If you’re interested in a career in real estate with a high-earning opportunity, you may want to focus on commercial properties. The exact numbers vary by source, but according to National Association of Realtors data, the median residential real estate agent made $34,100 in gross income in 2020. Commercial real estate agents? They brought in over $150,000.
Real estate education provider McKissock estimates commercial real estate agent earnings are even higher — about $166,000 annually.
“Price points of commercial real estate tend to be higher than residential,” says Courtney Potter, founder of Potter Real Estate Partners in Orlando, Florida. “The commission rates reflect that.”
Of course, those commissions aren’t a given. Selling commercial real estate requires specialty training and education, as well as a solid dose of determination and hard work. Looking to break into the commercial real estate world? Here’s what agents say you should know to get started.
[The Commercial Real Estate Outlook for 2024]
What a Commercial Real Estate Agent Does
Commercial real estate agents — also called CRE agents — focus on selling and leasing properties for businesses and other commercial purposes. They might assist a client in finding offices, developable land or retail space, and they help evaluate those properties from an investment standpoint.
“Commercial real estate is managing the client’s financial returns on an investment,” says Galit Ventura-Rozen, a commercial real estate broker with Commercial Professionals in Las Vegas. “Residential agents need to understand their clients’ personal preferences, versus in commercial, the agents focus on the asset types and how quickly a client can anticipate a return on those investments.”
According to Ventura-Rozen, commercial deals tend to be “more intricate and complex” than residential ones and can take much longer to close. Sometimes — particularly with leases — those transactions can span years or even decades.
As Potter explains, “Commercial closings can oftentimes take eight months to close due to all the due diligence requirements needed to go through prior to closing. This includes such things as meeting with the local municipality to confirm you will be able to get permits, environmental studies, getting signoff from all the agencies to get permits in place and so much more.”
Because of these long close times, most CRE agents handle only a few transactions per year. According to NAR’s data, the typical CRE agent does four sales and six leasing transactions per year. The median total sales volume transacted by a CRE agent is $4.2 million.
[READ: What Do Real Estate Agents Do?]
How to Become a CRE Agent
The exact path to becoming a commercial real estate agent depends on where you live. In some states, such as Minnesota, you can get a specific commercial broker’s license, which allows you to sell commercial properties in the state. In others, the license is the same for both residential and commercial agents.
In addition to getting the proper licensing, you should also look into commercial-related continuing education courses or explore getting a commercial designation, like the Certified Commercial Investment Member (CCIM) or the Society of Industrial and Office Realtors (SIOR). These can help you network as well as better understand how commercial transactions work.
“I tell any agent they need to invest at least two years in the early part of their career to focus on training and skill development,” says Alicia Shepherd, a commercial real estate agent and trainer with Keller Williams Commercial in Santa Monica, California.
As for skills, experienced CRE agents say being self-motivated, a good problem-solver and a smart negotiator are critical to success. Honing your analytical, communication and financial abilities is key, too.
“While a residential agent may be highly interested in a career where they get to shop for houses, stage beautiful homes and close transactions in a relatively short time, a commercial agent needs to be built for something totally different,” Shepherd says. “We need to be highly analytical and comfortable delving through large contracts and leases. We need to be ready to work a deal for months — even years.”
Experienced CRE agents also say finding a mentor is critical. According to NAR’s survey, 59% of commercial real estate agents sought a mentor in their first year of working.
“Usually when someone is new to commercial, they need to find a mentor in that niche that will teach them the ropes — and that’s not always easy to do,” Potter says. “Many seasoned agents and brokers do not want to take the time to train nor compensate another agent to learn what they know.”
One option is to choose a brokerage that offers mentorship as part of your onboarding and training.
“I recommend finding a commercial real estate company that will take you on as an employee so you can learn hands-on through observation and day-to-day tasks,” Ventura-Rozen says. “This gives you the opportunity to get paid a salary or hourly while learning the ins and out of transactions.”
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Is It a Good Time to Get Into Commercial Real Estate?
Commercial real estate offers the potential for a lucrative career, but your earnings will depend on what you put into it — as well as overall market conditions. According to many in the industry, CRE has a bumpy road ahead.
With remote work still a popular option, demand for office space has plummeted in recent history. Nationwide, office space has an 18.2% vacancy rate and leasing rates per square foot have dropped compared to last year. High interest rates and other economic factors make the industry challenging as well.
“With interest rates and construction costs high, many commercial property owners and buyers are waiting for market conditions to change,” Potter says. “That means commercial agents aren’t making as much money as they have the past couple of years.”
Still, that doesn’t mean there’s not opportunity in CRE. New agents just need to be willing to hit the ground running to drum up clients and sales.
“(2024) is going to be a year for the thick-skinned,” Shepherd says. “The outlook includes a wave of commercial debt coming due, uncertain global economics and both buyers and sellers having fatigue from market conditions. Agents in the space will need to be masterful at sourcing out opportunities, making a market around them and overcommunicating. Buckle up.”
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How to Become a Commercial Real Estate Agent originally appeared on usnews.com
