Bob Knakal, also known as “BK,” is the Chairman and CEO of BKREA. He has been a broker in NYC since 1984. Over that time, he has brokered the sale of over 2,330 buildings having a market value of approximately $22 billion. For 26 years of those years (1988-2014), he owned and ran Massey Knakal Realty Services, which sold more than three times the number of properties as the #2 firm in NYC from 2001-2014. Running the firm with a “Servant Leadership” management style, focusing on empowering everyone on the team, intensely training them, and building their self-esteem, led to this overwhelmingly dominant platform. The firm was sold to Cushman & Wakefield in 2014 for $100 million.
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John: Welcome to another edition of the Impact Podcast. I’m John Shegerian, and I’m so honored to have with us today, Bob Knakal. He’s the chairman and CEO of BKREA, which stands for BK Real Estate Advisors. Welcome, Bob, to the Impact Podcast.
Bob Knakal: John, thanks so much for having me on. I’m very excited to be here today with you.
John: Well, when I say it’s an honor, it’s an honor because very few times in life do you get to say someone is truly a legend in their industry, and you truly are a legend in the commercial real estate industry. So I just appreciate your time today. Our listeners and our viewers are just going to love to hear your wisdom and your success and your journey. Before we get talking about all that stuff, Bob, could you share a little bit about where you were born and how you got on this fascinating and very impressive journey you’ve been on?
Bob: Sure. Absolutely, John. Well, I was born in Hackensack, New Jersey. Grew up in the town next door, which was Maywood, which no one’s ever heard of. So I usually say the Hackensack area, but a little town like Mayberry, R.F.D kind of. It was a great childhood growing up. The school system was very small. In fact, we didn’t even have our own high school. I had to attend Hackensack high, because Maywood didn’t have a high school. But a great group of friends that I still have to this day that we all went to kindergarten together, played sports after school. The fire department blew the whistle at six o’clock and that was a signal for all the kids to go home and have dinner. So that kind of upbringing. But loved playing sports as a kid. My heroes growing up were guys like Thurman Munson and Bobby Murcer and Reggie Jackson and my Yankee heroes. Of course, Rhod Gilbert and Vic Hadfield and Jean Rattel. Brad Park, Eddie Giacomin from the Rangers. I’ve been [crosstalk]
John: Eddie Giacomin, oh my God.
Bob: Lifelong Ranger and Yankee diehard fans, also New York football giants. So a big sports kid growing up and looked up to the athletes that played in New York. It was a great childhood.
John: We’re the same age, Bob. I grew up in New York, New Jersey area as well. Again, all those names, they bring back all the best memories. We had a good back in ’69 and ’70. When the Yankees were hot, the Mets were hot. In the ’80s and like you said, under the Billy Martin era, but with Reggie and Thurman. Boy, there were some great players on those teams. That’s for [inaudible]
Bob: Absolutely. My first memory of sports actually is the ’69 World Series, Mets and Orioles. In those days, World Series games were played in the afternoon. They weren’t even night games back then. I remember running home from school to watch the World Series with my grandfather, who is a big baseball fan. But that’s my earliest memory of watching sports, was running home to watch the 69 World Series Mets and Orioles.
John: At Shea Stadium.
Bob: At Shea stadium.
John: At Shea stadium. Those were good days. But Bob, who and what inspired you in terms of career paths to choose real estate? Did you go to university in the New York metropolitan area? You went out of the area? What did you do?
Bob: No, I went to Philadelphia. I went to the Wharton School of the University of Pennsylvania. Very fortunate to have gotten in there. I will be the first one to tell you that my grades and academic success did not get me in. I played baseball in high school. I was an all-league pitcher and my high school baseball coach, Dave Seddon had a brother, Bob Seddon, who was the coach at Penn. Probably the best game I ever pitched in high school was the championship game my junior year. Bob Seddon, the Penn coach, happened to be there that day. High school games were seventh-innings back in those days. I brought a nothing, nothing shut out into the ninth-inning. Kid doubles off me to start the inning man on second, the number four batter on Clifton, who we were playing against, squares to bunt, throw a high fastball, kid bunts the ball right back at me. I dove, caught the ball, turned, spun to second, doubled up that guy. The next kid got a hit, so the run would have scored, but we got out of the inning and won the game in the bottom of the ninth, one nothing. Bob Seddon was at that game and I’m convinced it’s that play and that game that got me into the Wharton School. Going to the Wharton School made me want to be an investment banker like every other kid at Wharton at that time. So fresh spring break, freshman year, I drive around Bergen County looking for a summer job that would look good on my resume for investment banking at either an investment bank or a commercial bank. Those banks weren’t hiring any college kids for the summer, but I was in Hackensack and came out of a Paine Webber office. Across the hall, I see Coldwell Banker. So I’m like, “Oh, great, another bank.” So I walk in thinking this place is a bank. I give them my resume. They called me later that day to set up an interview for the following day. It’s 1981, of course, so there’s no internet. I go to the library to look up this bank, see it’s a real estate company. I’m like, “I don’t want to get into real estate.” But they were the only ones hiring college kids for the summer. Took the job, loved it, went back my next summer to run that summer internship program. Then went back my third summer, I got my New Jersey real estate license and I was an assistant, which was called a runner back in those days to an industrial broker, Tom Malaney, who’s still a good friend of mine to this day, and then started with CB in New York when I got out of school in 1984. So it was complete serendipity, complete luck. It was luck that I got into Wharton. It was luck that I thought Gold Banker was a bank and the rest is history. I stumbled into a job completely by accident that I absolutely love more than anything. It’s my job. It’s my hobby. I have loved it every day I’ve been doing it. July 16th, I start year number 41 doing this and I absolutely love it.
John: Just to level set for our listeners and viewers to understand about you a little bit more. Approximately since 1984, you’ve done what? Twenty two billion in transactions and sold over 2,300 buildings?
