WS1866 Tips to Grow your Real Estate Firm | Bob Knakal

In this episode Whitney interviews Bob Knakal, a real estate expert who has achieved remarkable success in New York City. With over 6,000 transactions worth over $23 billion under his belt, Bob shares his strategies for growth and how he and his partner scaled their business from a small team to over 250 people and three offices.

Bob emphasizes the importance of being strategic in the real estate industry. He highlights the need to have a clear plan and outlines the specific steps they took to achieve their impressive growth. One key strategy they implemented was a residential farming approach to commercial real estate. By deeply understanding specific neighborhoods and markets, they were able to differentiate themselves from other brokers and gain a competitive advantage.

Another crucial aspect of their growth strategy was their commitment to servant leadership. Bob and his partner focused on empowering their team members, building their self-esteem, and supporting their personal and professional growth. They created a collaborative and supportive culture that encouraged everyone to exceed their own expectations.

Bob also emphasizes the importance of tracking key metrics in both personal and professional life. In business, they closely monitored volume and value metrics such as the number of buildings sold, dollar volume of sales, price per square foot, and cap rates. This allowed them to stay informed about market trends and make informed decisions.

Bob's advice for success includes disciplined prospecting and networking. He personally makes a goal of contacting a certain number of property owners each week and attending networking events regularly. By staying top of mind and building relationships, he has been able to consistently generate business opportunities.

Lastly, Bob emphasizes the importance of giving back to the community. He sits on the board of several charities and focuses on helping disadvantaged children through educational and athletic opportunities.


To connect with Bob and learn more about his insights and expertise, email him directly at bob.knakal@jll.com. You can also connect with him on LinkedIn to stay updated on his latest industry insights and engage in meaningful discussions. Don't miss out on the opportunity to connect with a seasoned professional in the real estate industry!

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Transcript

1866 Transcript

Guest: [00:00:00] CoStar started tracking the building sales market in New York in 2001. The very first chart that they put out. We were at the top of the chart in terms of number of buildings sold. We were shocked by that. But from 2001 to 2014 the number two company in New York had sold about 1, 300 properties.

We had sold over 4, 000. So we lapped the field by more than three times.

Whitney: This is your daily real estate syndication show. I'm your host Whitney. So we're back again today with our guest, Bob  Knakal . Uh, again, I mean, you know, Bob has sold, uh, you know, closed over 6, 000 transactions worth over 23 billion from 1988 to 2014. Uh, I mean, he has a record in New York city, uh, for, you know, the number of buildings sold.

Uh, he and his partner grew quickly and you're going to hear more about how they did that today and how. Uh, you know, you could do that as well and using some of their techniques and how [00:01:00] ultimately they empowered their people.

Bob, to the show. Honored to have you for another segment. And I'm excited about this conversation. Cause you shared just a little bit with me, been piqued my attention and I know it will, the listeners as well. You know, you and a partner, you all grew from just you two and a secretary to over 250 people and three offices.

And we're doing so many more transactions than anybody else in New York city. And, and I want to hear. You know, these strategies for growth, right? How you all did that. I know you had to be strategic about that. That does not happen by accident. Right. And so let's dive in to that specific thing and, you know, give us a little bit of that story, some of the growth and what that looked like, and then let's dive into some of those specific things that you all, you all put in place.

Sure, 

Guest: Whitney, and it's great to be with you again. And so I'll tell you a little bit about the background. You know, I started in the business in 1984 showed up my first day at CB, which is called Coldwell Banker back in those days. Met [00:02:00] Paul Massey. We worked there for four years, left in November of 88 to form Massey Knackle.

That was at that time just the two of us and a secretary. We sold the business in 2014 to Cush and Wakefield. At that time we had over 250 people in three offices in New York. And the way we approached the business was. Very meticulously and actually adopted a residential farming approach to commercial real estate.

yoU know, having the CB background was great because we, we saw how folks were selling institutional properties and we brought that institutional sales. Approach to the private capital end of the business for smaller properties. But we each started, Paul and I started in small geographic territories, getting to know the neighborhood on a very granular basis.

