I’m an Industrial Real Estate Broker - AMA
Been at a top firm in a good market for over a year. Happy to answer any questions!
[{"id": "fav0jjc", "text": "I\u2019ve seen some reports that last mile warehouses will be in trouble due to technology (self-driving cars, logistics upgrades) that will allow for more centralization of warehouses. Do you think that these last-mile warehouses aren\u2019t future proof?", "replies": [{"id": "fav2xyv", "text": "Asking the real questions around here", "replies": [], "depth": 2}, {"id": "faxh76r", "text": "Not sure that I agree.  From what I see the push for last mile (in our area at least) is being driven by consumer demand.  We want our 1 day (or less) shipping. \n\nThat said, nothing is future proof.  If there is a drop in consumer demand then those last mile facilities will likely not be as crucial.", "replies": [{"id": "fbactlm", "text": "Agree with this. It\u2019s not about the commercial transit cost but shipping times to the consumer. Dropping transit costs does not necessarily decrease transit times", "replies": [], "depth": 3}, {"id": "fioajuw", "text": "1. What did your path to brokerage look like?\n\n2. What did your compensation look like once in brokerage? (I feel like I always hear $30k, $39k, $75k, then boom! $200k, $225k, etc.....", "replies": [], "depth": 3}, {"id": "htc3svu", "text": "Interesting, you nearly predicted the Industrial boom we're seeing today.", "replies": [], "depth": 3}], "depth": 2}, {"id": "fay77iq", "text": "Happy cake day!", "replies": [], "depth": 2}, {"id": "fc98vca", "text": "SupremeRussian, this a great question. Although I do not have a crystal ball predicting the future for industrial real estate, I do think of regardless of technological advancement that these companies will still need a place to store there product would still be the the demand for storage. For the next 2-3 years I do not see any slow down and nor any shortage of industrial space to keep up with demand across the country. \n\nBut you may be right and that the last mile warehousing might not be as in demand in the future, but storage for them will still probably be. This is the best I could answer that question.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fav3dyw", "text": "What do you see as the pros / cons to developing cold storage vs traditional industrial in your market?", "replies": [{"id": "faxhygz", "text": "Cold storage is great around here (high population density and a push to last mile food delivery coming).  That said, it is SUPER expensive so you need to be well capitalized and really know what you are doing.", "replies": [{"id": "fb52vzx", "text": "Also, cold storage is almost never developed on spec.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fav8fft", "text": "Hi there, thanks for doing the AMA.\n\n1. Are you in sales or leasing (or perhaps industrial brokers do both)?\n2. Is there a different approach to prospecting for business with industrial, or do you find owners the way other assets do?\n3. Are your owners small operators, or more institutional?", "replies": [{"id": "faxhqxw", "text": "1. - I do both sales and leasing.  My personal preference is landlord rep/development work.\n\n2. - Industrial seems to be a lot of door knocking (somewhat similar to office).  I have no idea how the retail guys do what they do (I swear it is black magic).\n\n3. - I see a mix of both here, I am probably 75% smaller operator / 25% institutional/corporate.", "replies": [{"id": "fb2rbon", "text": "Nice, thank you for the response.", "replies": [], "depth": 3}], "depth": 2}, {"id": "fc8zfbb", "text": "Hi u/powerbroker5000, Thanks for your question.\n\n1.) I do both, but I would say 65% leasing 35% sales is the ratio of business I do.\n\n2.) I do find prospecting easier for industrial as opposed to office, multi-family, or other asset classes. For example, a good majority of the time the owners themselves or decision makers are physically at the location you are prospecting, which helps significantly. \n\n3.) At my firm, a good majority of our business is institutional, although personally I prefer to work with more small/mid-size operators. Just my preference and is less corporate.\n\n&amp;#x200B;\n\nHappy to answer any other questions you may have.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fav8gx5", "text": "Any cold call tips for industrial? Both tenant rep and landlord rep/investment sales?", "replies": [{"id": "faxhglw", "text": "Always have a reason, recent building sale in the neighborhood hood, saw they had a full yard, you have  listing they may be interested in, new development in town, just have something. \n\nCalling to \"see if they had any real estate needs\" is roughly equivalent to hitting the lottery.