Bob: Yeah, last Friday I closed sale number 2,339.
John: Wow!
Bob: So that’s more than a building a week, more than 10 million a week for 40 years.
John: Incredible. Over twenty two billion in transactions. When did you evolve out of working for a larger brokerage house? When did you start your own place, Massey Knakal?
Bob: I started at CB in July 16th of ’84. I show up my first day at work and CB had about 50 or 60 brokers that were leasing office space, so about 20 brokers in the retail leasing department. In the building sales department, there were four people. Three of whom had about 20 years of experience and one of whom had just gotten out of a one-year training program, that was Paul Massey. I show up and the boss said, “Hey, Massey just got into sales. Follow him around, he’ll show you where the coffee machine is.” Day two on the job, Paul and I are having lunch and we’re like, “Hey, these guys with all this experience aren’t really talking to us at all. Why don’t we just work together, split everything 50/50, see how it goes?” That was the serendipitous start to a 30-year partnership. A year later, Paul and I were made the heads of that department. So those guys with 20 years of experience were actually working for us. We left CB in November 15th, 1988 to form Massey Knakal. We started with just the two of us and a secretary. We grew the firm to 250 people. We had three offices in New York. The CoStar Group, which is a company that aggregates market data in real estate, started tracking the sales market in 2001. From 2001 to 2014, when we sold the business, the number two company in New York in terms of building sales had sold about 1300 properties. We had sold over 4000. So we lapped the field by more than three and a half times, and this included all the big national firms and global firms. We were eating their lunch every year, 14 years in a row. Nobody came close to us. We sold the business to Cushman & Wakefield for $100 million in 2014. So then I worked three and a half years at Cushman & Wakefield, then went to JLL. I brought 53 people with me, all of whom had been with me at Massey Knakal. I recently departed from JLL and started my new company, which you mentioned, BKREA, doing the same thing that we’ve always done. But I will tell you that, a great story of success is the MK story and what we sold it for and how well we did in terms of selling properties. But the thing I’m most proud of about that experience was that today in the New York City investment sales space, there are 30 businesses where the owner of the business or the person running the division of a larger business, learned the business at Massey Knakal. So we ran the business with servant leadership, wanting to get the best out of everybody, promoting them, building their self-esteem, backing them up, wanting each one of them to do better than we did. The proof is in the pudding. Thirty businesses that are run by folks that we trained and taught the business to. That’s the thing I’m most proud of, because we created and helped to create some really wonderful lives for people that have taken the initiative and took what we taught them and turned it into something really great.
John: That’s so important what you just said, Bob, in terms of servant leadership and then how you seeded the whole community, you and I are both sports guys. So really, you became the Sabin or the Walsh or the parcels of the commercial real estate world, because the league, the NFL and college football are seated now all with coaches that came up under those great coaches. So you became not only a great entrepreneur and business person, but also a great coach and teacher as well. What were you teaching them that created such success, not only for MK, but for all these young people who then went on to now are having their own successful entrepreneurial journeys? If you were to say, John, I’m writing a book tomorrow and here’s the top 10 things in the book that I taught at MK, now I’m teaching again at BKREA, what are those top 10 things or top five things or top three things? What are the defining things that make great salespeople?
Bob: Yeah, John, we could talk for several weeks about that. But I’ll give you the highlights.
John: Okay, let’s hear the highlights.
Bob: I think number one is you have to hire good folks that genuinely are hungry, driven, have passion for the business and really want to succeed. The thing that I love about the real estate brokerage business is it is a very pure form of meritocracy. You get out of it exactly what you put into it. So we started with really good raw materials and the makeup of the folks that we brought in. Because real estate is such a competitive environment, we look for people who had that competitive spirit and team sports was a great training ground for this because it’s competitive, you learn to work with other people, this is very much a team sport also. So we looked for those characteristics that we thought would increase the probability of success for folks. Then what we did is we train the heck out of them. The old adage back in the ’80s in real estate was, “Hey, kid, welcome on board. There’s your desk. There’s the phone. Go get them.” That was about the extent of it. But we had an initial success training program with about a 250 page training manual where people had to become a market expert in their geographic territory that they were responsible for. They couldn’t even talk to a potential client or make a phone call until they passed this several week training program. Then we had continual training where we had topic experts come in and give lectures about business ethics and salesmanship and persuasion and human behavior and psychology, and likeability and all these things that increase the probability of success. When constantly training these folks, they got to become technically proficient. Then there’s something that I think is incumbent upon every leader and that is to make people feel good about themselves and build their self-esteem. It’s said that the among the cruelest things you can do to someone is not give them any feedback at all. Positive or negative, that’s better to give negative feedback than no feedback. But we gave everybody feedback, tried to encourage them, built up their self-esteem. This went from everybody to our very top salespeople down to the people that worked in the mail room and were our receptionists and to see the difference in their behavior. We had this guy, Harold, who ran our mail room. This guy took such pride in what he did. We used to send out three million pieces of mail back before email became popular. But he would go to the post office and figure out how if we bundled mail by zip code, we could save two cents a piece on every piece. He had such pride in what he did, and we’d say to him, “Harold, you’re doing such a great job for us. This company wouldn’t be what it is without you doing such a great job.” I’ll tell you, that guy loved it. He wanted to do everything he could to help. When we told our receptionist, “Hey, you know what? You’re the first impression people have of this company when they walk into our office and you always do such a great job of greeting them and asking them if they want water or coffee or if you can take their coat or get them a magazine. For the next several weeks, when somebody would walk through that door, it would be as if a long-lost relative was walking through the door. So, I think a combination of all those things, realizing that people need training, they need to know what to do, they need to feel good about themselves. As you read almost every study that’s been done on job satisfaction, the number one thing everyone thinks, oh, it has to be money. Money is rarely, if ever, at the top. It’s always feeling like what I’m doing is helping the company achieve its objectives. If you don’t let people know that they’re doing that, they will have no idea. So they have to feel appreciated, they have to feel as if they’re important. So we really made a point to make sure that everybody was recognized for the contributions they were making, felt good about themselves. When you make people feel good about themselves, they could achieve unbelievable things. So we always said, do better than your best. If you feel really good about yourself and you get pumped up, you can do better than your best.
