large institutional investor in HCOL doing asset management. Comp is ~$120k-$135k base plus 30% bonus target. This isn’t a shop like BX or Starwood but very large institutional name. Have just under 5 YOE in RE AM.
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It might be a tad light since you’re 5 years in and in NYC. If you moved to another company I’d figure you’d get a 10-30% base salary increase.
Appreciate the feedback. I feel it is a bit light as well, especially after seeing some recent postings for roles in NYC showing salary ranges. I accepted the role ~6 months ago so it's difficult to do anything other than maybe wait another 6 months to hit one year and then shop around I guess.
Im at around ~3.5 years exp in RE at a large asset manager doing equity AM. Currently a senior analyst making 120k base 10% bonus in NY/SF. I feel like you are pretty in line with normal comp for AM, maybe a tad light given all 5 of your years of experience has been in AM.
What comp would make you feel compensated fairly?
Would think 5 Years in should be around $200k all-in, especially considering a super HCOL market like NYC.
Here's a data point: I'm a senior associate asset manager with 1YOE getting $100K base and 5% bonus potential in a tertiary/secondary market.
Thoughts on this comp?
Edit: typo
Sr Aso with 1 year of experience? The only thing you should be worried about is title inflation!
Well I guess that's good to hear. I'd imagine title inflation wouldn't exactly be something to worry about...
Seems a little light for NYC. I’m an AM associate in SF with 2.5 YOE.. 120k base 35% bonus
It's really low. It would be okay for starting. Not for 5 YOE. Did you go to grad school?
Yes I have an MBA. Also I should've noted that when I accepted the role I had 4 YOE. Now I'm closer to 5.
Why are RE salaries so much lower compared to IB? Are the hours not nearly as bad at least?
At a Hines/Tishman/TCC level firm, so our pay isn't as large a discount to IB/PE as most RE roles (Associate equivalent makes ~225-250k or so, analyst equivalent ~125-150k or so), but can still address your question somewhat
Hours for one. My firm is generally in the 50-60 range for hours, and from what I can tell that's on the high side for the industry. Part of why IB pays so much is because they have to pay that well to compensate for the hours and poor treatment. Culture of paying juniors well also hasn't (yet) filtered over from other industries that compete for similar talent (Consulting, IB, PE, Tech), so RE pay seems to lie somewhere between those fields and more generic finance/FP&A/corp roles.
Also, there is generally a tradeoff between how desirable/"interesting" a job is and the money they will pay you. You see it all the time in industries like sports and entertainment where the pay is very concentrated at senior levels, and juniors get peanuts because there is a line out the door to replace them at any pay. The reality is the number of students interested in RE as a career is way higher than IB or consulting (I know not at top schools, but in general). And I think in general the percent of RE-AM/REPE/Dev grads that enjoy their role and have a passion for RE is much higher than it is in IB/PE/Consulting (the HF guys seem to love it, but that's almost a requirement of the role).
The upside of all that is that there is a ~LOT~ of "fat" in the RE industry to make lots of money at senior levels, because they aren't paying juniors as well. The MDs at my firm will out-earn the MDs at any bank (outside of maybe a few top boutiques), and comp is nearly on par with MFPE partners (8-figure years aren't common, per se, but I would say a typical partner/MD will have a couple of those in their career, with outlier years being multiples of that. None of these are owners/founders either). It only takes one homerun on a big deal for a development MD to have an 8-figure payday, or even multiples of that. And if you have a good pipeline and some luck where you earn out 1-2 deals/yr or more (obviously most of those will not net 8-figures, but you get the point), you can absolutely kill it.
Eventually the talent drain away from RE will become more evident, and salaries will rise, but that just hasn't happened yet. Looking at the post-MBAs at my firm, they are paid in the same ballpark as MBB grads (maybe even a touch less), with nearly all of them being M7 or HSW and having pre-mba experience in IB/PE/REPE/etc. You'd expect those people to be making more money or going back to IB/PE, but they were dead-set on development and took the paycut for the chance at a tail outcome down the road.
Haha dude…couple things:
IB associates make $200-$250k base but their bonuses are more like 50% to 200%, not 30%. So that’s $70k vs $400k.
Also: a good family friend of mine was an MD at Hines, retired a couple years ago around age 65, and had worked there for over 30 years. They are upper middle class at best and absolutely never had an 8 figure payday. E.g. had to sell their $1 million house to move closer to their aging parents, and also previously couldn’t quite afford a house near mine that was about $2.5 million even though they were looking at it and considered it (my mom’s good friends with his wife).
