Bob Knakal, a real estate broker credited with selling the most commercial buildings of any single agent in New York City, is now expanding his road map in search of further success.
During a 40-year career, he claims credit for closing deals for 2,339 buildings containing 83 million square feet and having a combined sales volume of $22 billion. With the launch of his new brokerage, BK Real Estate Advisors, in the wake of his abrupt departure early this year from JLL, Knakal wants to get that number to 3,000 by combining old-school mapping techniques with artificial intelligence.
One part of that strategy was on display recently in a 600-square-foot room on the 12th floor of a nondescript office building in midtown Manhattan, a space lined with copies of detailed Sanborn fire insurance maps of the borough spread underneath Plexiglas across about 10 white folding tables. The maps serve as a guidebook to the largest U.S. commercial property market.
Sticky notes in different colors indicate the status of many properties. Red signals a closed sale; green shows a listing; and blue means a deal under contract. Some properties also have highlights. An orange highlight, for example, points to an underbuilt development site.
This map room results from 220 hours of fieldwork in 2020, when the pandemic led New York to become what Knakal described as a “ghost town, like a science fiction movie.” Seeing it as a research opportunity, Knakal walked each Manhattan block covering properties south of 96th Street on the east side and south of 110th Street on the west side. In all, he examined 27,649 properties to fill what he considered a void for accurate development details. Knakal and his team completed the map by scouring building permits and other filings.
The maps and his office are set to move on Friday to a 5,200-square-foot space nearby to accommodate his now 11-person New York team. The new location also will house his plans to develop similar maps for Upper Manhattan, the South Bronx, Queens and Brooklyn. In addition, he has “a handful of folks” working virtually for the firm in other countries and, while acknowledging it’s “tempting to go to other markets,” he said the firm will remain focused on New York.
In an interview in the map room before packing got underway, Knakal explained, “We have, to the square inch, what’s being constructed or actively constructed” across residential rental, condo, office, hotel and other real estate properties from the fieldwork.
He added, “The information everybody wants to know is: Is the price going to go up? Is it going to go down? How much? How is the building really performing today? It’s all about the information.”
Knakal opened the map room about a year ago and said it has since proven to be a valuable component of his business. Nearly 20 brokerage pitches he has given in the room have led to a 100% success rate with exclusive assignments, compared with about a 26% rate with more traditional presentations.
“This room is probably the most analog room in the country,” he told CoStar News. “All of the data is in a system, but we will not digitize the map because … looking at it on a computer screen, it loses something as opposed to sitting here and being able to look at it this way. It gives you a great perspective on what’s going on in the city.”
Knakal has personally studied 2,417 land deals for development sites that closed in the city over the past four decades. He’s spoken to the buyers and sellers in “just about all of” the deals to understand the inside story about each of those transactions, he said.
About a year ago, he began working with data scientists to use artificial intelligence to examine the fluctuation in land values and study the effect of macroeconomic and sector-specific factors across residential, office, hotel and other property types to figure out what might be a leading indicator of changes in land value. By the end of the summer, he expects to unveil the Knakal Land Index, which he said will give a breakdown of land values in various property types going back to 1984.
“If the AI models work the way folks say they should work, we should be able to look at these fluctuations and say, hey, ‘When interest rates go down 75 basis points, and the price of oil goes up by $10 a barrel, in nine months, hotel land is going to take off this year.’ We’re trying to isolate the … basket of metrics that will be predictive of what’s going to make a change in the value of land.”
Knakal’s obsession with numbers, however, started earlier in childhood when he was in Little League, where he enjoyed tracking his baseball statistics. The combination of his passion for real estate, baseball and statistics takes shape in the form of his business cards, styled after the look of a classic Topps baseball card.
Knakal, a native of Bergen County, New Jersey, said he got into real estate by accident after driving around one day and dropping his resume for a summer job at real estate firm Coldwell Banker in his first year at The Wharton School of the University of Pennsylvania. He wanted to be an investment banker and thought Coldwell Banker was a financial services firm.
After he graduated in 1984, he started full-time with CB Commercial in Manhattan, which eventually would become CBRE, the biggest U.S. brokerage firm. In 1988, he formed Massey Knakal with Paul Massey Jr., a colleague of Knakal’s when he was at CBRE. In 2014, the duo sold the firm to Cushman & Wakefield, where Knakal worked until 2018 before moving to JLL as its head of investment sales.