It was block by block, building by building, know every owner, know every transaction, know the zoning changes that were [00:03:00] going on, major developments that were happening in the area, who was buying, who was selling, what the prices per square foot were, what the cap rates were. And because we were so deeply entrenched in these markets we got to know everything that was happening there.

That was a, a competitive advantage for us because it was a way for us to differentiate ourselves from every other broker. And then the first salesman we hired. Worked in a territory north of Paul the next broker we hired worked in a territory south of me. We grew the firm like a jigsaw puzzle and ultimately had the entire city covered with a a very, very granular approach to understanding the building sales business here.

And, you know, CoStar started tracking the building sales market in New York in 2001. The very first chart that they put out. We were at the top of the chart in terms of number of buildings sold. We were shocked by that. But from 2001 to 2014 the number two company in New [00:04:00] York had sold about 1, 300 properties.

We had sold over 4, 000. So we lapped the field by more than three times. We were just a local popcorn stand compared to the big national and global firms. But we were so entrenched in these neighborhoods. You know, we had gotten out out to the outer boroughs in, in Queens in 1999, Brooklyn 2001. So we were out there before it was really cool to be in the outer boroughs of New York City.

And we had a, a very, very significant number around when the market started to, to thrive out there. But it was just a very, very. systematized implementation of a blocking and tackling strategy of just knowing the markets, understanding that we're in the information business, not the real estate business, trying to have better information than anyone else.

And that system really worked well for 

Whitney: us. Love that just getting into the granular level [00:05:00] like that. And you mentioned, you know, piecing it out, right? So it's not like we're trying to do all of New York city or New York, you know, at one time, right? It's, it's you know, you build a process in a small area and then you.

Kept repeating, right? 

Guest: Yeah, look, there are 165, 000 investment properties in New York City. How can you possibly try to cover all that? Right. So, you know, easy to, to put deals together but to really be an expert and add value to your clients, to put yourself in a position where you can, because of your local market knowledge.

You can perform and achieve better results for your clients, that leads to more business. And, in fact, there was a period of time, 06, 07 when there was an appraisal firm, Miller Cicero that kept calling us and saying, hey guys, how come all of your comps are so much higher than the rest of the market?

And it turned out that they, for a couple of years, produced [00:06:00] what was called the Massey Nackel premium that showed that our prices were 31 percent higher than the rest of the market, the prices we were able to get for our clients. And again, our value proposition was very simple back in those days.

We only sold properties. Only represented sellers only worked on exclusives only worked in our territories and all we wanted to do. We were completely agnostic as to who the buyer was. We just wanted to get as many bids as possible. Get the highest prices we could get. And it was reflected in the data.

And unfortunately, Miller Cicero stopped producing that Massey Nackel premium study because no other brokers would cooperate with them and give them sales information because they felt they were advocating for us too much. But it really was just a focus on understanding the markets better than anyone.

We never pulled third market third party reports on data from anyone. It was all produced in house. And that was a, a, an easy way for us to differentiate what we were [00:07:00] doing and that differentiation led to a competitive advantage. Never pulled third party 

Whitney: reports. Speak to, you know, how you all did pull the information and how, you know, how you, Maybe you know, the process of organizing gaining and organizing that so it's helpful.

Guest: Yeah, I mean, it was, it was a system where we, we could have, we had access to city records, so we saw when deed transfers were done, but Each broker in their defined territory would look at the sales within their territory every week and call every buyer and seller and say if they didn't do the transaction themselves and most of our brokers had 15 to 20 percent market share in their, their local market.

in their territory. They would call buyers and sellers and get information. And our research people, you know, we call them the clipboard team. They had clipboards with all the sales on them. They went around sitting in the broker's cubes asking, hey, what about this sale? What about that sale? Was this really a sale?

What was the, [00:08:00] what was the price per foot there? And it was interesting how inaccurate a lot of the publicly available data was, but because our research team was getting information directly from the folks who were in the market that knew the transaction that did the transactions, the quality and integrity of the data that we produced was very significant.