\n\nAlso related to this, number of contacts is key.  Probably not going to land someone on the first go around.  Keep in touch and keep calling (with reasons)!", "replies": [], "depth": 2}, {"id": "fc8yu5f", "text": "u/Everythingsagame \n\nThanks for your question. My best cold calling tip that works for me would be to go directly off of costar and  reach out to the \"Contacts\" tab either on the ownership side if you wish for a land lord rep,or even they list the tenant contacts and reach out. \n\nOffer them something marketable or that would spark their interest... for instance, there lease is coming up in the next 12 months and you know of a building 5 miles away that is slightly bigger they could move to if they're ou. Feel free to DM me for further tips!", "replies": [], "depth": 2}], "depth": 1}, {"id": "fav8ipq", "text": "What market are you in?", "replies": [{"id": "faxhzn8", "text": "Inland Empire (Southern California)", "replies": [{"id": "fb3o9mj", "text": "First off thanks for jumping in and doing this AMA. lol\n\n&amp;#x200B;\n\nI have a couple of questions about the Inland Empire. Do you mind if I pm you?", "replies": [{"id": "fb6oglb", "text": "Sure, hit me up.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "fc8zwu0", "text": "u/mwada1 Northeast, yourself?", "replies": [], "depth": 2}], "depth": 1}, {"id": "favd3o9", "text": "How often do you Co-broker deals vs broker on your own ?", "replies": [{"id": "faxi6lt", "text": "I work with a partner (but not in that way) so I am always working with someone.  That said, I co-broker a lot of deal where our side is splitting the deal with a procuring or listing broker on the other side.", "replies": [{"id": "faxjcrs", "text": "Okay cool I do originations for a bridge lender as a commercial mortgage broker and am always looking for people to work with on deals that need financing where banks won\u2019t touch it. \n\nI understand you\u2019re not a mortgage broker but just thought I\u2019d ask.", "replies": [], "depth": 3}], "depth": 2}, {"id": "fc92tm0", "text": "u/limache Thanks for your question. I would co-broke any chance I got, because I think it's important to have relationships with other brokers also. But If I find my own side of both deals, yes the commission would be higher.  I would say its 70% my own vs 30% co broke. Especially if it's a problematic property I am more than happy to split my commission with another broker.", "replies": [], "depth": 2}], "depth": 1}, {"id": "favibgj", "text": "1)What do aspects of a deal do buyers look for in industrial properties? In essence, what are deal killers for industrial property or characteristics a warehouse might have that make the deal special?\n\n2)are all leases NNN? How long is the average lease length? 10 years? What lease rates are you seeing being done in the market?\n\n3)also what do tenants look for when looking to get into space? Anything to take into consideration? \n\nThanks!!!!", "replies": [{"id": "faxizqb", "text": "1. - Building features (owner/user): Clear height, dock doors, fire system, truck access, and power are probably the big ones. In general you want higher clear, more doors, ESFR sprinklers, 130' minimum truck courts, and 277/480 volt power (amps depend on size).\n\nInvestment features (investors): Stable tenant (good credit or long term in the space), upside (below market rents), pain (someone that needs to sell) along with a whole litany of other stuff.\n\n2. - Not all are NNN, typically sub 20,000sf are gross and above 50,000sf are NNN. In between it could be either way.  Lease terms range from 3 - 7 years, with smaller sizes being shorter term deal typically.  Lease rates range depending on size and other factors... if you made me pick a number I would say around $0.70/sf NNN (per month).\n\n3. - Tenants look for all of the stuff I outlined in #1 on the features side.", "replies": [{"id": "fb4g9mg", "text": "Thanks a lot man! seems like you know your stuff. Appreciate the insight.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "favw2lq", "text": "How did you start?!", "replies": [{"id": "faxj1ok", "text": "My family was in real estate, never thought I would be but fell into it and really enjoy it.", "replies": [], "depth": 2}, {"id": "fjfz8gi", "text": "I fell into it unwillingly (but luckily). Family connection, which led to an internship which led to a full time offer.", "replies": [], "depth": 2}], "depth": 1}, {"id": "favzx5t", "text": "As a new commercial Real estate investor,  I've purchased only fully occupied industrial properties,  we;ve been hunting the B Class, sub 30K sq/ft  as i suspected 50k+ was owner occupied at that point in a companies growth.  