I was at a Tufts real estate event a few weeks back and during an open discussion the prominent speaker was asked: what can young people do to position themselves for success in real estate?
His response was fairly generic, but one aspect of his answer stood out to me. He said that young people should think about working in the market where they want to work long-term. I completely agree. As much as real estate has become institutionalized and data more available, a big part of success in real estate is knowing the ins and outs of your local market better than anyone else. Executing successful deals requires understanding the needs of your target end users, being able to identify the growth areas within your market, and having a diverse network of relationships. These are aspects you can only grasp by living and breathing your market day in and day out.
I have a lot of good buddies who work for large PE funds and their goal is to have a relationship with a best in class operator for each product type in each market where they operate. With a very specialized product and geographic focus, operators have distinct competitive advantages over other real estate firms.
Those particular operators know every property and owner in the market, get first crack at deals, know all potential tenants and lenders, understand how that product operates, and have a reputation of executing. There’s a good reason companies like SL Green focus exclusively on office properties in Manhattan.
Part of my responsibilities with Atlas is running asset management on a number of deals. Despite having weekly calls with the regional and onsite management team, reviewing monthly financials, and drafting investor reporting, I really don’t understand the asset until I spend significant time in the market. Even then, it’s hard to fully grasp things like the leasing challenges in a deal. It could be the side of the street it’s on, evening noise from a nearby bar, or lack of lighting that causes leasing issues. It could be any number of things, but without having intimate knowledge of the micro-market, there’s no way to tell.
So when you looking for a job in real estate think, where do I want to work long-term.
I’m heading out west on a ski trip later this week so the next post won’t be until early January. I wish you all a happy and healthy holiday.