Covid prompts rethink on careers
Thousands of people have been thrown onto the ‘‘income relief’’ benefit by Covid-19 but is a commercial real estate selling and leasing career the right fresh start?
Twenty-five people from various industries and sectors, some of whose jobs had terminated, turned out recently to find that out at a careers evening run by NAI Harcourts Grenadier in Christchurch.
NAI Harcourts Grenadier commercial general manager Craig Edwards said most of the attendees were first-timers to real estate and some had had successful careers in manufacturing, tourism and aviation.
‘‘There’s a huge range of age and experience and life skills, just a very diverse bunch of people.’’
For its part, NAI Harcourts Grenadier was looking to expand the commercial real estate business, which had 18 staff already, because it saw great opportunity in the economic upheaval Covid-19 was ushering in.
‘‘Tony Alexander [independent economist and former BNZ chief economist] referred to it as the biggest phase of business restructuring in our lifetimes,’’ Edwards said.
Business tenants were looking much more closely at what space they needed and how to save money for efficiency and profitability. That created turnover in the leasing market. It would apply also in the industrial sector and had been happening in retail.
‘‘Those are the types of changes that generate work and opportunity in our industry.’’
It was similar to the upheaval in the property market after the Canterbury earthquakes.
‘‘It’s not going to be a prosperous time for commercial real estate necessarily, but there is the need to move some of these assets where they’re not being productively used or where capital or equity are a challenge.
‘‘It’s an exciting challenge for our industry and I think from that point of view it’s a good time for new people to start in the industry because there’s so much demand.’’
Landlords were struggling to find good people to service their needs and find reliable tenants for their buildings. In good times it was often harder for new salespersons to break into the industry, Edwards said.
One of the myths about commercial real estate was that you needed to be part of ‘‘the old boys’ club’’ and have networks through the business community.
While that helped to get established as a commercial agency, real estate was no longer dominated by ‘‘male, pale and stale’’ but was much more diverse.
There was also a perception that commercial agents didn’t do many deals but the ones they did do were big, ‘‘so [it was] a long time between drinks’’.
‘‘That’s not really the case. I would say most commercial agents are probably doing more deals than most residential agents but a lot of them were small deals.’’
A mix of smaller sales and leasing topped up with less frequent bigger deals resulted in ‘‘some very good paydays’’.
During tough times, owners of residential properties tended not to sell, but not so in commercial real estate, where necessity or opportunity drove sales and leasing – such as business tenants shrinking the number of premises, owners deciding to sell their businesses or business tenants deciding to buy their own premises.
What some people earned in commercial real estate was ‘‘phenomenal’’ but it was very hard work and sales people needed incredible drive, Edwards said.
‘‘You need to be a very organised person who can get business done, provide a high level of expertise to clients and build those relationships with those people that will give you that return and repeat business.
‘‘It’s often difficult to know who’s going to be successful in this business. To be honest, it isn’t for everybody and often you don’t know.’’
But the agency did its best to select who they considered would be successful because there was a lot of investment in training, supervision and management of recruits by the agency.
Edwards said there’s plenty of opportunity for more commercial property salespeople.
The industry was ‘‘significantly under resourced’’, with many fewer commercial real estate salespeople than residential salespeople when the total sales ‘‘pies’’ in commercial and residential were not that different.
Bayleys Wellington regional manager Grant Henderson said commercial real estate was not for the faint-hearted.
‘‘But here’s the point, you have to be a high impact player.’’ A salesperson could not cruise in the industry, or work part-time. And a lot more knowledge and mastery of detail was needed than in residential real estate.
‘‘Residential’s a very emotional purchase usually. Commercial is generally a nuts and bolts, yieldbased decision.’’
Selling commercial real estate was more complex and salespeople needed to understand earthquake ratings, planning laws, district plans, plant and machinery, leasing and be good with numbers. New recruits had to be trained, supervised and managed.
‘‘If you’re someone who is determined to work hard, has a competitive streak and enjoys working with people, then it is definitely a great time to be in real estate,’’ Henderson said.
Bayleys had not seen an increase in inquiries from people contemplating a career in commercial property.
‘‘There hasn’t been a huge pick up of people, not even in our residential division. We certainly wouldn’t be just taking anybody on. We’d really want to qualify who they were because you don’t want people to fail in this industry, it’s too hard.’’
Henderson and Edwards are coy on the amount sales people earned in commercial real estate. The
Ministry of Business Innovation and Employment estimates the average income in real estate last year was $84,500.
‘‘There is potential to have higher earnings in commercial than there is in residential, especially if you are prepared to apply yourself,’’ Henderson said.
‘‘It’s about the application of yourself and your ability to really push yourself to get through these things. There are some tough days.’’
At Bayleys, the top sales earners flipped each year between commercial, residential and lifestyle property agents but ‘‘we do have a very good representation of commercial agents in our top earners’’.
Whether you were selling houses or factories, hotels, office towers or businesses, a person had to get a real estate sales persons licence, Edwards said.
The Real Estate Agents Act 2008 prescribed the courses and levels of study and qualifications. Once
‘‘Residential’s a very emotional purchase usually. Commercial is generally a nuts and bolts, yield-based decision.’’
those were passed and the prospective salespersons passed the good character test, they applied for a real estate salesperson’s licence. That was the minimum requirement to start a career in real estate.
In Auckland, JLL New Zealand managing director Todd Lauchlan said real estate businesses were typically very busy in times of rapid change.
‘‘That doesn’t mean to say it’s any easier. Maybe the business is harder because, if anything, you probably need more experience.’’
In a commission-driven business it was challenging for novices, especially when buy and sell decisions could take time.
Those who were successful had a passion for the business.
JLL had received more inquiries than usual and some CVs from people in other industries but it wasn’t a flood, Lauchlan said. It had taken on a few people but dhpreferred those with property experience.
A commercial real estate business did not start to benefit from new salespeople for 18-24 months because it took that long to get up to speed.
He had not received inquiries from any unemployed pilots.
‘‘But even if we did, I think I’d be very unlikely to want to engage with them unless they did convince us they really wanted to do something land-based. And it’s not a question of competency, it’s just a question of passion.’’
‘‘We’re really trying to hire for cultural fit and tenacity because it is a volume game.’’ A salesperson had to make a lot of connections and do a lot of hard work building up a client base.
Those who had a head start in being hired were people who understood property, had some experience in it and had invested in it, whether commercial or residential or both. Those people were able to talk to other owners and buyers of property knowledgeably.
A lot of commercial agents entered the industry after doing a four-year property degree at university and that qualification was crossed-credited when they sought a real estate agent’s licence.
‘‘As far as earnings go, the world’s your oyster,’’ Lauchlan said. It would be similar earnings to selling homes but without all the weekend work involved in residential.
‘‘I think on average you would find the average commercial broker I’m sure does earn more than the average residential broker.’’
However, a top residential agent with 15 to 20 years’ experience would often be earning close to the top commercial agents, Lauchlan said.
If a commercial property agent in Auckland, Wellington or Christchurch was not bringing in gross fees of about $200,000 a year, of which the agency took half, they were not profitable for the business.
The top commercial property agents were bringing in more than $2 million in gross fees, he said.