Entering a career in Corporate Real Estate can take many paths. During my career I met countless CRE executives with myriad backgrounds. Some moved from real estate services such as brokerage or consulting. Others came into the profession as architects or engineers. A popular avenue is facility management, since the disciplines of property and maintenance management are a natural stepping stone to real estate management. I recall one executive who was a senior vice president responsible for corporate manufacturing. He was close to retirement and requested a role as the head of real estate services. He had no knowledge or experience in corporate real estate but as a seasoned senior executive he was imminently qualified to lead a major corporate function. What I recall is how much he enjoyed the specifics of corporate real estate, particularly the various deals that required his review and approval. I had written a thesis as part of my MBA which made a case for my company to enter the real estate development business. The senior executive read the thesis and invited me to corporate headquarters to launch a real estate development program. We formed a development subsidiary and subsequently entered into a number of joint venture developments, anchored by the company’s sales and marketing branches. Thus, the executive parlayed his senior management skills and experience into a major development strategy.
Perhaps the most important knowledge base required for a career in corporate real estate management is the subject of corporate finance. It’s imperative that the executive has a good working knowledge of discounted cash flow, accounting, and balance sheet structure. This is particularly true now with the advent of new lease accounting standards which require that all leases of one year or more in term be placed on the balance sheet as both assets (value in use) and corresponding liabilities. There are various professional development courses offered by universities and professional organizations such as Corenet that cover the basics of real estate finance and accounting. Some of these courses are offered on line so there are several options for the aspiring CRE executive to gain a working knowledge of real estate finance.
Another avenue for gaining knowledge of commercial real estate is to study for a real estate brokerage license in your local area. In fact, you may want to spend some time as a commercial broker to gain experience and learn first hand the rudiments of commercial leasing and deal structuring. One option is to seek a summer internship in corporate real estate. I worked with a number of summer interns over the years, and I recall how beneficial the experience was for both the interns and the CRE department. Many of these interns went on to successful careers in corporate or commercial real estate.
Another critical knowledge domain for the aspiring CRE executive is the subject of market analysis. CRE executives must have a working knowledge of real estate market dynamics; the effects of supply and demand on pricing, absorption, and property value. Many of the large real estate brokerage firms provide quarterly market reports on line. It’s a useful exercise to study these reports to become familiar with the terminology and key variables in real estate market analysis.
In summary, I’ve touched on a few of the knowledge areas that must be mastered along the road toward becoming an effective CRE executive. I’m frequently asked if taking a formal course in real estate finance and marketing is the right strategy for entering the CRE management arena. I would certainly endorse this approach; although such an option requires significant investment in time and expense. I prefer the option of learning on the job, supplemented with short courses offered by such associations as Corenet or IFMA.
In my next blog post I’ll delve into the subject of real estate technology and what the aspiring CRE executive needs to know for starters.