do think my theory holds weight?\n\n&amp;#x200B;\n\nthanks for your insight.", "replies": [{"id": "faxj80k", "text": "I see more sub 30k that are owner occupied than on the larger side, but that may be due to our market.  Out here the larger deal (50k and up) have a ton of institutional investor ownership and those guys will chase the bigger deals.", "replies": [], "depth": 2}], "depth": 1}, {"id": "faw4g82", "text": "What are the three most important components to making a building a successful industrial space?", "replies": [{"id": "faxjdcf", "text": "Good truck access, a good/decent fire suppression system, a decent (doesn't have to be immaculate) curb appeal.", "replies": [], "depth": 2}], "depth": 1}, {"id": "faw8mfz", "text": "This is not how AMA\u2019s work", "replies": [{"id": "fax7r5p", "text": "He said you could ask him anything, not that he would answer.", "replies": [], "depth": 2}, {"id": "faxgyx5", "text": "Okay, I am bored... let me try.", "replies": [], "depth": 2}, {"id": "fc97ilo", "text": "Hi Phauliski, how does it work then?", "replies": [{"id": "fc9d3w9", "text": "The questions are answered the same day.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fawae8v", "text": "What are the pros and cons of corporate/credit level commercial vs industrial?", "replies": [{"id": "faxjt4h", "text": "Not sure if I understand, you can get corporate credit in industrial.  If you are referring to single tenant NNN deals then I would say the following.\n\nSingle tenant NNN retail means you will never have to worry about the building and can just collect your rent.  However, if that tenant goes out (Blockbuster Video, Sears, etc...) you have a very big problem on your hands.  Industrial can require more management, but if your tenant goes out you should be able to get a new tenant without major hassle (note: should not always).", "replies": [{"id": "faxqa5m", "text": "Interesting. Thank you!", "replies": [], "depth": 3}], "depth": 2}, {"id": "fc97fp1", "text": "Cocles,\n\nI would ask you to please clarify what you mean by corporate/credit level commercial. Do you mean all other commercial real estate excluding industrial? I would need a little more information on what you\u2019re asking for me to properly reply with a good answer.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fawbr41", "text": "As an appraiser in a major market working primarily on large industrial and office properties, I\u2019m frequently having to confirm sales prices and lease rates for comps. What\u2019s a good way to engage a broker when requesting sales or lease info? I\u2019m in a non disclosure state so people are hesitant to share or just don\u2019t respond...", "replies": [{"id": "faxjys9", "text": "Make friends, be nice, and always send whatever comps you get for your deal to anyone that shares info with you.\n\nAlso, be a good appraiser (actually know what you are doing) so when brokers have problems with bad ones they call you for help.", "replies": [{"id": "fazqarr", "text": "Thanks! I always offer to be a resource to them in return, but sending comps back to them is a good idea.", "replies": [], "depth": 3}], "depth": 2}, {"id": "fc972iy", "text": "This is a great question. I did find this difficult also when I worked in valuation for a short period time. I would say the best way to get information is to first try calling (it\u2019s more direct and you\u2019re likely to get a response instead of an email). Second I would make sure you have something to offer them in equal value, for instance, a good off market comp that you know about that\u2019s directly related to their line of business would be very valuable to that agent. \n\nI don\u2019t know many brokers that wouldn\u2019t want to have a conversation about a comp they didn\u2019t know about. Hope this answers your question!", "replies": [], "depth": 2}], "depth": 1}, {"id": "fawcjrj", "text": "What are some resources for beginners that you have came across?", "replies": [{"id": "faxk7zo", "text": "I am sure there are YouTube videos and websites out there.  He's a bit of a crack up but check out Tuesday Traffic Tips with Allen Buchanan on YouTube.  A lot of the info is super basic, but we sharpen the saw in our office every week on Tuesday.", "replies": [], "depth": 2}, {"id": "fc8zou6", "text": "Hi u/thaitanous Thanks for your question.