John: Right.
Bob: So that was a big part of the way we grew and ran that firm.
John: Bob, you went to Wharton, at the University of Pennsylvania, undeniably one of the greatest higher education institutions in the world. But where did you get what you just said? Where did you get that skill set and that ability to lead like that? Where did that knowledge come from? From your upbringing or were there other people around you in your neighborhood or aunts, uncles, grandparents, where did that come from?
Bob: John, I think that it stemmed from an environment growing up where my folks always told me, do the right thing. Just do the right thing. You’ll never get in trouble if you tell the truth. You never get in trouble if you do the right thing. Do the right thing, whether everybody will know or nobody will know.
John: True.
Bob: I think that laid the foundation, but then it was it was really curiosity. Paul and I always were very big readers and read a lot of books, all the Harvey Mackay stuff, the Dale Carnegie stuff. You mentioned higher education. I think that higher education misses the boat in a big way in what it teaches people. Most of us in our professional lives deal with people and yet very little is taught about likeability, how to develop a relationship with someone, how to ask probing questions so you can really get to know them so that you can find the basis of a strong bond that enhances a relationship, persuasion, why people do what they do, the psychology. Because if you think about it, if you’re in a sales position, and I’m sure that there’s a lot of sales in your company as well. All we try to do as salespeople is get the switch inside somebody’s head to go the direction you want. It’s either going to go to yes or no. How do we influence that switch going the way that we would like it to go? All of these things that I mentioned help with that. There should be a curriculum in college surrounding this, because I think if you’re in a profession where you’re dealing with people and almost every profession you do deal with people. I think that skill set is tremendously valuable, much more so than understanding whether prepaid rent is a debit or a credit on a balance sheet, unless you’re going to be an accountant.
John: True. But let’s talk a little bit about that, generationally speaking, how things have changed generationally. You and I are the same age. We’re 62. So when we were kids, back when we were 22 and 23 back in ’84 and ’85, and I was working for my pops in the advertising business and you had just started your real estate career. Everything that was valuable was done face to face, nose to nose. As you and I know, the technological revolution comes in ’98 and Google’s founded in ’98 and beyond. People became more and more isolated, leading up to the pandemic, which only accelerated this isolation. So I now have to keep coaching the next generation of young people in their 20s that sell for us and have customer service and go, “Hey, get your face out of Facebook and go meet with people face-to-face.” Is that part of your coaching now? Whereas we didn’t have to coach that 40 years ago, that was the only way we all could do business. There was no cell phones or text messages or anything like that, or Zooms that you and I are on today. But now that all this technology exists, is coaching that face-to-face and in-person relationship, part of your curriculum also, as you train the next generation of salespeople?
Bob: Yeah, in the real estate business, and I haven’t really thought about it, but you probably could extrapolate it to any sales business.
John: Right.
Bob: There’s something called market presence. Market presence revolves around being top of mind. Look, there are thousands of people that want to sell buildings in New York City. People rarely sell buildings in New York City as an owner. In fact, using Manhattan as a microcosm of the entire market, south of 96th Street, which is the prime part of Manhattan, there were 27,649 buildings. The average turnover of that stock on the average year is 2.6%. It tells you a couple of things. Tells you, one, people are not always selling and number two, on average, when someone buys a property in Manhattan, they own it for 40 years. So they’re not always transacting and you have to put yourself in a position to make them think of you when they do want to sell. So in order to do that, to remain top of mind with people, you have to do these market presence things. Market presence things include making cold calls and prospecting calls, sending out email blasts, sending out texts, sending out hard mail, which we still send a lot of hard mail today, I think it’s very underrated. Going to networking events, setting up meetings to meet people face to face, which is the best interaction you possibly could have with people, but being on social media, doing all these things so that you’re constantly reminding folks that, “Hey, I’m here, I can help you. If you ever have a need, come talk to me.” But that face-to-face interaction is the best type of interaction you possibly could have. Much more meaningful. I’d rather meet with somebody once than have 10 phone conversations with them. It’s so much more meaningful. Then understanding the skills of finding out someone’s hobby outside of the business interaction is, so that you can draw a bond. Now, you and I we talked a few minutes about sports, right? So if you and I get [crosstalk] together for a cocktail, we’re going to talk about the Yankees and the Rangers for probably a half hour before we start talking about business, right? So when you have that kind of rapport with someone, that creates the basis for a very strong relationship, a strong bond and then once you have that doing business becomes so much easier.
John: Got it. Yeah. For those listeners and viewers who’ve just joined us, we’ve got Bob Knakal with us today. He’s the chairman and CEO of BK Real Estate Advisors. To find Bob and his colleagues, please go to bkrea.com. Bob, I’ve read so many stories about you over the years, so today is truly a delight for me. But one of the things I read about you, and I thought I did this well, but you own this whole sector. This was my business card for the last 20 years or so. It’s a small business card because we’re in the recycling business so we’re trying to save carbon footprint. This became very memorable because people would say, I can’t read it and all that other kind of fun stuff that comes up from that. Talk a little bit about again, creating a connection and likeability, and building bridges with people you meet. What’s your business card look like? I know, but I want you to share what your business card looks like.
Bob: Yeah, my business card is actually an eight and a half by 11 baseball card, which has all my statistics for 40 years on the background. I’ll tell you how it came about, actually.
John: Okay.