You know, 

Whitney: speak to maybe some of the other strategies for the growth, right? You know, you, you have to be very strategic, obviously with, from hiring to scaling the hiring process to, you know, how you treat your employees to, I mean, own and own, right. So, you know, let's go a little deeper in, you know, just a strategy for that kind of growth and that many people on the team.

Guest: Well, Whitney, we, we always implemented what is referred to as Robert Greenleaf's servant leadership and servant leadership. is about empowering the people that you work with. Building up their self esteem, [00:09:00] showing them that you support them and you want them to do better than, than you do. And so, everything we did was around building up the people around us trying to get them to exceed their own expectations for what they could achieve.

And that the implementation of that approach actually has worked wonderfully. If you look back today. Today in New York City there are 29 investment sale businesses or divisions of businesses that are owned by or run by people who learned the investment sales business at Massey Nackel. And that is something I'm extraordinarily proud of.

We produced great professionals. It was very collaborative. The culture was great. We were supporting each other, pulling for each other. And putting folks in a position to achieve the best results they can personally achieve. You know, has led to great success [00:10:00] for, for a lot 

Whitney: of them. Love that.

I love the, the servant leadership approach and, and just the, the thought and really the being purposeful and empowering your people. Right and all the things you listed there there maybe give us some tactical ways you all did that you know, what does that look like on a daily basis, you know with leading, you know that many 

Guest: people well I think it's important to realize if you if you look at studies on employment and job satisfaction and job dissatisfaction um the the number one Thing that comes up in survey after survey, uh, about job satisfaction is not money.

You would think it would be money, but it's not money. It is feeling as if what you do every day is integral to the mission of the company and the success of the people around you. And so whether it was a, one of our top producers or the receptionist. [00:11:00] We let people know all the time how valuable they were to the firm, how what they were doing made an impact on how the firm did and the collective success that we had.

You, you let the, the, the receptionist know, hey, you know what, the way you greet somebody. Is so great because you always smile, you're warm, you offer them a cup of coffee or a bottle of water and you're the first impression that people have when they walk into our office. And you know what? The next time somebody walked in, they practically got a hug.

And that's the kind of thing when people feel like what they're doing every day is important. They respond and act very, very differently. And so we were very cognizant of that, made sure we told people all the time you know, what a great job they were doing, how accretive what they were doing was to the success of the broader firm.

And it really made a big difference. [00:12:00] And, you know, also. Encouraging and instilling a high level of self esteem within people is also something that creates great performance. You know, people want to feel good about themselves. There's a lot of reasons for people to feel good about themselves.

But the better you feel about yourself, the more pride you have in what you do, the more pride you have in how you help clients. That that is just going to be self perpetuating. It's what economists referred to as a positive feedback loop. And you get people in that mindset where everything they're doing is positive.

They're getting great feedback. They're getting encouragement. They're getting support. You have the, the, the leaders of the firm encouraging them that incentivize everybody to incentivize everyone to do a better job. Love 

Whitney: that, you know, our our pastor was he, I've heard him say like the, one of the secrets to parenting and really, and in so many ways is[00:13:00] is, is focusing on, you know, how you can encourage versus just focusing on what's going wrong.

Right. And I think that's almost what you're saying here, you know, in a big way you know, on the business front and encouraging your employees, but man you know, encouraging them and what they are doing great in, right. And building them up. And so, they, and how important, right. What they're doing is to the mission of the overall business you know, speak to a training you know, and, and you know, maybe, you know, how you all have done that.

Well, just scale that fast. You know, how have you trained your people? Was there certain systems you all use or implemented to, to do that? Well, so people, they, you know, a salary or whoever you mentioned there didn't know to smile, you know, when people came in the door and how to greet them or direct them in the right way.

Guest: Yeah, well, I'll talk about the training of our, our brokers when we hired someone to be a producer, they could not get on the phone and talk to somebody until they were quote unquote checked out in order to check out. You had to [00:14:00] create maps of your territory. You had to go walk every street, take pictures of every building, put together catalogs with the tax lot map, photo of the property, ownership information, verify all that information.