Maybe other top firms are different where the organization is more centrally organized like Tishman, so heads of development make 8 figures. But that isn’t the case at Hines. I know another MD there in the same office who lives in a pretty shitty suburb and I can’t possibly imagine is making 7 let alone 8 figures.
How would that even occur? Say Hines develops a $500 million building and sells it at completion for $600 million. Even if you assume that the promote is calculated off that entire $100 million, that would bring in +/- $20 million to Hines overall. Obviously a lot of that would go to the actual owners of Hines, so how much is left over to compensate the entire office that developed it? $10 million? Split among a few MDs? I’m sure a Hines MD has made 8 figures in a year before but it isn’t typical.
IB pays so much because their cash fees are fucking enormous and there’s a fuck ton of money to be spread around. MDs at EBs regularly make $5-$10 million a year, every year. It’s a completely different ballgame.
Billion dollar deals that a group of 5 bankers get done in a couple months bring in like $10-$20 million and they typically work on several deals at a time.
Looking at the IB boards for bonuses this year..... looks like associates are expecting 250-300k all-in. IIRC BB associate base starts at 175 and goes up to 225k. Obviously places like Evercore will be higher, but I'm willing to bet very few associates at BB's are making 400k this year. Associates at my firm are making ballpark 250k this year vs ballpark 300-350k for the guys at places like Citi, boa, jpm, etc. I also already said we are a discount to IB, just less so than most firms in RE
There's just no way he was a good MD at Hines making as little as you say unless there is more to the story. Or maybe Hines just pays like shit, I don't work there, so I don't know what their MD's make, but if it was so little they would leave. I know for a fact that multiple MD's at my firm are getting to 8-figures after they get their 2022 payouts. And I also know that of MD's in my office cleared 8 figures for 2021. Feel free to think i'm lying, but I know what their share of the payout is, and I know what the promote figure is. Pretty easy to do the math on overhead, cost of capital, etc to find out what they made approx (+/- 10%, including deferred). Principals don't clear quite as much, but I'm sure 8-figures happens occasionally, and it would be unusual for them to not be at >2M once they have a good pipeline going. Maybe the MD you knew was just frugal or maybe he lost a ton of money gambling. My bet is there is more to the story than you know.
This isn't PE where everyone shares the pie. There's never going to be more than a small handful of people with direct carry on a project. If you hit a homerun, you reap the benefits.
I just took a look at a recent sale we did in the ballpark of your example. We developed a multi-phase project for ~350M. That required ~150M in equity. We sold the project for 700M. About 3.5 years from first land close to exit. Our pure promote on that project (so excluding profit on GP equity) was >120M. That is being split (primarily) between two MD's. Even after pulling out overhead, cost of capital, profit sharing for the office, etc, those two are still grossing multiple 8-figures for that deal. The whole headcount for the office including coordinators, etc that developed that project is.... maybe 20 people? 25? And they have multiple other deals closing per year (although this is definitely an outlier deal for sure). A more typical project likely is netting in the 10M or so range for the office that developed it, and each office has multiple of those deals starting and ending each year. I'm sure the economics aren't as good at every firm, but we are a firm everyone on this forum would have heard of. From what I know, Tishman has similar economics to us, and then there are the regional shops that do tons of deals in one area that run super lean.
I mentioned EBs already in my initial comment, but our MDs are matching that figure just as regularly, with more potential for upside (and downside) in a blowout year. At a BB most MD's are in the 1.5-3M range as has been well documented on this site. The economics here work the same way as they do at a HF or PE fund. It's easier to deploy more capital than it is to close more deals, especially when it's LP capital (hence why MFPE partners out-earn even EB MD's.....).
You can feel free to think I'm lying, but there are absolutely firms in the RE/Dev space that pay on par with PE/HF/EBs at the senior levels. Close 2-3 deals/yr with >10M in profit, and get 30% of the promote, and there you go. Even a more pedestrian outcome where you're "just" a principal with 2 deals closing for ~5M in promote each, all it takes is 25% share and you're at 2.5M. I would say that that is average to slightly below average at my firm, and then one level up MD's typically have stronger pipelines and larger shares. The math isn't hard to figure out, let alone the fact I have heard some of these figures from the senior guys themselves. Your earnings are uncapped so if you knock it out of the park, you will reap the benefits.