Bob: I have a client here in New York that I’ve done several deals with over the past three decades or more. I hadn’t done a deal with him in a while, but yet saw him all the time, because we both sit on the executive committee of the Real Estate Board of New York. So I see him every month. Normally when we see each other, it’s, “Hey, how are the kids? How’s the boat?” Not really talking about business that much. I bumped into him on Park Avenue one day and we started talking about business. So I said to him, “Hey, what are you going to do with that big piece of land you have in Long Island City?” He said, “Oh, I’m going to start looking for a construction loan because I’m going to start building.” So I said, “You really should talk to our mortgage brokers.” I was at JLL at the time. I said, “You really should talk to our mortgage brokers. They’ve done some construction loans recently and maybe we could help you.” He said, “Oh, Bob, thanks so much. But I’ve already decided I’m going to go with JLL.” I said, “I’ve been at JLL for over four years.” He’s like, “Oh, I thought you were still a Cushman & Wakefield.” So, I said, how do I convey the message where I am to this guy in a funny way? As a kid, I always collected baseball cards. I was one of those kids that always looked at the back of the card more so than the front of the card. I said, “You know what? Why don’t I just put in the back of the baseball card, it said what teams you were on in different years and what your stats were.” So I put this baseball card together on the back. I put all my statistics, what companies I was at, what years, etc. I was just going to do one and send it to this guy. The kids at the office said, “Hey, BK, this is the coolest thing we’ve ever seen. You got to do a ton of these and get this out.” So I said, “What the heck?” So I did a bunch, sent them out, and it just has gone viral, I guess. Now I think I’ve done the fourth one which is the 1972 tops. They’re all based on real baseball cards. The first one I did was the 1970 tops. Then I did 1968. I’m on 1972. I’ve also done 1974. All the years that I collected as a kid which [crosstalk].
John: Sure.
Bob: I’ve probably autographed 25,000 of these things.
John: Wow!
Bob: My best signature story of signing one of these things is there’s a guy named Don Tepman who goes by Strip Mall Guy on Twitter. He and I hosted a Black Pie gala here for social media back in April. I had an open house at my office, which is the map room. One of the folks who’s really getting very seriously into real estate is Justin Pugh, who is an offensive lineman for the New York Giants. So, he comes in and say hello so great to meet you. I said, “Great to meet you. I’ve been a giant fan my whole life. “
John: Right.
Bob: He’s like, “Hey, BK, I got to ask, could you please autograph one of your baseball cards for me?” So I have this great picture of me signing an autograph for this active NFL player. He’s making a funny face and it just was really a riot. But it’s caught on.
John: So what year did you start? I want to just understand. What year was the baseball card launched? That idea, was that still [crosstalk]
Bob: That was probably three years ago. It commemorated the sale number 2222.
John: Got it.
Bob: I think it was about three years ago that we did [crosstalk] the first one.
John: We’re going to come back to likeability and exposure in a little bit, but you just mentioned the very important map room. Explain what the map room was because in my brain, when I think of Bob Knakal and all the information I’ve years, they’ve shown pictures in the newspapers before of you in the map room. Talk a little bit of what the map room means and why that helps set you apart from all your competition.
Bob: Yeah. Well, John, what it all revolves around is that right from the very beginning, I’ve always said, I’m not in the real estate business. I’m in the information business.
John: Right.
Bob: Real estate just happens to be the stuff that the information is based on. But market knowledge, expertise, all the things that differentiate you from others in the business come down to the information you have, the quality of the information, the volume of the information you have. One of the things that I sell a lot of is land in New York. In order to understand the value of land, you need to know what else is being built. What is this to be built building going to be competing with when it’s finished? Surprisingly, there’s very, very little information available in New York City about the supply pipeline of new buildings being built. So I said, how can that be? If you’re standing in front of a building, you can see whether it’s under construction or not. I said, for 10 years, I wanted to go out and count every building. During the pandemic, the city was absolutely a ghost town. There were no stores open, nobody on the street, no cars on the street. It occurred to me, you know what? This would be a perfect time to go walk around the city and county buildings. So I had copies of this Sanborn map, it’s called, that has information about every tax parcel and the diagram of the building. I took these copies into the street. I walked every street of Manhattan, south of 96th Street and 110th Street, logged every building that was under construction, every building that had been demolished, every potential development site, every potential assemblage site. Assemblage sites are sites where you could purchase three, four, 10 buildings and knock them down and create a piece of land. I had all these pages with all these highlights on. I highlighted different types of buildings and different colors and started taping a couple of them together to say, “Let me see what’s happening in this neighborhood. Then I got two together, then four together, and then I did another neighborhood. Before you know it, I had taped the whole thing together and I have this map that’s 24 feet long and 10 feet wide that has identified every development opportunity in the city. We spent 220 hours out in the field walking the streets. We followed it up with about 3000 hours of research on all of these. Since we did the fieldwork, we’ve been tracking every demolition permit, every building permit, every foundation permit that the city has issued. So we have taken this information and disaggregated it into five main buckets, residential rental land, residential condo land, hotels, offices, and a miscellaneous bucket. Today we know what is being built down to the square inch in every one of these buckets. That puts us in a position to really be able to more accurately analyze land than anyone else in the city. That’s part of the passion that I have for the business and the love I have for the business. I thought it was the coolest thing ever to get out there and walk around the city and be on every block. But it’s created an information resource for us that really differentiates us very significantly from everyone else. Now I have clients come into the Knakal Map Room. They don’t want to leave. We talk about every neighborhood and things they’re doing, and things that we’re doing. It’s really a great client magnet who love to come in, who want to learn about the market, teach us about the market. Like I say, it’s all about information and this one giant piece of paper has more information on it than probably any other piece of paper in the city.
John: As you and I know Bob, the internet has pretty much democratized information. You then hit the streets and you did something very unique and put the time in an analog way to get and create a differentiator again, for you and your firm that separates you from the competition. As you say, information’s power. Because so much information though is now online and accessible, and the AI seems to be, again, another democratizer that’s going to be leveraged more and more in your industry and most industries. How many of your jump does that map room give you on your competition right now because you have it and nobody else does?
