The Future of RealEstate

Compensation: Watch for the emergence of thefloating salary, whereby real estate firms will bifurcate basesalaries into fixed and variable components. The fixed componentwill likely be 80% to 85% of the market rate for that position. Atthe end of each quarter or year, real estate companies will studythe market and determine the variable component or value of eachposition and make the necessary lump-sum adjustment payment. Basesalaries will likely increase 150 to 300 basis points above therate of inflation, and annual bonus awards will approximate 90% ofthe targeted amount. Watch for teaming and profit-sharing to becomecommonplace in brokerage. The shift toward a 100% split for thehigh-production broker may be in store for small to mid-sizebrokerage firms.

Consolidation: The industry consolidation willcontinue, and as many as one third of today's CEOs will be gone by2008. Succession and legacy exits will become a leadershipchallenge for many organizations. Don't be surprised to find thenew acquirers to be non-real estate firms. (e.g.: An Amazon.com andEquity Office Properties merger would provide millions of contactsto the acquirer.)