Go through training on how to underwrite a property so you understood the value, went through training relative to being able to articulate what our marketing program consisted of you had to do a three year comparable sales study for your territory so you knew how many buildings sold, what percentage of the market that was, what the average price per square foot was, those metrics going up or down and by what percentage, and you had to sit in front of a panel Of five senior people at the firm and do a presentation and talk about your property.

You talk about your, your territory, do a marketing pitch. And if you didn't pass that, you had to go back and [00:15:00] work with our director of training and brush up your skills. And you had to pass that check out before you could get on the phone and talk to somebody. And then for continuing training, we had a training session every week for the whole company to learn about time management and prospecting and overcoming objections and, and all those kinds of things that are so integral to the the, the typical blocking and tackling that that is such a big part of our business.

Yeah. 

Whitney: Wow. No, I appreciate that. It's it's a process, right? It sounds like, you know, you all had a process for training. You had a process of people knew exactly what was expected and that they were trained and prepared. And I think that goes right in line with empowering people, right? They need to know the expectations.

They need to know exactly what's expected. And, and so. When they do it, you can encourage them, right? You can't say 

Guest: no. In fact, I will show you, I have, just happen to have here. Wasn't expecting, but this is [00:16:00] the old Massey Nackel Partnering for Success Initial Training Manual. And this, this thing is 286 pages.

of just initial training materials. So I just, I don't know why this thing is in my office, but it's it's sitting here. So I thought I'd share 

Whitney: it with you. Yeah, no, that's awesome. That is that's incredible. It's, and that takes time, right? And intentionality to make something like that happen. What about early on what were, you know, maybe When you and your partner and secretary were first just like dreaming of scaling, right, you know, and you're trying to think through these things before you had this amazing handbook, right.

You know, 200 plus pages of training, you know, any, or maybe some of the strategies then that helped you all to just scale quickly in the very beginning. 

Guest: Yeah, well, everything was designed around creating market insights that were, were self produced. Self verified and something that would [00:17:00] be of value to the clients.

And then, you know, it was all about prospecting. It was getting getting on the phone, calling folks, you know, back in the early days before technology was really big. It was, it was nothing more than phone calls and hard mail. There was no other way to get in touch with people. So you were on the phone all the time.

We send out hard mail like clockwork every month, every owner in our territory got a piece of hard mail from us. You know, at the peak, before before email became very popular we were sending out 3 million pieces of mail every year. Including a a newsletter that, you know, we started with just a little four pager and ended up, I think it got to 32 or 36 pages at its peak.

And you know, we just stayed in front of people. It's all, it's all being top of mind in the brokerage business, because if you look at. Market and again, use Manhattan as a [00:18:00] microcosm south of 96th Street, which is prime Manhattan, there's 27,649 buildings. Over the past 39 years, the average turnover of that stock has been 2.6%.

If you figure half the stuff that goes on the market actually sells this is telling you two things. It's telling you that. When someone buys a property in Manhattan, they own it on average for 40 years before they sell it. And number two, it tells you if there's a 5 percent of the stuff is actually being considered for sale, that 19 out of every 20 people you talk to are not going to have anything for you to do.

So, you, you look at what the the reality is of this of market. Turnover and activity, and that helps guide what you're doing, how you're doing it, how you're approaching the business, and so, you know, sending out that mail regularly to people was a was a key piece of staying top of mind, because when that the main reasons for having to sell death, divorce, taxes, partnership disputes, things like [00:19:00] that, when that were, That happens that that moment happens when somebody realized, Hey, I have to do this.

You want to be the first thing that folks think of. And if you're constantly in front of them with good and valuable information, they're going to think of you and hopefully they think of you first when they decide that they need to do something. I love 

Whitney: that. I love that you, you know, the detail right that close.

I think that's challenging to me and I hope it's challenging to or challenges the listeners as well to understand their data that well also, right? You know, and knowing that about your market, I mean, it's such a leg up right as well on your competition. No doubt about it. I know, and we're going to shift gears just a little bit here as we come towards the end of this segment as well, Bob.

