $25 million in commission before brokerage splits, assuming a 6 percent charge. Chris Cortazzo, Compass’ Malibu superseller, hit $705 million in sales last year. That could mean up to $42 million in commissions, shared with the buyer’s agent and Compass.
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But things could be changing, particularly for luxury agents.
After selling high-end apartments at Corcoran for 16 years and founding her own brokerage, Louisa Gillen still can’t believe how much agents earn for luxury sales. At her new firm, Simple Real Estate, she plans to change that.
Regardless of price tier, real estate agents generally charge between 4 and 6 percent commissions. Even in the highest price tiers, an agent on either side of the deal almost never dips below 2 percent. As the prices and commissions climb, the essential work of an agent — coordinating showings, setting list prices, negotiating deals — stays the same.
Gillen and a growing crop of luxury agents, notably Zach and Cody Vichinsky of Bespoke Real Estate in the Hamptons, are radically reducing luxury agent commissions in what they call a long-overdue recalibration. Bespoke, which only sells homes valued at $10 million or more, announced it will charge just 1 percent commission for its sales. At Simple, where listings range between $900,000 and $10.5 million, Gillen caps commissions at $50,000.
“At a certain price point, you are simply overpaying,” she said.
Gillen recently sold a studio apartment belonging to a friend’s grandmother. The unit’s window faces a wall, and the sale took months to close after dealing with the board. Gillen says she only made $1,000 from the deal.
Around the same time, she sold a $5 million Tribeca loft in what she describes as a relatively effortless experience. A neighbor in the building turned up to the first showing and bought the condo, all cash.
She says selling the grandmother’s studio was a far greater ordeal than the Tribeca condo. “At that higher end, they’re meticulously done, they’re usually in the best locations, they have the best views,” Gillen said.
Once you start selling the Palm Beach compounds and Central Park penthouses of the world, the difference between 1 percent and 6 percent commission can be millions of dollars. If their strategy works, sellers like Bespoke and Simple will undercut the competition, forcing others to slash their own commissions if they want to compete for listings. Ultra-luxury buyers aren’t the most price-sensitive, but they also aren’t the type to leave cash on the table.
“Who’s not going to try to negotiate that as a seller?” Gillen asked.