Bob: Well, look, people know, look, you know about the map room, right?
John: Right.
Bob: A lot of people know about the map room.
John: Right.
Bob: So it’s already something folks are talking about.
John: Yeah.
Bob: But I will tell you that over the course of my career, my success rate on pitches for trying to get business has historically been 26%. In the map room, I’ve given 17 pitches. I’ve gotten 17 exclusive listings. I’m undefeated in the map room. So that says everything you need to know.
John: Everything.
Bob: [Inaudible] another broker who’s walked every street of Manhattan and has looked at every single building, and I’ll be impressed.
John: So really what you’re saying for those out there in customer service and client relations and sales, they have to create, they should create their version of the map room for their industry, and they could therefore increase their odds of landing more business.
Bob: Yeah, John, everything we do is about delivering the best possible results for the client. [Crosstalk] It’s all about the client. [Crosstalk] So what do I do? I try to put my clients in a position where they can make the most informed decision that they possibly can. Clearly, the more information you have, the better decision-making ability you have. So, I try to arm my clients with as much information as they can possibly have to make the best possible decisions for themselves.
John: Right. Right. So now you sold MK with your partner, Paul, in 2014 for, I don’t think I’m saying any secrets here, talking out of school, $100 million plus. Now, for a lot of people at 52 or so, that would have been enough, and you could have been just fishing or whatever you’ll dig to do the rest of your life. Talk a little bit about now 10 years later, after working for two great firms, Cushman and JLL, you’re now a new entrepreneur again, all over again at 62. Talk a little bit about that process. Why do this and why you’re so excited about the new launch of your wonderful new brand, bkrea.com, BK Real Estate Advisors?
Bob: Sure. Well, John, I will tell you, like I said earlier, selling buildings for me is a career and it’s a hobby. I absolutely love doing it. They talk about kids today on cell phones, and they use this expression, the dopamine rush [crosstalk] that you get this positive rush from certain things that you see. I think the brokerage business for me gives me that same opportunity. There are many, many opportunities to win. Just like winning a sports game as a kid, getting a hit or a do throwing a great curveball and striking somebody out. Those are things that give you that dopamine rush. Well, in brokerage, I get that rush from finding out somebody wants to sell their building. I get that rush when I give the presentation, they say, yeah, Bob, we’re going to hire you. I get that rush when you’re negotiating with somebody, and you finally get a meeting of the minds between the buyer and the seller. Then you get the same rush when you get the contract signed and then when the deal closes. So, there are so many opportunities to win. I think that that winning gives me that dopamine rush that keeps me keeps me going. I’ve been very, very lucky. God has blessed me with a tremendous amount of energy. I feel like a young kid. Today, in some ways, I have to tell you, I almost feel as if I’m starting my career all over again. I have the new company. There are several new policy initiatives that the city is implementing that is basically putting everybody on a level playing field today because these initiatives are so new. But I’m getting out ahead of the curve, understanding all of these programs, how they work, how they can benefit people. I just think it’s the coolest thing ever. I talk for a living. I’m not doing manual labor. So as long as I can talk, I can do this and it’s so much fun. Why would I ever stop?
John: Hey, listen, I’m with you. We’re both 62 and I have no intention of stopping. We were team, we were having a little chat online before we started taping today. We talked about Charlie Munger. He was still going strong 34 days before his 100th birthday. Why not? If you can do it, why not? That’s not by accident, you’re healthy and full of energy. One of your trademarks is your famous desk. You have the sole horse desk. Talk a little bit about what the sole horse desk is and why again, you’re able to maximize your time while you get to enjoy [crosstalk]
Bob: Well, one of the things I love, people ask me about my life and my habits. I always wake up early. I get my work out in. I love to work. I love to spend time with my wife and my 15-year-old daughter, Sophie, they’re the loves of my life and the most important things in my life. I go to church and that’s my life basically. So, I try to get a lot of cardio in. I have an arthritic L2 and L3. So, my doctor wants me either on an elliptical machine or a bike. When I’m doing the bike, I’m like, hey, I got to figure out how to multitask. It’s a little boring after being a runner for so long. So, I created a sole horse desk that I can put my laptop on, and I can be on the bike for two or three hours and just do emails the whole time. It makes the bike tolerable, get some work done, and I think it’s important to stay in shape.
John: Bob, it’s your line that says, it’s not who you know, it’s who knows you. We talked a little bit about the likeability factor, getting out in front of people. One meeting in person is more important than 10 phone calls. Talk a little bit about the rise of social media and also the rise of the television broker. I’m not talking about the television broker, I’m talking more on the home side, the residential side, of course, the flags and the Altman’s and the Tracy Tutors and the Ryan Serhants of the world. Talk a little bit about how is that applicable to you and how are you going to leverage now social media, which didn’t exist in ’84 when you first started your career, but now you’re seen to master the analog world. What’s your vision of the social media world and the television world and how to leverage that to help your new venture, BKREA?
