Commercial Real Estate: the Places Where Money is Made
On the surface, the biggest difference between residential and commercial real estate is in how the properties will be used. Residential real estate generally amounts to house, or places where people will live; commercial real estate is any property that supports commerce, ranging from office space, retail and restaurant developments, industrial properties, warehouses, and even multifamily housing like apartment complexes.1 Although both can provide investment opportunities, the cost, scale, and complexity of investing in commercial real estate creates a lot more demand for professionals who specialize in the business of real estate.
Money, I’m Home!
Home may be where the heart is, but commercial real estate is where the profit is.2 Commercial real estate serves as a money-making vehicle for owner and tenant alike. Businesses lease office space to support their operations, warehouses store goods for retail and manufacturing, and even multi-family housing is meant to provide an income stream, rather than eventually being owned by the occupants.1
Even in an era of digital commerce and online retail, commercial real estate is foundational to the operation of the economy. Retailers need warehouses to store goods before they ship them, office space to support online operations, and call centers to provide customer support. Given the close ties between real estate and the economy, commercial real estate is a popular component of investment portfolios–and a growing employment sector for MBA graduates.3 Such holdings can add value to businesses, provide an added income stream or dividend potential to shareholders, and give companies greater leverage in the marketplace.2
Effectively managing these portfolios and advising investors on real estate assets requires a solid grasp of economic concepts and applied financial training. It takes professionals who understand the competitive landscape, the administrative decision-making process, and how to deal effectively with stakeholders in a way that balances financial interests with legal, environmental, and political concerns.
A Different Kind of Management
Dealing with commercial real estate transactions is as much a social enterprise as it is financial. Given the wide diversity of tenants and uses for this kind of property, its ownership involves a great deal of different stakeholders. Legally, commercial real estate straddles a huge variety of zoning categories and use limitations. The growing awareness of environmental hazards means that real estate is increasingly at the forefront of sustainable business practices. Financing the sale and purchase of commercial real estate is also subject to a whole different set of regulations.
Ensuring the viability of a given property as an investment requires extensive research and understanding of the legal environment it occupies, not to mention the features of the property itself. Businesses and organizations looking to assemble a portfolio will require extensive due diligence in researching properties to understand these risks, expenses, and the regulatory environments they occupy.2
Handling these kinds of transactions can end up looking a lot like managing a large organization. But rather than having that team working under one roof or for the same company, the stakeholders in real estate are scattered across different organizations and a spectrum of specific industries. Balancing their various needs, interests, and levels of engagement takes superior business savvy with a specialized understanding of the real estate world. This is precisely why Marylhurst University offers an MBA in Real Estate: to provide the kind of applied training needed to succeed at this dynamic intersection of industries.
Aces in Their Places
Given the huge number of stakeholders and special interests involved in commercial real estate, it should come as no surprise that there are just as many different careers and employers awaiting graduates from Real Estate MBA programs. While traditional investment groups like major banks or asset management firms are recruiting, major companies like Google and Facebook are also popular employers.3
The specific career paths in commercial real estate are every bit as diverse as the employers, though they all offer impressive average salaries. Graduates with managerial minds and an interest in getting hands-on with property can specialize in Real Estate Management, which pays around $112,000 a year. Asset Managers who deal with real estate investment portfolios can expect to earn an average of $96,000 a year, while Commercial Real Estate Appraisers average more than $113,000 annually.4
There is no shortage of demand or opportunity for those who put their skills and expertise to work in the world of commercial real estate. From maximizing the value of investment portfolios to charting the future of development and commerce, the Real Estate MBA is a powerful springboard to exciting and fulfilling careers in a critical industry.