But you know, I love the strategies for growth and just the servant leadership and thinking that way for our employees and ensuring they're trained well. And man and just the level of detail of the information, right? Again, I think just gave you all a a leg up. I mean, to know how to use that data.

And to push [00:20:00] forward at scale. So Bob, you know, and I know you, you are specific to New York city listeners still always ask me on what's going to happen. What's the expectation. You got these experts on the show. We want to hear what they say. Obviously, I shared this with you earlier. I know you know, nobody has a crystal ball, right.

That you know, in the last segment we talked about, you know, but that information definitely speaks to our, what we think and the actions that we take. So what are your thoughts on just the, the economy, what you see happening you know, buying and selling or, or, you know, what, what's happening are with buyers and sellers that you're working with and moving forward.

Guest: Yeah, well, just on a a macro perspective, you know, I think the U. S. economy is doing fairly well and not surprising given that really only about 20 percent of our economy is highly correlated to interest rates. You know, if you look at that, for instance, government and health care make up about 35 percent of our economy, and people aren't putting off open heart [00:21:00] surgery because interest rates are high today.

So, we still have things happening. Unfortunately, real estate is 1 of the sectors that is very highly correlated to fluctuations and interest rates. I think clearly that's created a big issue for some folks, particularly given how quickly and the extent to which rates have increased it's creating tremendous stress on refinancings that are coming about today.

You know, I think in, in every situation where you have. Market conditions where something exerts downward pressure on value and the Fed started raising interest rates last March really started to impact the the markets in August, September you know, I think you, you go through a period where folks need to get acclimated to the new reality.

And that takes a while for that to happen. Usually it's 12, 18 months, but you have to hit that capitulation stage where folks start to transact, they, [00:22:00] they come to the realization that the market is the market, and if there's pent up demand to transact, they're going to transact but I don't think we've quite hit that capitulation stage yet.

I think I. I was a little hopeful last quarter because using again Manhattan as a indicative of what's happening in broader New York City for transactions over 10 million. In the first quarter, we had 42 second quarter 43. It doubled to 84 in the third quarter. I thought capitulation might be setting in.

But I always caveat quarterly data by saying to to see a trend. You really need two or three quarters in a row, and it looks like fourth quarter numbers are going to be down again. So we'll, we'll see what those numbers look like when they come out, but we need to get through the capitulation phase. I think in New York, what we're seeing is that each product sector is performing very differently and autonomously from from each other.

Which is kind of interesting. That hasn't been the case in the [00:23:00] early nineties during the SNL crisis or the recession of the early two thousands or the GFC. Everything was heading downward just a different degrees. Today, different sectors are performing a little differently. The hotel market is is on the upswing today.

The retail market is on the upswing. Multifamily is. Is is somewhat challenged given the political headwinds that exist in New York and how highly correlated public policy is to performance within the multifamily sector. And then the office sector still has a lot of wood to chop, as we say, before it's out of the woods, but I should say that the new construction class, a office performing very, very differently than the rest of the market.

But, you know, I do think that. We, we should be seeing an increase in volume at some point next year. I'm hoping it's the beginning of the year rather than the end of the year but I think things will start to turn around in New York for everything but office next year. What, what 

Whitney: would you say is [00:24:00] your best advice for passive investors right now?

Guest: Well, I think it depends on what your risk tolerance is. I think, you know, T bills at 5. 5 percent look pretty compelling today. But again, if you, if you have some, some risk tolerance, I think real estate is a great place to be, particularly if you really know the market well. If you're a passive investor, I would find a really good quality operator and maybe give them some equity.

Because I do think that there are going to be fortunes made in the next 12 to 18 months buying at what is likely to be the bottom of the market. So I, I think it really, it depends on your risk tolerance and how much of your, your total portfolio you want to put into various assets. But I think there is a lot of opportunity out there today.

Bob, what's some 

Whitney: of the most important metrics that you track? It could be personally or, or professionally. 

Guest: [00:25:00] Well, I mean, a whole host personally track and this again, working with my broker coach, Rod Santomasimo, we, we started when I started with him 12 years ago, we started tracking about 10 different things.