I don’t think you’re lying but I do think you don’t know the facts since the example you gave is absurd. I did some back of the envelope calcs and here’s what that deal would have required:
1. 22% deal level IRR
2. 42% equity IRR
3. Increase in value at completion of 50%. Typical is 20-25%.
4. 33% rent growth in 1.5 years of operations, assuming 2 years of construction for a $350 million project.
5. Assuming preferred returns are part of the $350 million, your company got a 34% promote. This also excludes any selling costs, so really it’d be closer to a 40% promote or more.
Needless to say the above numbers are not remotely accurate. Regular MDs do not make 8 figures consistently and very few ever do. The revenue simply is not enough compared to banking or PE. A fuck ton of time goes into any development. To hit the numbers you outlined would require a lean team to break ground on about $1 billion of construction every year.
For another reference point, my dad’s best friends with a guy who has developed about $3 billion (cost basis) of office since 2015. He owns 90% of the company and his four executives each own 2.5%. At refi’s and sales they make a couple million. My dad doesn’t talk to his buddy about money but I know the execs are making over 7 but less than 8 figures and they are top guys at one of the biggest developers in the country. One of those execs talks about money constantly to my dad and so I have a good sense of how much he’s making, about $2-$3 million a year. And they don’t have a ton of overhead, the entire company is like 25 or 30 people.
Feel free to not believe me. Without doxing myself, here are some facts:
The deal I quoted is an outlier for sure, but I can go on my phone right now and check the sale memo that was distributed. It might be absurd but that's my whole point that you only need one crazy home-run when you are working on massive deals. That isn't even the best deal of the year, just the biggest in terms of raw figures. These are all real numbers. Now, some of it is a result of a bear market the last decade and cheap capital..... but it happened. We aren't talking about "regular MD's" here. We brought in >1M in revenue per FTE last year, and broke ground on nearly $5B in projects.
Are juniors underpaid in comparison? Maybe, not my place to decide. As far as I can tell they pay enough to outcompete our competitors for talent. I was certainly content with my offer, and them dangling the long term tail outcomes certainly incentivizes staying long-term (and given there is no forced attrition like at most IB/PE shops, that isn't unreasonable). Typically VPs and below are being paid out of the dev fee, and then get some level of profit sharing each year based on deals that sold. I actually have more insight into the comp at senior levels than mid-level (VP and SVP I have a rough ball park but that's it, and doesn't include any carry). Senior guys get the promote. Might not seem fair but life isn't fair.
Maybe the other big firms are wildly different than mine, and we are the extreme outlier, I have no clue. I figured that Hines/Tishman/Related all had similar outcomes and economics, but maybe not. But I have not inflated or fudged the figures that I know.
I totally agree. The numbers and bonuses he's citing just does not add up to the peanuts the juniors make.
pulled a home address of a recently minted MD at Hines in his mid 30s. zillow estimates $3.3mm
Not saying you're lying but if the MDs are set up to make this amount of money, they want the absolute best talent. And to get the best talent they would pay more to their juniors. This just doesn't add up. The numbers you are quoting are only similar to that of finance, so why would they not be paying even CLOSE to finance money. Sounds like you guys make about 50% of your finance counterparts.
These salaries in CRE have always been trash. Hard to become rich working for someone in CRE nowadays.
The issue is people keep taking roles that pay poorly. I’m sure comp would increase if people told these firms to fuck off (see IB over the last three years).
There are quite a few shops that do pay classic IB/PE money but I’m guessing the data points in this thread aren’t working at those shops.
Nobody's taking a job that pays poorly if they have other options... The difference is that people in IB seem to have other options (either in the industry or across industries). Sure, you could boycott the CRE industry for higher pay, but people will make short-term financial decisions so don't expect people to line up to be the first one without a job.
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Seems low. But sounds like a stable job going into a recession.
Seems low for 5YOE. Similar to what an analyst makes
I'm actually not sure it's too low (162K all in) given that you took it w/ 4+ YOE all in RE AM. What was the MBA timeline? Is this your first job after MBA or have you been out for a few years?
I was recruiting this past spring/summer w/ 5 YOE total (3 yr in RE Acq+AM) and seeing ~200K+/- all in. Focused more on acq tho, and with my limited sample size, it feels like acq roles (and dev roles at the larger shops) lend themselves to higher comp. Did hear ~200K for one AM role I spoke with so it's out there (or at least was).
That $200K AM role - can you share the firm and seniority of the position?
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