\n\nWithout a doubt in my mind the biggest resource for a beginner is to have a mentor that is an industry veteran in the field you wish to get in. I would take a pay cut and work for free for 6-12 months just to learn all the invaluable information someone could teach you just from shadowing them, apposed to courses, videos, etc.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fawhw3b", "text": "I\u2019m looking for a $1-$2mn industrial property in New England. NNN 5 year leases or better at an 8 cap or better.\n\nMessage me if you have anything", "replies": [{"id": "faxhstz", "text": "I have nothing, but if you want a 4% cap in SoCal I got you covered.", "replies": [], "depth": 2}, {"id": "fc930zo", "text": "u/Testudo44 Thanks for your question. I would have to agree with u/Limkar here, and that I have not seen an industrial property transact for that high of a cap rate recently. If you are okay with older product, and a less credit worthy tenant, then MAYBE I could find you something here in the North East. Feel free to DM for details.", "replies": [], "depth": 2}], "depth": 1}, {"id": "faxmblm", "text": "Do you have any off-market properties in NYC that need value add or have a NNN that is leaving soon?", "replies": [{"id": "fc93jij", "text": "u/securegrowth Please DM me.", "replies": [], "depth": 2}], "depth": 1}, {"id": "faxss82", "text": "Sup so If you use this link to join Landa, we both get $10 to buy &amp; sell real estate properties!\n Redeem your gift here: https://landa.app/invt/precise-jonathan-730", "replies": [], "depth": 1}, {"id": "fazqfso", "text": "For freezer warehouse, is it better to buy land then build or buy an existing warehouse then renovate?", "replies": [{"id": "fc93hpt", "text": "u/chanedaddy That's a great question, and I actually do not have a definitive answer on which one would be better vs the two. \n\nI do know though that depending on the market if you did a built to suit or converted an existing building to freezer space, that you would have 10-20+ credit worthy tenants lining up your door paying $20-$25+ NNN for a long term lease. Happy to share you comps if you DM me. Hope this answers your question.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fd541xv", "text": "How can I become a CRE after college?\n\nI'm a student at Ole Miss double-majoring in finance and real estate. I'm willing to hear any advice whether it be a city to move to, skills to learn, internships, or anything else that may apply. I greatly appreciate any advice. \n\nThank you", "replies": [{"id": "fjfz1wv", "text": "Thanks for your question. You need to directly reach out to brokers and ask the for a call or take them to lunch and pick there brain. Getting a real estate license would help. Ask to shadow them for a full day, and if you can see yourself working for that person flat out ask for a position after your graduate. Work for free if you have to too just get the experience. Hope this helps. DM me if you have other questions.", "replies": [{"id": "fkhyzlq", "text": "Thank you very much- this was very helpful\nI will likely message you with questions in the future.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fhc0j6p", "text": "1. What did your path to brokerage look like?\n\n2. What did your compensation look like once in brokerage? (I feel like I always hear $30k, $39k, $75k, then boom! $200k, $225k, etc.....", "replies": [{"id": "fioah10", "text": "Bump though I know this thread is a few months old...", "replies": [{"id": "fjfyv2d", "text": "Bosox, I\u2019m sorry for the late reply. All I do now is work from sun up to sun down 5 days a week (occasionally the weekends but not often) But it\u2019s worth it cause I love what I do. \n\nMy first 8 months I made $19k (pre-tax). This year in 2020 I stand to make 60k-100k of whats just in the pipeline and closing. I\u2019m very fortunate to be on a high producing team at a top firm but that is not the case for most brokers. \n\nPlan to not make any money or scrape by on a PB&amp;J diet for your first 2 years. Years 3-5 is when you really see it pay off, and you should be making atleast low six figures by then. The sky is the limit after that. You can DM me if you have more questions", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "igb0z4k", "text": "Considering a career change into either commercial or industrial and was wondering what the steps are to be either and also what skills are necessary? Also what a day in the life would be like?", "replies": [{"id": "il2tm9x", "text": "Find a good mentor you can relate too. Showing properties, writing up offers, negotiating deals on behalf of your clients, etc", "replies": [], "depth": 2}], "depth": 1}]