Your guide to commercial real estate leasing and investing

Get a Commercial Real Estate License in 2023 – a Complete Step-by Step Guide

Commercial real estate is a high-volume, high-value field that continues to be on the cusp of major growth in the United States. Commercial realtors are in increasing demand and can take part in the profits predicted in this sector. If you are wondering where to start, read this complete guide on how to get your commercial real estate license.

commercial real estate license guide

Covered in this article:

 

What is Commercial Real Estate?

Commercial real estate is the buying, selling, and leasing of properties that are used exclusively for business, or income-generating, purposes. Getting a commercial real estate license qualifies you to sell or lease non-residential real estate properties.

The Association of Real Estate License Law Officials estimates that there are more than 3 million active real estate license holders in the United States. There are over 2 million commercial real estate businesses in the U.S., a number which increased by 2.4% between 2021 and 2022.  Some of the biggest CRE companies in the U.S. include Colliers International, Jones Lang LaSalle, CBRE Group, Cushman & Wakefield, and Newmark Knight Frank.

 

 

The four most common classes of commercial real estate are:

1. Office space
2. Industrial space
3. Multi-family
4. Retail

Here are some types of commercial real estate properties:

  • Multifamily—Residential, plexes, apartment buildings
  • Office—Office buildings, hybrid workspaces.
  • Industrial—Manufacturing, assembly, warehouses
  • Hospitality—Hotels, resorts, restaurants.
  • Healthcare—Medical offices, labs, and related care facilities.
  • Retail—Malls, single storefronts, shopping centers.
  • Land—Greenfield, agriculture, infill
  • Mixed-use—Some combination of all types

 

In contrast to residential real estate, commercial real estate requires more capital and often includes investors. Publicly traded real estate investment trusts are called REITs. This model allows individuals to invest indirectly in CRE.

While some property type transactions fell in volume during the COVID-19 pandemic, there was an increase in land sales and sales of industrial properties. Experts at JPMorgan predict commercial real estate to experience a boom that will last through 2023.

According to them, commercial real estate can expect the following areas of growth:

  • Positive rent growth, which incentivizes new multi-family building transactions.
  • Multi-family moves back to major markets, with average growth numbers increasing by a factor of two or more in the southeast and west.
  • Growing need for warehouse space to meet the demands of eCommerce businesses.
  • Hybrid office models that require more space per person and new layouts.
  • A resurgence of small, local businesses and A-grade malls.
  • Increased use of adaptive reuse buildings, modular construction, and additional affordable housing creativity.

 

Residential vs Commercial real estate

 

What is the Difference Between a Residential and a Commercial Real Estate License?

To sell or lease commercial real estate, you may have to obtain a commercial real estate license. In some states, this is different from a residential real estate license and will indicate that you specialize in CRE. As with residential licenses, commercial real estate license requirements vary state by state.

If your state does require a separate license, you will take different courses, which relate specifically to CRE, and face a different test. CRE agents most commonly work for a commercial real estate brokerage firm. Those two differentiators set a CRE career path apart from a residential one.

Commercial real estate and residential real estate vary in a few ways. In contrast to residential real estate, commercial real estate may offer the following benefits:

  • Higher return on investment—According to the NCREIF Property Index, CRE investments averaged an annual return of 16.08% in 2022.
  • Higher net leases—A unique opportunity within commercial real estate comes in the form of triple net leases. They may vary but can mitigate property expenses and maintenance costs. This is only available to commercial properties.
  • Longer lease terms—In contrast to a typical 12-month residential lease, commercial property owners may be able to secure long-term leases for three or more years. This translates into secure revenue for a longer period of time.
  • Value increase—CRE is less subject than residential properties to valuation solely based on comparable property values. Rather, investors may assign value based on how much revenue a property generates. This may mean a faster increase in value.

 

What Can You Do With a Commercial Real Estate License?

Most commercial properties are investor-owned, so the transactional real estate tasks may relate to leasing, commercial sales or even property management and appraisal. Commercial realtors operate at a more elite level than residential realtors and have more of a likelihood of working with high-powered, high-net-worth individuals. Investors may require commercial real estate license holders to provide market demographics, work with analysts for environmental research, provide financial analysis and projections, and more.

 

Who Can Get a Commercial Real Estate License?

CRE is a fairly competitive field. Getting a CRE license is, of course, the first step. Eligibility requirements for a CRE license will vary by state, but usually don’t include specific education or experience requirements. Instead, you can earn a license once you have done coursework and completed a licensing exam. In most states, you must be 18 years of age, a U.S. citizen (or permanent resident) and have graduated high school. When you get a real estate license of any kind, it qualifies you for work in a certain state. There is some flexibility between states in instances of reciprocity.