Got to the point where we were tracking almost a hundred including, you know, what time I got to sleep, what time I woke up, how many, many. Times I went to the gym every week and what I was eating, what I was drinking. But you know, I think in terms of you know, personal things to track you have to be conscious of how much you're working, how much you're, you're spending in the, the various components of your life that are important, you know, and life, life, work balances is a challenge for everybody.

It's different for everybody, but you have to look at all facets of your life, your work. your personal life, your family, your friends, your health, your faith and find the right balance for you in that regard. With regard to business you know, the two V's for me [00:26:00] are the are the things to watch.

And those are volume, And value on the volume side. We're looking at number of buildings sold and dollar volume of sales because very large transactions can skew dollar volume. I think number of transactions are much more indicative and you can look at number of transactions over time and going back 30 years.

Those numbers are valid. If you look at dollar volume, you have inflationary things that would need to be adjusted for to make older data valid for comparison purposes. So, you know, particularly looking at number of properties sold is great. And then looking at values price per square foot cap rates and cap rates relative to lending rates to see what that bargain is for the buyer.

But those are the things we track to kind of get a sense of where the market is and where it might be going. What are some 

Whitney: habits that you are disciplined about? 

Guest: Well, I prospecting is my number one goal [00:27:00] every week. You know, up until the pandemic I, my goal was to contact 50 property owners a week and get around to asking them if they wanted to sell anything during the pandemic when I, I didn't have the in stop and chat in the office all the time.

I was able to make 100 connections a week. And I guess proving to myself I was able to do that. I've kept that up. And you know, my average last year was 114 connections a week. This year. I'm a little less. I think I'm probably in the 103 104 range. I haven't checked it in a month or so. But you know, that's, that's the thing that really for me is like putting gasoline in the car engine is you need to be making prospecting calls and, and networking.

Networking is really important. I, I'm a big believer. In in the the the saying it's not who you know, it's who knows you particularly in a market where you have 250 000 people that Are owners [00:28:00] of investment real estate. It's impossible to call all those people So, to a large extent it's who knows you and getting out networking is important I try to get to 261 networking events a year Which is one every working day.

And so the prospecting calls and the networking are two things that you know, I try to make sure I'm doing all the time. 

Whitney: A networking event every day. That's, there's probably not too many markets where you can do that. 

Guest: It's definitely a big advantage in New York. There's always something going on here.

And so, you know, it's been two 61 for, for decades and remains two 61. Yeah, 

Whitney: that's incredible. I love that drive and even tracking that. And yeah, that's, that's incredible. What about the last question, Bob, how do you like to give back? 

Guest: Oh, well, I we do a lot of charity work. I sit on the board of many charities.

I think, you know, of course, our core [00:29:00] values always were passion, integrity, responsibility and excellence and the responsibility part is, is giving back to the communities in which we live and work. And you know, I think there's nothing nothing as important as that. And most of the the philanthropic work that we do revolves around helping disadvantaged kids in a number of ways.

Either with educational opportunities, athletic opportunities life learning things that will hopefully put them on a path to have a better life. Awesome, 

Whitney: Bob, I'm grateful for how you've given back to us today. And actually yesterday and today are over two segments here and just diving into strategies for growth, how you all did that so well and strategically at scale to say the least.

I mean, you all, you all really did it. And so grateful again, thank you for your time. How can the listeners get in touch with you and learn more about you? 

Guest: Yeah, Whitney, the best way to get in touch with me is email me bob. knakl at jll. [00:30:00] com. And knakl is K N A K A L. So bob. knakl at jll. com. I have a, a great suggested reading list.

For for folks who want to excel in, in the real estate brokerage business, also have a piece I put together on lessons learned over the 26 years and 46 days of, of running Massey Knackle, some of which we, we shared over the past couple of days with with you but happy to distribute that to to anyone who would like to take a look at it.

And then of course, I'm on social media. Twitter, LinkedIn, Instagram, et cetera. So, you can track me down there and DM me there if you like.