Knakal suddenly was out at JLL in February after a New York Times profile of him included just one passing reference to JLL. Knakal quickly launched BK Real Estate Advisors soon afterward.
JLL didn’t respond to CoStar News’ requests to comment on this story.
“It was definitely a surprise,” Knakal said of his departure from JLL. “It was out of the blue. No warning. It was hard emotionally because who wants to be told they’re not wanted?”
The next day, however, “that somber feeling had passed, and total excitement set in,” Knakal continued. “After nine and a half years at the big global firms, I needed to take a deep breath and then do my own thing again.”
In his second time as an entrepreneur, Knakal said he doesn’t see his new firm becoming as big as the 250-person shop that Massey Knakal had grown to be. “With technology today, a team of 15 to 20 can be just as effective as 100 people used to be,” he added.
To be sure, Knakal’s goals come as higher interest rates and borrowing costs have soured investor appetite and hurt the investment sales market, squeezing the profit brokerage businesses make.
In Manhattan, investment real estate sales slumped 45% last year as the number of deals also fell 33% to 280, according to a study by Ariel Property Advisors.
But there are some signs of change as office and other property values decline and the Federal Reserve has given hope of a rate cut, even as the exact timing of it remains uncertain.
“What we’re seeing in the land market is that the better quality sites are actually increasing in value, [and] the poor quality sites are still going down in value,” Knakal said. “That usually is a sign that the market is getting poised to completely change.”
Knakal expects the 27,649 buildings covered in his Manhattan map will see the highest turnover rate of ownership change in over 40 years and reach 5% and 6% for two or three consecutive years. That’s compared with the average of 2.6% in the past four decades and the prior peak of 4.7% in 2012, he said.
The challenges facing the office and multifamily sectors in the city will lead to “tremendous turnovers” over the next few years, he said. “Legislation and interest rates have really negatively impaired the [multifamily] market,” he said. Regarding “the B and C office sector, 75% of the buildings will not be owned by the present owner five years from now.”
At his new firm, Knakal’s employing some of the strategies that worked at Massey Knakal.
Just as Massey Knakal differentiated itself by having brokers specializing in different neighborhoods, BK Real Estate Advisors plans to hire specialists for different property types, such as a broker focusing on office-to-residential building conversions, one of his most recent hires.
“It’s more important to focus on one type of property, so that everything you’re doing all day long is accretive towards helping you win the next transaction,” he noted.
This oil painting of George Washington has been with Knakal in his office throughout his career. His grandmother had gifted the painting when his grandfather started his plumbing shop. Knakal’s aunt gave the painting to him when he co-founded Massey Knakal. (Andria Cheng/CoStar)
Massey Knakal was considered by some to be a training ground for many of the industry’s well-known executives, including James Nelson, who heads tri-state investment sales at Avison Young, and Shimon Shkury, president and founder of Ariel Property Advisors.
Knakal “is really taking the time to really coach me and help me to develop certain skills that are in a great broker,” Ryan Candel, who opted to leave JLL after about two years there to join Knakal at his new firm, said in an interview. “One of the things that I really admire about him is his honesty, even when, in his best interest, his idea of making money is selling buildings. I don’t know many people who would say to an owner, ‘Don’t sell your building right now. You want to wait till the market gets better.’ His honesty and transparency with potential sellers is what makes him an amazing broker.”
Candel, who serves as senior vice president of transactions at BK Real Estate Advisors, said he considers Knakal a “great role model.”
Another one of Knakal’s qualities is his discipline, especially when it comes to prospecting and cold calling. And it’s paid off.
After he was let go from JLL, one of those who wished him well was famed New York developer Harry Macklowe. Their friendship started after Knakal cold-called the developer’s office for two-and-a-half years regarding a small retail property on Manhattan’s Upper East Side before Knakal finally got Macklowe on the phone.
That persistence would lead to Knakal handling about 22 or 23 deals with Macklowe totaling about $350 million, Knakal said.
“Last year, I averaged 112 connections a week with property owners,” Knakal said. “Cold calling is like the gasoline that makes the car run. That’s what keeps deals coming in. It keeps market information coming our way.”