Knakal: Ashley, I could not be happier. After spending nearly 10 years at global companies, it feels great to get back to my entrepreneurial roots. So my happiness quotient is extraordinarily high, and it is certainly having an impact on our production. We are about 15 strong now and we have recruited smart, hungry, hard-working folks who are passionate about what we do. We have integrated the newest technologies and have completely embraced AI. In fact, my first hire was my COO, Seth Samowitz, who is an AI guru. He has started AI companies and worked in driverless cars for six year. We always say, if he could make a car drive itself, he can help us sell buildings.
Our production, thus far, has been much better than we expected. We have closed on the sale of 9 buildings for just over $200 million and have 47 exclusive listings, aggregating to about $2.5 billon. We currently have 3 deals under contract and contracts out on 8 more. We are feeling very good about the future.
Knakal: We saw development as a gigantic opportunity. Selling development sites has long been part of my practice. Today, the world is changing and fundamentally so. City of Yes has been the most impactful change to our zoning resolution since 1961. We have a new tax abatement program for new construction (485X) and a new tax abatement for office to residential conversion (467M). Inclusionary Housing Bonuses (IHBs) are out and Universal Affordability Program Bonuses (UAPs) are in. These programs are complicated and difficult to understand. There are some holes in the operating procedures that are still being worked out. Midtown south rezoning, if passed in its current form, will have a profound impact on the Garment Center. Probably half of the stock may be demolished within the next 10 years if it passes.
To meet these challenges, we formed a BKREA Policy & Development SWAT Team. We have policy and zoning professionals of all types in-house so we can fully analyze a ground-up development opportunity or an office-to-resi conversion within a couple of days. That’s a competitive advantage for us.
Back in the Massey Knakal days, we were different because of our territory system. Today, we are trying to be different by doing brokerage like a developer would, not how a broker would. Thus far, it has been very effective.
Knakal: Not at all. I was really doing the exercise of looking at every building under construction to better understand the supply pipeline and, therefore, land values. It morphed into color coding a map so I wouldn’t have to write neatly and risk not understanding what I wrote. I then started adding layers to the data. Then taped pieces of the map together to see what was going on in different neighborhoods. Before I knew it, the map was 24’ long and 10’ wide.
Initially, I rolled it up on a wooden closet rod. It barely fit in the car. And almost no clients had a conference room table large enough to roll it out completely. Then I got caught in the rain one day and that was that. The map needed a home. I approached JLL about giving me 600 square feet to display and work on the map, but they didn’t see the value in it and if they gave me 600 square feet, would they have to give everyone 600 square feet. I took a 600 square foot space outside of JLL’s offices and The Knakal Map Room was born. I let JLL know I had the space, per NYS licensing regulations, and spent three days a week over there.
When I am making calls, I am often on top of the map looking at the subject property. It has been a great resource and we haven’t lost a pitch in there yet. We are currently 35 for 35. Of course, we will eventually lose in there but our winning percentage will be much higher than it has ever been in my career. My only regret was that I didn’t do this 30 years ago.
Knakal: Social media is really a remarkable thing. For years, I thought it was a total waste of time. Then, succumbing to peer-pressure, I gave it a shot in January of 2023. I was going to give it 3 month to see how it would go. About 4 weeks in, I posted a photo of my standing on the giant map. Back in those days we were posting at 10am EST every day. Now we post at 7:30am. So we post the photo of the map and two things really jumped out at me. Before 11am, about 8 people at JLL came up to me and said something like, “Wow, that picture of the map is really cool.” The two things I immediately thought was, 1) a lot of people look at social media, and, 2) what the heck are people doing on social media between 10am and 11am on a Wednesday morning? I figured if it was like that at JLL, it was probably like that everywhere.
If you follow me on social media, you know I am a big proponent of: “It’s not who you know, its who knows you.” Social media is a great way to get people to know who you are. There are lots of people out there. 250,000 investors own the 167,000 investment properties in the 4 boroughs (not including Staten Island). I make a lot of prospecting calls but I cannot call 250,000 people. Some of them have to call me. Social media helps with that. A single post can get over 100,000 impressions and that dynamic is very powerful.
Knakal: That really depends on what sector of the business you are talking about. One of the most interesting things about the past couple of years, is that during past corrections, all property types were moving in the same direction, and that was down, just to different magnitudes. Today, different sectors are moving in different directions and that makes understanding the market much more challenging. Currently, in New York City, retail properties are on the upswing. So are industrial properties, land and hotels are probably the hottest sector in the market. On the other hand, our multifamily sector is still facing tremendous headwinds and public policy is not helping. In fact, our multifamily market, in New York today, is more highly correlated to public policy than even to supply and demand. That should not be the case and is the main reason why our housing is so expensive in New York.
Our office sector has two distinct silos. Class A, new construction, office is doing relatively well. It is the Class B & C product that is still facing challenges, and I don't think we have seen the bottom yet as, almost every week, we are hearing about another deal that is being done at an even lower price. This flies in the face of the increase in leasing activity we are seeing, but is the reality.
So, the answer to your question is that it really depends on what sector of the market you are talking about it is misguided to try to paint current market conditions with a very broad brush if I tried to do so I'd say we are at or coming out of a tough period of time and things are generally trending better.
Knakal: We are so thrilled to be a client of yours! Crexi is such a great platform that we use on a daily basis. We have all of our listings posted with you guys and we have gotten such great feedback from buyers that we were previously unfamiliar with. That is so important as we always look to maximize the number of investors looking at our deals. That is in our clients’ best interest and using Crexi is a great way for us to get the property out to a massive audience. The search function is very user-friendly, and you have created an open marketplace on which we can very broadly market our exclusive listings. You guys have tons of users/investors and that is great in terms of our objective of maximizing the exposure that our listings get.
We also love that you get our properties in front of folks that are proactively looking at similar types of deals. Our investor list grows weekly and investors who come to us via Crexi are very high quality.
We also do a significant amount of research on your platform as the data is really outstanding. We are thrilled with your platform and are using it at an increasing rate every week! We always say
Crexi is “The most powerful platform on which to prospect, evaluate, connect and close any commercial real estate transaction”, and that couldn’t be more true.
BKREA is an investment sales firm which exclusively represents sellers of investment properties and development sites in New York City.
BKREA is an investment sales firm which exclusively represents sellers of investment properties and development sites in New York City.
To contact Bob Knakal:
Crexi is the most powerful platform on which to prospect, evaluate, connect and close any commercial real estate transaction.
To contact Ashley Kobovitch:
Get tailored industry and listing news, Map Room, and Bob Knakal's insights in your inbox!
Follow us on
.avif)