 

What is Real Estate Reciprocity?

Real estate professionals qualify for and receive a real estate license in one state. However, some states practice license reciprocity or recognition. This means that you may be able to practice real estate across state lines. Currently, the states that allow full license reciprocity are Alabama, Virginia, Mississippi, Colorado, and Maine. If you are moving to practice real estate in one of these states, you won’t have to take general real estate courses. You will still have to take some courses that cover state-specific real estate laws and requirements. States that offer partial license reciprocity include Arkansas, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Louisiana, Maryland, Massachusetts, Nebraska, Nevada, New Hampshire, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, West Virginia, and Wisconsin.

Real Estate License Reciprocity

 

Where to Get a Commercial Real Estate License?

Getting a commercial real estate license is almost always going to include taking courses and then passing a licensing examination. Hourly requirements, course requirements, and the test itself vary by state. Especially post COVID-19, you will likely have the option to complete your coursework in-person or online. The exam may be proctored. If you take the exam online at home, it may be through proprietary software to enforce a time limit.

To get a commercial real estate license in Texas, you must follow these steps:

  • Take 180 hours of coursework, which is termed pre-licensing education.
  • Pass a state exam, which is made up of 75-100 multiple-choice questions.

 

In Texas, the requirements to earn a Texas real estate license and a Texas commercial real estate license are the same. Here are some online options to study for the real estate exam in TX:

 

Organizations like Kaplan, Aceable Agent, the Real Estate Express, and more are national entities that may offer real estate test preparation courses for other states as well.

You’ll want to check the requirements for your state to make sure you follow the right steps for a CRE license.

commercial real estate license requirements

What are the Requirements to Get a Commercial Real Estate License?

The exam is key, but most states do also require verification of identity and citizenship. Age requirements and education requirements vary by state.

Here are the five steps to be aware of, which include the coursework and exam mentioned before:

1. Complete education requirements in the form of coursework. While it will vary, it will probably be between 60-180 hours of classes. States may have different requirements around what these are. You may be limited to a distinct set of acceptable classes from accredited institutions. They will relate to real estate.

2. Submit an application to the state real estate commission. In the state of Texas, it is the Texas Real Estate Commission.

3. Take an exam prep class. This is offered by many states and will help you with actual test prep and practice.

4. Pass the state exam. This step varies a lot, logistically, by state. Some states require you to schedule online and come in person. Other states require you to take the test and then submit score sheets along with an application. Others are completely online. Simply find your state’s real estate commission website to learn more.

5. File identity verification, usually in the form of a state background check and fingerprints. Some states will also require an FBI background check.

 

How Long Does it Take to Get a Commercial Real Estate License?

180 hours is not something you complete in a week or two. Commercial real estate is a complex field with numerous intricacies. It requires significant market understanding and legal knowledge to become qualified to buy and sell commercial real estate or work with investors to find commercial properties. That is why the standards are in place.

Broken down by hours, it may take between four and eight months, on average, to get a commercial real estate license. Keep in mind that, in every state, you don’t get a commercial real estate license on your own. You must work with a broker.

 

How Difficult is the CRE Licensing Exam?

Because real estate licensing is issued by state, each state has a different test. Test difficulty is best determined by pass rates. In Texas, for example, first time test takers average a 59.7% pass rate. TREC allows you to try up to three times to pass both the state law and national portions of the exam. If you fail one portion and pass the other, you only have to retake the portion that you failed. Rescheduling fees are a little over $50. If you fail one portion of the exam the maximum number of times (3), you have to take an additional 30 hours of real estate education. Many states will have rules similar to these, so be sure to research the protocol for test-taking and retaking in your state.

 

Factors that Affect Eligibility of Getting a Commercial Real Estate License

Commercial real estate license requirements are different in each state but almost invariably include age, citizenship, and the ability to verify your identity. The most common reason someone wouldn’t earn their commercial real estate license is if they fail the test. TREC sets an exam pass rate benchmark for course providers. The minimum pass rate for real estate course providers in TX is 48%, and in other states, the pass rate ranges into the high 80s. Either way, there is a cohort of people who take these courses and do not pass. In the event that happens, coursework has to be redone until a candidate reaches the required hour allotment and can also pass the test.

 

How do Commercial Real Estate Agents Make Money?

Applying for a Commercial Real Estate LicenseIn the United States, in 2021, commercial real estate contributed more than $1.2 trillion to the national economy. It also provided jobs to more than 8.5 million Americans and generated $418.7 billion in salaries and wages. Commercial real estate agents make money through commission fees.

