I am a graduate student who has decided that institutional real estate is one of the most attractive financial sectors right now and, as such, have chosen to forge a career in it.
The reasons behind my ambition to make something of myself in the sector are multi-faceted.
Starting with the big picture, it is clear from where I sit that commercial property has been one of the beneficiaries of monetary policy intervention. Central banks reviving economies via quantitative easing started with the Great Recession and little has changed on that front since. In today's context, it means the world's largest investors, such as pension and sovereign wealth funds searching for yield to meet their liabilities and targeted returns, must turn to assets like real estate for a solution, That bodes well for the future employment of those able to help them meet their needs.
Secondly, given these uncertain times, when global markets are rocked repeatedly by things like extreme geopolitical changes and terrorism, I can see how an investor will continue to take refuge in perceived safer assets versus those perceived to be more volatile. Great Britain's exit from the European Union and China's wobbling economy are among the ongoing events that will see the continuation of negative or lower interest rates for longer than many people previously imagined. The global capital seeking a home in the US, as a result, is another reason why a career in its institutional real estate market is attractive for someone like me living in the US. Some believe the institutional real estate market may be a little frothy right now and that yields may be squeezed further, but I think real estate fundamentals remain strong, particularly given inflation remains low and the labor market has tightened. In the US, there have been improvements in almost every property sector in terms of occupancy and rents, and subsequently values.
Even if current yields are pricing some investors out of gateway cities, and of mainstream assets, certain secondary locations will benefit from current institutional demand, as well as so-called non-traditional property types like self-storage, student housing and single-family residential. I also believe that two of the strongest non-traditional property types are healthcare and life science facilities, as well as industrial and logistic properties. Their decorrelation with the more vanilla property types offers investors defensive strategies to augment against volatility within their portfolios.
I believe there are three routes one can take if they are seeking employment within the institutional real estate industry. First, each and every commercial bank and investment bank has a department that is dedicated to financing real estate transactions at both the property and corporate level. These financial institutions also have small teams that acquire institutional-grade properties. Secondly, each and almost every consulting firm has a team dedicated to auditing and or advising on commercial real estate transactions. Thirdly, many of the big insurance companies have been investing in real estate for decades on both the equity and debt side. Last but not least, commercial real estate brokerage firms (CBRE, JLL, C&W, Colliers) are companies that focus on all aspects involving commercial real estate.
What do I believe such employees will need from me at this point in the market cycle? Impeccable time management, professional integrity, and stellar work ethic. Other characteristics that are beneficial are data analytic skills and hyper-competitiveness. These two characteristics are very important at a time like today where there seems to be more capital than opportunity.
Several mentors have emphasized throughout my studies that, at the end of the day, technical skills help you obtain a job, but your people skills will determine your level of success. I recently met a portfolio manager from CalSTRS (California State Teachers Retirement System), who said: "there are a lot of last-generation real estate investors that are going to retire over the next 5-10years, and there may not be enough talent to replace them". He also stated that there are many opportunities for intelligent, motivate, ambitious, and ethical young professionals".