Bob: Yeah, well, John, it’s a really interesting concept. I had always poo-pooed social media. I said, what are people doing on social media? It sounds like such a ridiculous waste of time. I’d be out for drinks with friends in the business, and we’d talk about deal stories, and they’d say, “Oh, that’s such a great story. You should really be on social media and share that story with people. ” So finally, I succumbed to peer pressure, said, all right, let me try it for three months, see what this is all about. I looked at the lay of the land, what other brokers were doing. There was a lot of, hey, I just listed this, or I just sold that and not many details about what they just sold other than the price and the size of the building. I said, you know what? What people seem to be really the most interested in is what happens behind the scenes? What was the seller really thinking about? What was the buyer really thinking about? Were they telling the truth? Were they lying? Were they spinning things? I thought maybe sharing deal stories would be an important part of what we did. Also I love teaching, so maybe have my Knakal nugget series where I talk about things I’ve learned over the years. I’d just been shocked at the traction that it was getting. The first impression I had that really was interesting, I guess I was probably five weeks into social media, and I posted a picture of the map, the first picture of the map, and it was laid out on the floor of my great room in my country house. I was standing on top of it so you could really see how big this thing was. Back in those days, we were posting around ten o’clock in the morning. Now I post at 7:30 in the morning every morning. But we were posting at ten o’clock. So, the picture went up, I think it was on a Wednesday. I was in the JLL offices and by eleven o’clock, probably eight people had stopped me and said, “Hey, I saw a picture of that map. That was so cool. Tell me about it.” Two things occurred to me then. Number one, I said, “Wow, this social media really has some tremendous reach.” The second impression I had was, what the heck are these people doing on social media between ten and eleven o’clock in the morning on a Wednesday? Don’t they have some work to do? So, this is shocking how much reach it has. I’ve made so many great relationships through it, come across so many great opportunities that I wouldn’t have had otherwise. I’m a big fan, big fan. In fact, there’s an organization called CREI commercial real estate influencers on social media. By 2024, I was the number two influencer on Twitter and the number one influencer on LinkedIn. So, I guess people are [crosstalk] enjoying the stuff that I’m doing, and it’s just been a neat thing. I’m really, really enjoying it. I learn a lot from it. Hopefully I teach a lot from it, and it’s been a great experience.
John: They’re liking it. Are liking the presence. Is AI going to play a big role in the scaling of BKREA?
Bob: Huge, huge. Again, apropos of the map itself, I’m about as analog a guy as there is.
John: As am I.
Bob: The technology is not my friend. I’m happy my cell phone goes on in the morning. But I’m a big fan of Dr. Benjamin Hardy and Dan Sullivan’s books. One of them is “Who Not How.” The thesis of that book is when you say to yourself that’s a really good idea, I should do that and you ask yourself, how am I going to do it? You’re asking yourself the wrong question. The question should be, who am I going to get to do that for me? So, when it came to AI, I work with a broker coach and have since 2011, Rod Santomassimo at the Massimo Group. Rod is probably the leading authority on AI and in real estate. Just talking to him. I said, “You know what? This AI thing, it’s unstoppable. It’s so powerful. I have to get on board with this. But I’m not going to take the time to learn this or figure things out. Let me hire somebody who’s an expert at this.” So, I hired Seth Samowitz, who’s my COO, who has started AI companies. He worked in the driverless car business. I figure if this guy could teach a car how to drive itself, he can figure out how to sell a building. So, we’re using AI in three ways. We’re using it on the prospecting front to make prospecting more effective and efficient. We’re using it on the deal execution front to make that process more effective. Then we’re using it on the data interpretation front, and the potential there is just really, really amazing. It’s going to generally be very hard for the real estate industry to use it because most data sets in real estate are not very good. Fortunately, our data sets are good. We’ve done things using the same methodology for 40 years. So, there’s a lot of integrity in the relationship in our data sets and the relationship between the numbers is really what matters. The absolute numbers are not nearly as important as the relationship between the numbers and seeing are they going up, are they going down, how much are they going up, how much are they going down. So, we’re really excited about the potential that it has and we’re coming out with something called the Knakal Land Index, which looks at fluctuation in land value in Manhattan over the past 40 years. I looked at the first run of it, and we’ve been working with data scientists for about a year now on this, and we’re just starting to get some results getting spit out. It is mind blowing what this stuff can do. I can’t wait to show it to clients because they’re going to be blown away.
John: Talk a little bit about your 2,300 and now 39 buildings that you’ve sold. Are they mostly in the in the five boroughs in the island of Manhattan or is that outside New York as well?
Bob: Mostly in New York City and mostly in the four boroughs, the Staten Island market. No disrespect to Staten Island, but Staten Island operates more like New Jersey than New York.
John: Right.
Bob: But mostly [crosstalk] in the four boroughs, I’d say, 97, 98%. Back in the early days, we did some stuff out of town, but I don’t do anything out of town. I don’t think I’ve sold a building out of New York City in many years.
John: Bob, where were you on 9/11?
Bob: I was in my office at 18 East 41st Street and out the back of our back windows, we actually could see the North Tower, saw smoke coming out of it. I remember back in those days, I used to listen to Howard Stern on the radio. At first they were joking about it, thinking that a small plane had hit into the World Trade Center. Then clearly, it became obvious it was a much larger thing. It was really a shocking, shocking thing. The city shut down immediately. We immediately ran out to buy sandwiches and food and beer and other drinks for folks who if you lived out of Manhattan, you were spending the night in the office, probably. We scurried to get hotel rooms to the extent we could for our folks. But I remember being in the office until about two o’clock. At the time, I lived up at 300 East 59th Street, which is at 59th and second right by the foot of the Queensborough Bridge.
John: Yeah.
Bob: The tunnels were shut down. The subways were shut down. People from Manhattan that lived in Queens had to walk over the Queensborough Bridge and try to walk home, get picked up by people on the other side of the bridge. John, I will never forget, walked over from 41st Street over to 2nd Avenue and then started walking north on 2nd Avenue with hundreds, hundreds of people walking up 2nd Avenue to the bridge. Every fourth or fifth person covered in ash head to toe and with the hundreds of people that were on the street you could hear a pin drop. Nobody was saying a word. Self-service was knocked out. So, nobody was talking. You heard footsteps and that’s all you heard, but nobody saying a word. The city smelled of electrical fire. It was a very tough time.
John: What did the recovery look like and how did you prepare your team for that recovery period since we were in uncharted territory?
