Broker Attrition

The popular word now in real estate isestate, he states, “Having gone through a
“attrition”–the reduction in numbers usually bybankruptcy and being laid off two times within one
resignation or retirement of some sort. Everyone isyear really changed my perception of the industry. I
talking about a form of attrition, whether it is in numberstarted to see the volatility and uncertainty that is part
of transactions, loans closing or some other measureof commercial real estate. While I do like the business, I
that we like to use.began to consider leaving to find something more
However, as a broker, I am seeing another kind ofstable. It was this understanding that really started to
attrition among my colleagues. The attrition rate ofchange my thinking of staying in commercial real
brokers and other service providers in this downestate.”
market is rarely discussed and not easy to quantify.Keith continued to express his desire to work in the
Most brokers do not like speaking about the rate atindustry but felt with the mass closures, layoffs and
which their counterparts are leaving the commercialbankruptcies, he was competing for jobs with much
real estate industry. But there is definitely a bright sidemore seasoned professionals. He continued, “Firms
to working with real estate professionals that arethat were/are hiring seem to be looking for
products of the attrition rate and faring well in thisexperienced (15 years or more) talent that they can
market.hire at a discounted rate. While I have six years
It’s no big secret that brokers are typically paid onexperience, many people with a lot more experience
commissions earned from sales. Therefore, whenthan me were looking for the same jobs.”
there are fewer sales, there are fewer commissions.Brokers are hardly the only group of service providers
And when there are fewer commissions to go around,that are experiencing attrition in this market.
people have a tough time maintaining a lifestyle orDevelopment firms started laying off people in 2007
paying bills altogether. Some brokers just can’tand consolidating offices in order to weather the
afford to be brokers anymore.upcoming storm. While most are working on skeleton
So what is a once-prolific real estate professional tocrews, some have been forced into drastic scenarios
do? The answer is simple: Hang in there.and closed their doors altogether.
While most brokers do not make as much money inAttorneys, once considered recession proof, have
down markets, some still do. Leasing brokers are abeen forced to reduce salaries and lay off some of
prime example, especially those representing tenants.their staff in order to work under a business model
With rates down, vacancy at abnormally high ratesthat receives fewer fees. The easy money is gone
and landlords more apt to make a deal, tenants thatand most likely wont come back for decades. That
are still in business are shuffling their spaces to moreaspect in itself will deter many from staying in the
affordable locales and the brokers are there tobusiness and will most likely detract from new
facilitate the transaction.professionals being motivated to enter the business.
However, let’s discover more specific and criticalNew graduates are finding that jobs are less prevalent
data points that point to success, and downfall, ofin the field and are reallocating their academic credits
brokers in recessionary periods. The arduous andto different interests in order to have a better chance
coveted Certified Commercial Investment Memberof gaining employment.
(CCIM) designation has probably seen the smallestA group of industry professionals got together in 1954
decrease in membership over the past year. Losingand started the Realty Foundation of New York. Its
only 2% of its almost 10,000 members in this economy,sole purpose is to help brokers when times are tough.
CCIM could be used as a barometer for those trulyThrough anonymous grants, they help their colleagues
committed to commercial real estate sales. With anget back on their feet. Maybe it’s several months
increase of membership over the past five years of atof mortgage payments, college scholarships for their
least 17%, it could be said that those committed tokids or paying a tax bill that comes due, but the
professional commercial real estate services are stillfoundation is as busy as ever in this market.
interested in the industry. Additionally, from JanuaryFrom the 1950s to today, people know that brokerage
2005 to October of this year, CCIM has enrolled overis a necessary profession in the commercial real
85,000 people in its courses.estate industry and is not always the easiest one to
While statistics are helpful to determine trends, it is alsosustain. Keeping true professionals in the business,
important to qualify what commercial real estateeven in the hardest times, will benefit everyone as the
professionals are experiencing. We have heard ofmarket begins to take a positive turn.
entire brokerage firms closing in 2009 and seen layoffsWhat I am personally finding, as a broker, is that some
beyond our comprehension. But do we know exactlyof the slower times at the beginning of the year helped
what has happened to the people that were laid offme formulate my strategies for the next several
on a day’s notice? We hear from industryyears. I knew that while I wasn’t going to retire in
professionals that most of the seasoned brokers havethe next six months, I was able to have more
easily found a new home. While it may take a littlesubstantive conversations both with colleagues as well
while for them to build their brand under a newas future clients. I was able to take advantage of the
umbrella, they have committed themselves to theirphone not ringing every two minutes and actually
profession.engage in a meaningful conversation. Essentially, I was
However, like previously stated, some have left theable to listen, learn and, in some cases, mentor.
business altogether. Without naming names, we haveWith the national unemployment rate essentially at 10%
heard of commercial real estate investment salesand layoffs still occurring from large conglomerates to
brokers going to medical supply sales; we have heardsmall local businesses, we can assume that there will
of brokers going to copier sales; and we have evenbe additional attrition in commercial real estate for the
heard of brokers going to the restaurant industry.next year or two. So what are you ultimately left with
Brokers are having a hard time remaining brokers, yetand who is the last one standing?
those that are sticking it out are experiencing lessThose that remain in the business, are dedicated to the
competition. Those people, the last ones standing, arefield, are true professionals and realize that this is a
those committed to an industry that isn’t alwaysdifficult, complex and sophisticated industry are the
good to them.people you want to work with now and into the future.
As an example of the effects the market is having onThey understand that every year, every quarter or
well-trained and ambitious professionals, highlighting oneevery day will not be a windfall of cash. But they
individual that optimizes the tone of the market isappreciate the long and established relationships that
important. Keith Edwards, MBA, is a relative newcomerthey generate over the years of providing the absolute
to commercial real estate, having been in the industrybest and most comprehensive services.
roughly six years. However, during his tenure, he hasIn essence, those real estate professionals that are still
been considered a strong asset to twohere and those committed to their field are who you
once-successful companies: a regional developer andshould choose to work with for years to come.
a tenant-in-common syndicator.Because we all know those that were in it for the
Keith was part of dozens of transactions during hisquick buck always had their eye on just that and not
time at each position, but became a product of histhe long-term benefit of servicing their clients for
environment. Laid off twice within 12 months, he hasextended
been looking for a new position for about a year.                  By: David Sobelman
When asked about his perception of commercial realSource: GlobeSt.