Brokerage

Mastering Your Future

Commercial real estate pros weigh in on the value of advanced degrees versus experience.

Do your clients care what diplomas hang on your office walls?

Probably not, say most commercial real estate professionals who responded to an e-mail survey on graduate degrees. "An advanced degree means little to a client except as a door opener," says Ernest G. Condra, CCIM, of Cohen & Malad in Indianapolis. "The only thing that matters is a person's personal attributes and what they do that day."

Others agree that experience is more valuable. "You're only as good as your last deal," says Paul Blum, CCIM, of Re/Max Commercial Investment in Scottsdale, Ariz.

Of course, it should be mentioned that Condra holds a master of business administration from Indiana University and Blum has a doctor of law degree from New York Law School. They are representative of survey respondents - most hold advanced academic degrees but value commercial real estate industry experience more.

Of CCIMs and other commercial real estate professionals who responded to the survey, 60 percent hold MBAs, 12 percent have master's degrees in real estate, 12 percent have master's or doctorate degrees in tangential or unrelated fields, almost 7 percent hold law degrees, and 9 percent have no advanced degrees.

While self-selected, the anecdotal survey indicates a depth of education among commercial real estate professionals. On a broader scale, a 2002 CCIM Institute survey revealed that almost 24 percent of CCIMs have advanced degrees, more than 20 percent have some post-graduate study, and nearly 40 percent have undergraduate degrees.

Professionalizing the Industry

While seasoned practitioners might be surprised at the number of graduate degrees among their colleagues, those in education are not.

"With Wall Street beginning to recognize real estate as an asset class, brokers need the skills to converse with [professionals who have] MBAs, and they need to know how to play with the big money," says Elaine Worzala, director of a new real estate master's program at the University of San Diego.

About 70 percent of the Chicago School of Real Estate graduate students already are employed in real estate, says Jon B. DeVries, who heads the two-year-old program at Roosevelt University in Chicago. "These students are in a far more competitive and corporate world; they find additional training a valuable asset."

Brokers only need a state real estate license to set up shop; however, most acknowledge that an undergraduate degree now is a minimum requirement. Along with a bachelor's degree, many companies want professionals who have commercial real estate experience, which can be hard to come by in a slow economy. In lieu of work, a graduate degree can make a difference.

"I researched prospective jobs for real estate majors and discovered that most jobs require three to five years of experience or a graduate degree," says Brooke Tallman, who has an undergraduate degree in real estate and is a first-year law student at the University of Denver.

Those on the hiring side agree. "With youth, the degree is important, especially in years one through four [of a career]," says Craig C. Evans, CCIM, senior managing director of Colliers ABR in New York.

"When I was in charge of hiring for KPMG's Honolulu office, I would not interview employment candidates without an advanced degree,? says Scot J. Voronaeff, CCIM, MAI, who now owns Premiere Properties in Honolulu. "Currently I would not consider it a necessity but certainly value it as a great asset."

Today's students are well aware of the many high-paying careers in the $5 trillion commercial real estate industry. USD's inaugural class had twice the number of applicants it expected, and Roosevelt's program currently has more than 100 students.

"Our students today come to us with much more education and direction," says Mark Lee Levine, CCIM, CIPS, CRE, director of the University of Denver's Burns School of Real Estate and Construction Management, which also has seen an upsurge in students. "[They] realize that formal education in real estate is very important."

Experience Counts - Up to a Point

Industry insiders acknowledge that graduate degrees only take you so far. "Both my MBA and CCIM [designation] were very instrumental in my getting hired," says Christian J. Johannsen, CCIM, managing director of the Aztec Group in Miami. "After that, experience and production carry much more weight."

Yet as the industry consolidates, others realize that experience isn't enough, especially in corporate environments.

"You have to meet certain academic requirements before you are considered for some positions," says Pamela A. Dudash, CCIM, vice president of MB Real Estate in Chicago. "Even with experience you are limited in how far you can climb before the lack of education stops your career."

Although she just had been named vice president at Coldwell Banker, Letty M. Bierschenk, CCIM, currently with the Bierschenk Group in Bell Canyon, Calif., felt the pressure to get a degree to maintain her status. "Many of the new people being hired at that time had MBAs, and it became evident that an advanced degree would be helpful if not essential," she says. She obtained a master's in federal taxation, "to offer something unique."

Changing Career Paths

Others seek advanced degrees to take a new direction. Prior to getting a master's in real estate, Richard Button, CCIM, was "substantially locked into a brokerage career path." Graduate education allowed him to "pursue real estate as an investment/asset class," he says. "It provided me the fundamentals to confidently engage in acquisition, financing, and development activities." Along with owning investment real estate, Button now runs the asset and property management division of Granite Realty in State College, Pa.

David J. Latina, CCIM, moved in the opposite direction. After six years of local development in Milwaukee, he wanted a better understanding of the big picture - how capital markets fund urban redevelopment projects. He attended Columbia University's interdisciplinary master's of real estate development program. Today, as a vice president for San Francisco-based A.F. Evans Development, Latina develops mixed-use urban infill projects. "The degree pushed me to the top of my compensation range and definitely opened doors in management positions that were not open to those with more experience," he says.

Broker Benefits

Advanced degrees also help transaction brokers move into consulting or jump up to bigger, more lucrative deals.

"I get more brokerage business because of my degrees," says Tom Whatley, CCIM, who owns Whatley Realty Services in Atlanta and holds an MBA and a master's in real estate from Georgia State University. "I am beginning to do some consulting that would have been impossible without an advanced degree."

Although some brokers speculate that advanced degrees have little effect on salaries and commissions, others report a 20 percent salary hike due to graduate degrees, more negotiating power for bonuses and commissions, and the ability to win high-commission transactions.

"It has given me more credibility and opened the door to large national deals,' says Hal Hanstein, CCIM, GRI, of Cardinal Realty Group in St. Peters, Mo., who has a master's in real estate management.

Networking is a side benefit that many discovered while in school. "I probably learned just as much from the experienced people who took the classes with me," says Dee C. Metz, CCIM, president of Metz & Associates in Bethesda, Md., who received a master's in real estate from Johns Hopkins University. "Learning from their real-life experiences and now having those contacts to call is invaluable. My earnings also increased because of the extra business I've done with classmates and other alumni."

Looking to the Future

About 80 percent of real estate new hires come from competitors within the in dustry, according to real estate consultants CEL & Associates. That high entry barrier could spell disaster in the near future. By 2010 experts predict 10 million more jobs nationwide than qualified people to fill them. Coupling that fact with the average age of today's real estate professional - 45 - means the industry needs new ways to identify qualified new hires.

Both educators and commercial real professionals tread lightly when it comes to instituting an industry-wide degree requirement for brokers.

"I don't think advanced degrees are ever going to be required, but there's certainly a difference in the quality of service [brokers with degrees] can offer, their extensive awareness of issues, and [their ability to] look out for clients," Worzala says.

Douglas Groppenbacher, CCIM, CIPS, associate broker with Re/Max Commercial Investment in Scottsdale, thinks requiring more education isn't the answer. "Real estate is one of the few business areas where a person without higher degrees can put forth honest work, provide a great service, and be very well compensated."

"But commercial real estate is a very competitive field," Metz adds. "People who think they can go out and get a degree and become successful before learning the business and the market through experience are usually disappointed. But if you have the experience, the degree shortens your learning curve and opens up more opportunities for greater success."