Bob: Yeah. Well, don’t forget, we were in the midst of a recession nationally at the time. We had 9/11 happen. We had the dot-com bubble bursting. A year or two later, we had the Russian ruble crisis. We had a lot of things going on. One of the things, it actually was a tremendous inflection point for Massey Knakal because what happened shortly after 9/11 is every company started downsizing. They were laying people off. You had really great, highly qualified people that were out of work. They were brokers, attorneys, bankers, lawyers. Paul and I said to ourselves, you know what? This could be the opportunity of a lifetime. We said, we started the business November of ’88, by September of ’01, we had 21 people. So, in 13 years, we went from three to 21. Up to that point, Paul and I had interviewed every candidate ourselves. We said, you know what, let’s go out and hire a director of HR and hire all these people, these great qualified people and have them sell real estate. New York is tough. New Yorkers are tough. We’re going to come back. We’re going to come back strong and let’s go hire all these people. Two years later, we had 150 people. We had opened an office in Queens. We opened an office in Brooklyn. So, September ’01, we have 9/11. And by early 02, we go on this hiring binge. Hundred-and-fifty-people market. It’s a little squishy. By 2003, the market starting to really come chugging back. Other companies waking up saying, “Hey, maybe we should start hiring some people.” We had hired them two years ago. We train them, put them out in the outer boroughs. Market comes roaring back. That’s when we really started to clean up. ’04, unbelievable, ’05, unbelievable, ’06, unbelievable, ’07, unbelievable. We were just so well positioned and that move could have sunk us, but [crosstalk] the market didn’t come back. We were in deep doo doo. We really believed that the city was going to come back strong and we got very lucky with that move. It served us really well. Luckily [Crosstalk] By ’07, we had such a dominant position in the market that CBRE came to us and offered us $50 million at the time. So, we’re like, wow, that’s a lot of money. Started talking to them. For a variety of reasons, that transaction didn’t happen. But what we learned from that was that when we did sell the company, we would be on five-year contracts with whoever bought us.
John: Okay.
Bob: We looked ahead, and we said, okay, well, Paul, who’s two years older than me, turning 55 in 2015. People are going to feel like these contracts are worth more and we’re going to be much more productive if we’re in our 50s and if we’re in our 80s. So in 2014, if the market doesn’t suck, we should really think about selling the firm. This was decided in late 2007. We get to 2014; the market is humming. Little did we know, it probably was the absolute best time ever you could have sold a company because there were more buildings sold in New York City in 2014 than ever before in history. Five thousand five hundred and thirty-four buildings sold. That was an all-time record by more than 10%. We’ve still never come close to that. Absolutely perfect timing, but not because we were so smart, just because we decided that in 2007. Again, got very, very lucky. I got to tell you, luck has played a very, very pivotal role in my life. I do believe that the harder you work, the luckier you get. But I think you really have to have a little bit of luck on your side also.
John: Well, you’re very honest and also, you’re very humble. But the truth is, any entrepreneur who doesn’t give luck its due is just not being honest with themselves. It all takes a little bit of luck for all of us to break out. You listen to Bruce Springsteen talk about his career, he goes, “There’s a lot of guys that sang better than me down at the Jersey shore and play the guitar better than me.” He goes, “Why me? I don’t know. I just wanted it more. Who knows? But there were more talented people than me.” Same thing could be said for you, Bob. You really wanted it that bad and you also position yourself and your firm to be in the right position at the right time and right place and it will work. Talk a little bit about analogous situation. Not analogous, but the bookend crisis of the pandemic. Where are we now post-pandemic as we were in post-9/11? Now we’re living through these hype cycles of the election, which will get resolved one way or another in November, God willing, and the interest rates, that bubble, that hype cycle will bust too in the near future. But we’re in the middle of it now, and all these externalities plus post-pandemic still, plus post-WeWork world. Where are we now with regards to New York real estate and your view on it and the future of New York real estate as it stands today?
Bob: Yeah, well, I’m a big believer in New York. I always say never bet against the city.
John: Right.
Bob: We do have our issues, mostly. The biggest problem the city has actually, John, is voter apathy. Only about 14% of our registered voters actually vote. That’s a problem. [Crosstalk] But the real estate industry is such an important part of New York. If you look at real estate taxes, mortgage recording taxes, transfer taxes, other charges and fees, real estate contributes 54% to the city budget. So, the fact that our policymakers don’t embrace the industry is really perplexing to me. But it’s almost as if real estate folks have a black hat on here. A lot of politicians won’t even take campaign contributions from real estate folks. So that’s a whole other issue. But it’s looking at the market itself. I think this correction that we’re in now, which really is completely unnecessary, what the Fed did with their interest rate policy. Only about 20% of our broader economy is highly correlated to interest rates. 35% of our economy is healthcare and education, which doesn’t care what interest rates are. So, the real estate industry has been disproportionately negatively impacted. That being said, this correction is very different from the last four in that and going all the way back to the SNL crisis in the early ’90s. During the past four corrections, every product type was going down in value just to differing degrees. Today, different segments are moving in different directions. Our industrial market is very strong. Unfortunately, it makes up only a very, very small slice of the New York City market. Our retail market is strong. Our hotel market is strong. If you look at multifamily, we have significant political headwinds in that space and refinancing risk is very, very difficult today. We have a situation where almost every refinance is a cash in refi, that’s creating significant challenges for owners. Then you look at our office market, which everybody talks about. I think it’s very important to differentiate between class A new construction office, which is doing relatively well and then it’s the B and C office stock that’s really getting hurt. I think we’re going to see unprecedented turnover within that BNC office class, mainly because the prices were so high. Buildings are selling for $700 and $800 a foot. They’re selling for $200 and $300 a foot today. So, I think we have what is a generational buying opportunity. I always said the savings along price was the best buying opportunity I ever saw. I think that today’s opportunity is even better. I think that people should be buying. Four or five years from now, everybody’s going to look back and say, why didn’t I buy everything in sight in 2024 and 2025? Just to show that I’m not just saying something that’s self-serving, and I should say just because something’s self-serving doesn’t mean it’s not true. But I also tell sellers that you shouldn’t sell today. That unless you have to sell or have a very compelling strategic reason to sell, don’t sell. But it’s an interesting market. I think we are at or near the bottom. We’ll come out of this, and we’ll be in good shape. The market always has been, is, and always will be cyclical. It will come back. Just a question of when.