Unlike traditional employment, real estate is unique. Realtors represent investors, owners, buyers, and sellers. Contracts are drawn between agents, brokerage firms, and clients. Once a property closes, the agent will make a portion of the price of the property. Keep in mind that there is frequently a delay of 1 month to 1 year between listing or leasing and closing a commercial deal. Commercial realtors, on average, make more than residential realtors.

 

How Much do Commercial Real Estate Agents Make?

As mentioned before, commercial realtors make more than their residential colleagues. Income varies substantially by state and region. For instance, a commercial realtor in Manhattan may out-earn one in Oklahoma. Then again, if they specialize in industrial oil and gas production facilities, the reverse may be true.

In Texas, commercial real estate agents make an average of $103,383 a year.

Many commercial realtors make six figures a year.

 

How Long Does it Take to Make Money in Commercial Real Estate?

As a commercial real estate agent, your earning potential is high, but many people are curious about how long it takes to scale up. Your financial success in this business directly depends on the number of deals you close. Remember that CRE deals may take longer to close than residential ones, but the payoff can be higher. Many professionals start earning a sustainable living within two years of getting their license.

 

Different Types of Commercial Real Estate Jobs

Much of this article has centered around how to get your commercial realtor or commercial real estate broker license. Once you have it, the real work can begin. There are a few different types of commercial real estate jobs. You will most likely specialize in one of these:

CRE roles — Leasing, sale, sourcing, design, entitlement, construction, recapitalization: there are many stages to a commercial property transaction. People who pursue CRE may be drawn to acquisitions, appraisal/valuation, asset management, capital raising, brokerage, corporate real estate, development, investor relations, portfolio management, property management, or even non-profit work.

CRE property types —The primary four types of CRE properties were listed above. There are further categories within these. Some commercial realtors specialize in multifamily, industrial, office, retail, hospitality, hotels, land, mixed-use, or special-purpose buildings.

CRE firm types — If you are aiming for a long-term role in CRE, it may be worthwhile to choose a job with a certain type of CRE firm. These include limited partner or general partner and have to do with the amount of overall investment capital or unique investment approaches/strategies.

 

 

 

How to Get a Job as a Commercial Real Estate Agent?

The role you decide to pursue in commercial real estate, and the type of work-life you want, will impact how you go about finding a job. In almost any context, the following tasks will help you be successful:

  • Build a network of contacts. The people you study with in your real estate courses, your current co-workers/colleagues, and people you meet at industry events are all great starting points.
  • Be active online. Your ability to succeed in this space may depend on your online presence and engagement. Both for job opportunities and client acquisition, a strong social media presence, LinkedIn activity, and website appearance are key.
  • Craft a brand. Realtors often make a name for themselves by niching. Sometimes, you can achieve this simply by signing on with an esteemed broker. Other times, you will want to be a maverick and become known for who you are and what you say. Be vocal and consistent.
  • Pursue specific positions. Some professionals make the mistake of casting too wide a net. Do some due diligence and find the best firms and companies near you. Then, reach out to their hiring departments directly. It’s never too early or late to find the right fit.

 

 

5 Tips to Having a Successful Career as a Commercial Real Estate Agent

Commercial Real Estate buildingCommercial real estate appeals to people for its high-earning potential and high-impact activities. But it may require some growth to achieve what you want in this field. Ultimately, you need to be entrepreneurially minded, an outstanding communicator, and able to rub shoulders with elite clientele. Here are some tips for carving out your space in CRE:

1. Be dedicated to skill development. There will always be new things to learn and new skills to develop, all of which increase your value and earning potential.

2. Manage your time effectively. This may feel like a general tip, but in CRE, every minute counts. Every lunch. Every meeting. Every moment you are working can be maximized for productivity and forward motion in client relationships, networking, and in deals.

3. Be opportunistic. Once you get into this field, you will see opportunities everywhere. Learning to assess these quickly and know which ones to take is key to moving forward in this field faster.

4. Pick a specialty. CRE is simply too broad to be good at everything. The more specific your niche, the more valuable you will be to clients looking for a distinct skill set.

5. Be persistent. Real estate, in general, is not for the faint of heart. It requires diligence, initiative, and patience. If you hone the skill of persistence, you’ll last much longer in this competitive industry.

 

Conclusion

Getting a commercial real estate license requires some studying and passing a test. While the difficulty of that shouldn’t be underestimated, it is only step one. Every ambitious CRE professional must stay persistent and diligent in building a network. In an ever-evolving field, only the most committed will stay sharp and on the cutting edge of what’s next. If you’re driven and apply yourself, you can go far.

 

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