Commercial Real Estate Pay Explained

Most people get into commercial real estate to make money, but the way people get paid in this business isn’t all that straightforward.

And even though the income potential is really high in this industry, there are certain paths you can take that make a high income a lot more likely, while others can make this a lot more difficult.

So in this post, we’ll talk through how pay structures tend to actually work in commercial real estate, how these differ in different parts of the business, and what to expect when you’re first getting started.

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Principal Side vs. Brokerage: Understanding the Difference

The first thing worth mentioning here is that pay is going to be very different between brokerage and principal side roles, and this is something worth knowing up front.

Starting Out on the Principal Side: Salary and Bonus

To start with roles on the principal side (working for an investment or development firm), when you first start out with an analyst or associate level title, pay is going to be primarily based on salary and bonus.

At these levels, bonus targets usually come in somewhere between about 15% and 30% of base pay, with the exact number within this range you can expect usually being directly related to how close your job is to revenue-generating activities.

And this means that jobs in acquisitions or capital raising roles, where you’re working closely to get deals funded and closed, will usually have the highest bonus percentages in the industry. And on the other side of the spectrum, jobs in asset management or portfolio management, where you’re primarily working on company operations, will usually have the lowest bonus percentages in the industry.

The Reality of Bonus Pay

Unlike a salary, which is essentially guaranteed pay, bonus pay can be extremely variable and tends to be highly dependent on the performance of your team and the company as a whole.

This means that a lot of people who were working in acquisitions in 2022, 2023, and even 2024 with bonus targets on the high end of that range might have actually seen a much smaller bonus payout in practice, since transaction activity for many firms during these years was extremely low.

Bonus Timing and Its Impact on Hiring

Bonuses in commercial real estate are usually paid out somewhere between January and March each year, so you’ll typically need to stick around until at least after the holidays if you want this. And because this timeline is so common among companies in this industry, this also affects recruiting timelines throughout commercial real estate.

People will almost always wait to get their bonus before taking a different job and leaving their current company. Because of this, the most active months of hiring in this business tend to be in the winter and early spring, when people tend to move on and their positions become available.

This is also a time when people tend to get promoted into more senior-level roles, which also creates openings at the analyst and associate levels.

How Compensation Changes as You Progress

The next thing to know about pay going into this industry is that as you progress throughout your career, bonuses and other forms of income become a much bigger portion of your all-in compensation.

Director and VP Level: When Pay Really Increases

When you move up to the director or VP level in an acquisitions or capital markets role, this is where bonuses start to get significantly higher, and will often come in somewhere between about 50% to 100% of annual base salary.

This is also the level where other forms of compensation can start to come into play through participation in fees and promoted interest, which can really start to add up in years with a lot of transaction volume.

Understanding Fees and Promoted Interest

In asset management roles, senior leadership might be entitled to a portion of what are referred to as leasing override fees, which are usually calculated as a percentage of the total value of a new lease that’s signed in the portfolio.

In acquisitions roles, senior leadership will often be entitled to a portion of what are referred to as acquisition fees, which are usually calculated as a percentage of the total purchase price of a property they acquire.

Senior leadership will also sometimes receive a portion of promoted interest on deals they work on, which is a percentage of the profits over and above what they’ve invested, and this can often be the biggest portion of annual pay in later stages of your career.

This is also why jobs at the biggest firms that are doing the biggest deals in the industry tend to be some of the most sought-after roles in commercial real estate, because the bigger the deals you work on, the bigger those fees and promoted interest amounts will be.

A Real-World Example of Senior-Level Compensation

If an acquisitions director buys $200 million of real estate in a year, and the company charges a 1.5% acquisition fee, that’s $3 million of acquisition fees alone. And if that acquisitions director receives only 5% of that, that’s an additional $150,000 added to their paycheck.

And if the company sells a handful of properties and earns $10 million of promoted interest in that same year, if that same acquisitions director is entitled to 5% of that, that’s an additional $500,000 added to their paycheck.

If you layer these numbers on top of something like a $250,000 base salary and a 100% bonus target, this person would be taking home an all-in pay package of over $1.1 million. And while this wouldn’t be the case in every single year, something like this isn’t unrealistic at all for more senior-level positions at high-volume shops.

Vesting Periods

Now, while this sounds really good when we throw out these numbers, one of the most important things to think about related to promoted interest is that this often takes a number of years to vest. And in many cases, if you leave before a certain date, you may need to forfeit this.

Most vesting periods I’ve seen in this industry last somewhere between about 4 and 6 years, which can feel like a very long time in your 20s and 30s, especially if you’re in a work environment that doesn’t feel sustainable.

I’ve personally had opportunities where I’ve said no to structures like these because I knew I wasn’t going to stick around long enough for these to pay out, and with how high these promoted interest amounts can end up being, this can make it really hard to leave a company for a better opportunity or to start your own thing.

How Brokerage Pay Works

With the caveat that brokerage firms will all pay a little bit differently, below are the types of structures I’ve seen on the brokerage path for analysts and associates at big-name shops.

For people starting in investment sales or capital markets at a company like CBRE, JLL, Eastdil, or Newmark in a major city, salaries are often lower than what you’d see on the principal side of the business, but bonus targets are often significantly higher, usually somewhere between about 50% and 100% of base pay (depending on production volume).

This can vary a lot based on the number of deals you personally work on and how much experience you have overall, but ultimately, this is usually determined based on a small percentage of the commissions your team earns throughout the year.

Senior Level Brokerage: 100% Commission-Based

For more senior-level roles in brokerage, this is where you typically move into a 100% commission-based job, where you’re entirely responsible for generating new business. And if you’re working on bigger deals with equally high commissions, top-tier brokers can make a lot of money.

At big shops like the ones I mentioned, brokers will often take a deal to market as part of a team, with anywhere from about 2-4 individuals working to get that property sold.

And if a three-person team sells a $30 million deal with a $600,000 commission, even if 50% of that goes directly to the company and support staff, this still leaves $100,000 of commissions for each team member involved with the transaction.

And again, for someone doing 10-15 deals like this per year, an income in the low 7 figures is very realistic. And while this isn’t necessarily easy to do, this is absolutely possible in this part of the business.

Ready to Break Into Commercial Real Estate?

These are the biggest things I wish I knew about commercial real estate pay when I was first getting started, and if you’re trying to break into the industry right now and want to make sure you have the skills you’ll need to land the most competitive and highest paying jobs in this industry, make sure to check out our all-in-one membership training platform, Break Into CRE Academy.

A membership to the Academy will give you instant access to over 120 hours of video training on real estate financial modeling and analysis, you’ll get access to hundreds of practice Excel interview exam questions, sample acquisition case studies, and you’ll also get access to the Break Into CRE Analyst Certification Exam, which covers topics like real estate pro forma and development modeling, commercial real estate lease modeling, equity waterfall modeling, and many other real estate financial analysis concepts that will help you prove to employers that you have what it takes to tackle the responsibilities of an analyst or associate at a top real estate firm.