John: New York is obviously your hometown, and you have an encyclopedic knowledge of everything going on there, which is, as you’ve shared earlier, your strategic advantage. What other markets do you study when you’re looking for trends in which way capital is flowing and sentiment around the world? Are you watching in Hong Kong, London, San Francisco, or are you just really focused on New York and you’re not really looking at those other markets as for trends and for sentiment issues?
Bob: No, we always keep track of capital flows. Capital, it’s interesting. People think that cap rates, which cap rates are the return that you get on a real estate investment.
John: Right.
Bob: A lot of people think that cap rates are dependent upon market conditions and how are rents doing and what are lending rates. I will tell you right now that the flow of capital has more of a direct correlation to what happens with cap rates than anything. If I gave you a billion dollars and said, “Hey, John, you have to spend this on apartment buildings in New York in the next 30 days.” You know what? Cap rates are going to drop regardless of what’s happening with interest rates. Flows of capital is very important. We’re looking at interest rates around the world, getting a sense, but on a very macro basis, very high-level basis. What’s happening with interest rates, what’s happening with flow of capital, what’s happening from a legislative perspective allowing people to get money out of their country. So, we’re keeping an eye on that, but mostly just trying to get a sense of what’s happening in New York, what’s happening with transaction volume, consumer sentiment. But we always look at macroeconomic factors. Also, one of the things we’re doing with our AI application for doing data interpretation is comparing fluctuations in values in various sectors to real estate metrics within that specific sector, but then also a whole basket of macroeconomic factors, interest rates, inflation, lending rates, S&P 500, Dow Jones, price of gold, price of oil, consumer sentiment, to try to get a sense of what metric or basket of metrics might impact the direction the market moves in. We’re keeping an eye on the larger picture, but it comes down to understanding the sale price of a particular asset and why the sale price was what it was is the most important thing that we can look at.
John: Bob, you’re in a city of iconic characters in terms of developers. What’s your favorite story working with a developer in New York City that you’re allowed to tell on air? Or one of your favorite stories that you’re allowed to tell on air?
Bob: Yeah, well, why don’t I say this? I will tell you one of my favorite developers in town is Harry Macklowe.
John: Yeah, sure.
Bob: Harry has a storied career, great guy. I love him because he looks at a building and sees things that others don’t. So, I really admire what he’s done. I also love the hotel developer Sam Chang. Sam, I don’t even know how many hotels, but probably built a couple of 100 hotels in New York.
John: Wow.
Bob: I’ve done, I think more deals with Sam than anyone else. Sam only looks at the big picture. Doesn’t sweat the small stuff. He’s probably the easiest guy in the city to sell properties to. So, I love working with him. Then Gary Barnett at EXTell Development. Gary is probably the smartest developer in the market. He knows the market incredibly well. One of the smartest guys. Yes, I love working with people who are so creative. To be a developer, you have to have optimism, capital, creativity, ingenuity. Gary’s probably one of the best land assemblers in the history of New York. I shouldn’t have said anybody’s name, because now I’m thinking of 20 names that I should say.
John: That’s okay, though. That’s okay.
Bob: People are going to get mad at me. But it really is just a tremendous group of folks that operate in the city. It is just so much fun to be dealing with them regularly.
John: Bob, when you go to bed at night thinking about what you can do with BKREA, BK Real Estate Advisors, and for our listeners and viewers to find them, they could go to bkrea.com. It will be in the show notes as well. What’s your goal? What’s your dream? Where are you going to go? What do you think in three-year increments, five-year increments? Where can this be in the years ahead?
Bob: Yeah, John, you know what? I haven’t given that all that much thought. My departure from JLL was sudden, so I haven’t had a lot of time to think about this.
John: Okay.
Bob: I know that personally, again, getting back to the tie with baseball. In baseball, getting 3000 hits is a big milestone. I’d love to get to 3000 buildings sold. That would be a neat thing. But I just want the company to continue to do a great job, serve clients well, help clients in any way we can, and continue to be positive. I have some young folks that are working with me. I want to try to help them create great lives for themselves. So just stay on track, keep doing what we’re doing, and we’ll see what the future holds.
John: How many Yankee or Giant games you get to go to a year in person?
Bob: Well, I usually go to two or three Yankee games, usually hit one Giants game, but I’m a season ticket holder for the Rangers since 1984.
John: Wow.
Bob: That’s one of my favorite things. My little girl Sophie is a huge hockey fan.
John: Is she really?
Bob: She knows more about the sport than I do. This year she watched the draft.
John: Wow.
Bob: I’m looking over her shoulder and she’s like, “Hey, dad, that’s, [inaudible] from Sweden. I think he’ll go in the sixth round to Vancouver because they need a sixth defenseman.” I’m like, “What? What did I do here?” She plays ice hockey too, which is great.
John: Oh, kidding. Oh my, she doesn’t dig Aaron Judge though? She doesn’t love Aaron Judge?
Bob: Oh yeah, love. She has a Judge [crosstalk] I’m bringing her up right. She’s a good New York sports fan.
John: I love it. Bob, thank you. Just like I said at the top, it’s just a joy speaking with you. I could talk for hours and hours with you and hopefully I get to shake your hand one day in person. For our listeners and viewers to find Bob and his newly launched firm, BKREA. BK Real Estate Advisors, please go to bkrea.com. It will be also in the show notes. Bob Knakal, it’s very rare when I get to speak to a legend. You are truly a legend and it’s just an absolute joy and an honor to talk to a fellow New York, New Jersey and then, that’s done so well and done so much, but there’s so much to learn from you. I learned a lot today. I’m sure our listeners and viewers learned a lot today. I just wish you continued good health and tremendous success in the future.
Bob: Thanks so much, John. Thank you so much for having me on today. This really was very enjoyable.
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