Why Being a CCIM Matters
If you're in the world of commercial real estate, you may have heard the designation "CCIM" tossed around before. But what does it mean, and why is it such a big deal? In this blog post, I’ll dive into the details of the CCIM designation, what it takes to obtain it, and how it sets CCIM designees apart from the rest of the commercial real estate brokers in the market.
What is a CCIM?
First things first: CCIM stands for Certified Commercial Investment Member. It's a designation awarded by the CCIM Institute, a global organization of real estate professionals. The CCIM designation is recognized as one of the most prestigious in the industry, and it's only awarded to those who complete a rigorous course of study and demonstrate a high level of expertise in commercial real estate.
How do you become a CCIM?
To obtain the CCIM designation, you must complete a significant amount of coursework and demonstrate your proficiency in the topics covered. The coursework is divided into four core classes:
1. Financial Analysis for Commercial Investment Real Estate: in this course we learned how to analyze the financial aspects of a commercial real estate investment, including how to calculate and create cash flow projections, how to calculate the net present value of a future stream of cash flows, and how to calculate the internal rate of return of those cash flows. We also learned how to use financial analysis tools to evaluate the performance of a property and make informed investment decisions.
2. Market Analysis for Commercial Investment Real Estate: this course teaches CCIM candidates how to analyze local and regional markets to identify trends, opportunities, and risks. We learned how to use demographic, economic, and real estate data to make informed decisions about investing in a particular market. One example of what we learned was learning how to project the future population growth for a given area based on “basic” versus “non-basic” job creation in that local municipality and how that projected population growth might impact retail demand in a given trade area.
3. User Decision Analysis for Commercial Investment Real Estate: in this one we learned how to analyze the needs and requirements of potential tenants or buyers of a commercial property. We learned how to evaluate the feasibility of different uses for a property and make informed decisions about how to position it in the market. One area I was trained on in this course that I think is of tremendous value to my clients was the training on lease analysis and what I learned with regards to how to perform a competitive financial analysis for multiple leases. For instance, if three different leases are presented to a potential tenant from different landlords with one offering a significant amount of tenant improvement dollars but at the highest lease rate, a second one offering six months of free rent at a mid-level lease rate, and the third one offering the cheapest lease rate but no free rent or tenant improvement budget, which one is the best option for the tenant? I now have the financial modeling expertise to guide my client through this analysis to the best financial decision for them.
4. Investment Analysis for Commercial Investment Real Estate: this course taught us how, as CCIMs, we can evaluate the financial and non-financial aspects of a commercial real estate investment. They taught us different valuation methods, such as the income approach and the sales comparison approach, to determine the value of a property. We also learned how to analyze the risks and rewards of different investment strategies, such as value-add and redevelopment projects. One really interesting takeaway for me was learning how to incorporate multiple possible outcomes and probabilities into a future projection and to blend them together into a single projected outcome (base case, above-trend case, and below-trend case).
I enjoyed all four of the core classes of the curriculum, but my favorite had to be the Investment Analysis course. Getting into some of the details of this course, what I learned allows me to be able to analyze various decision options for an investor, and using advanced financial modeling and analytics, I can guide them to the correct and best choice for them. An example would be an investor who owns a commercial real estate investment and has received an offer from someone to buy it from them. Should they sell it? Should they hold it and do nothing? Perhaps they could refinance it, take out some of the equity and invest that elsewhere? Or maybe they should 1031 exchange it into a different investment altogether? Which of these options will lead to the best overall return on investment and result in the most amount of capital at the end of a given period of time? I now know how to answer all of these questions and can back it up with sound calculations!
In addition to these core classes, CCIM candidates must also complete several elective courses that focus on specialized areas of commercial real estate, such as leasing or site selection. For my electives I chose courses related to my development background. I took one course on calculating distributions and “waterfalls” in partnerships and syndicated investments. I took another course that focused on ground-up development projects in which I learned how to perform relatively quick financial feasibility calculations to see whether an opportunity is worth pursuing. This course also taught me how to calculate the maximum price I can afford to pay for the land for a given type of development project. These are crucial calculations with which I, as a CCIM designee, can add tremendous value and assist my development clients.
Beyond just coursework, candidates for the CCIM designation must also have at least two years of experience in commercial real estate or a related field, and must qualify for the designation based on the dollar volume and or amount of transaction activity they have had over a recent period of time. My development activities provided ample transaction history for me to satisfy this requirement. A candidate must compile a “portfolio” of their professional experiences and submit it to the CCIM Institute who assigns a panel of reviewers to review the “portfolio” to ensure the candidate meets the professional standards and qualifications to become a CCIM Designee.
All told, the coursework required to obtain the CCIM designation totals more than 200 hours of classroom time, with an emphasis on practical, real-world applications and case studies. Once the coursework is complete, CCIM candidates must also pass a comprehensive exam demonstrating mastery of the coursework and a thorough understanding of the commercial real estate industry. This exam is no walk in the park – it's a grueling six-hour test that covers everything from financial analysis to market analysis to investment. Most of the questions are case study type questions requiring a substantial amount of calculations and complex steps to successfully work through to achieve the correct answer.
How does the CCIM designation differentiate brokers in the market?
So, what sets CCIM designees apart from other commercial real estate brokers in the market? For one, we have a deep understanding of the financial and market aspects of commercial real estate investment. We're able to evaluate the potential of a property not just from a qualitative perspective, but from a quantitative perspective as well.
CCIM designees are also trained in user decision analysis, which means we understand the needs and requirements of potential tenants or buyers of a property. This allows us to position a property in the market in a way that maximizes its potential value.
Additionally, CCIM designees are trained in investment analysis, which means we can evaluate the potential risks and rewards of different investment strategies. We understand how to use different valuation methods to determine the value of a property, and we can analyze the impact of different factors, such as changes in interest rates or the local economy, on the performance of an investment.
Perhaps most importantly, CCIM designees are part of a global network of real estate professionals. The CCIM designation is recognized and respected around the world, and CCIM designees have access to a wealth of resources and opportunities through the CCIM Institute. This network allows us to stay up-to-date on the latest trends and developments in the industry, and to connect with other professionals who share our dedication to excellence in commercial real estate.
Why should you work with a CCIM designee?
If you're looking to lease, buy, or sell commercial real estate, working with a CCIM designee can give you a distinct advantage. CCIM designees have the knowledge, skills, and expertise to help you make informed decisions about your investments. We can help you identify opportunities that you might not have otherwise considered, and we can guide you through the complex process of buying or selling a property.
In addition to our expertise, CCIM designees are bound by a strict Code of Ethics and Standards of Practice. This code requires us to act in the best interests of our clients and to maintain the highest levels of professionalism and integrity in all of our dealings.
Conclusion
The CCIM designation is a testament to a broker's dedication to excellence in commercial real estate. It requires a significant investment of time, energy, and resources, but for those who earn it, the rewards are significant. CCIM designees have the knowledge, skills, and expertise to help clients make informed decisions about their investments, and we're part of a global network of real estate professionals who share our commitment to excellence. So if you're looking to lease, buy, or sell commercial real estate, consider working with a CCIM designee like me – it just might be the best decision you make.
If you are interested in seeing samples of some of the analysis I do for clients, or would even like to have me do an analysis for you, please contact me through www.atxwarehouse.com and I will follow up with you.
Brian Smith is an investor, developer, and commercial real estate agent who specializes in the industrial market in Central Texas. You may contact him at www.atxwarehouse.com or on Twitter @brianesmith92