The Truth About Building a $1.6 Billion CRE Pipeline with Bob Knakal

Aviva (00:00)
This week's listener of the week is you. That's right. For our a hundredth episode of Commercial Real Estate Secrets, I just want to thank you all for listening to every single episode. We have a very, very special guest today on Commercial Real Estate Secrets for our a hundredth episode, Mr. Bob Knakal.

Bob is the chairman and CEO of BKREA. Bob, you know, he's going to be humble, but for all intents and purposes is the greatest commercial real estate broker of all time. And,

Bob Knakal (00:35)
I appreciate that overly optimistic introduction, but thank you so much for that.

Aviva (00:42)
I have to give credit where credit is due. So Bob, thank you for being on the show today.

Bob Knakal (00:47)
My pleasure to be with you. really is great to see you and great to be on with you.

Aviva (00:52)
And I want to preface this by saying, used, before I met Bob about a year ago, I used to think about brokerage in New York city and how crazy it must be. You know, I, I'm a investment sales broker here in Colorado. We're a little more chill. was, you know, the West coast is operates different than the East coast. And, I used to think, it's gotta be all sharks out on the East coast. And then I met Bob who is.

Just you are so kind and so humble. It made it. I had to rewire how I thought about East Coast brokerage because you are a gem and just.

Bob Knakal (01:33)
Well, thank

you. See, not all New Yorkers are as sharp elbowed as the reputation pretends to be.

Aviva (01:38)
You

And you make that cool. So thank you for being who you are. I wanna jump into it. You sold your brokerage for $100 million. You're a top grossing broker of all time. You exploded your brand online and you're consistently reinventing yourself. What is the driving factor that keeps you going?

Bob Knakal (02:04)
Well, Aviva, think it's a number of things. Number one, firstly, and I think most fortunately for me is I truly, truly love this business. It's so much fun. It's a passion of mine. It's my career. It's my hobby. My life is very simple. I sell buildings. I spend as much time with my wife and daughter as I can. They're the loves of my life.

I go to the gym, I go to church and that's pretty much it. And, you know, I tell people if, if my wife and daughter were going on a girls weekend and we're going to be away, I'd be trying to sell buildings all weekend. That's how much I enjoy it. So, you know, I think that for me, it's lucky I got into the business completely by mistake thinking Coldwell Banker was a bank. I stumbled in and just truly, truly love it. Feel very blessed that that's the case. And,

You know, I think it's that passion for it that keeps you going. And, yeah, the sale of Massey Knakal was a great life-changing thing for me. but, after taking a little bit of time to be introspective, I realized I really, really truly enjoy being a broker. like to call myself a salesman. If you look at my, my little tag on social media is, is I sell buildings in New York. And that's what I do. I sell buildings in New York and I really enjoy it.

You know, I think that if I had to look at one thing, I think it's kind of, you know, when they talk about kids who are on their cell phones, they say kids are addicted to the cell phone because they get that dopamine rush. I think there are so many opportunities in the brokerage business to get that dopamine rush. And I think I'm addicted to that and addicted to winning. And the brokerage business gives you lots of opportunities to win. So I just keep going. And, you know, every day.

is fun and well, not every day is fun, but most days are fun. But, but, you know, starting the new business six months ago, it was a great thing. I've been happier than I've been in a decade. Working at the big shops is not for me, but really have enjoyed it.

Aviva (04:13)
Wow.

How many folk, I know you did the transition from the big shops to your own and now you have an army of brokers, sales rep. How many people now work for BKREA out of curiosity?

Bob Knakal (04:30)
Okay, well,

we have about a dozen people that work here full time. You know, and my objective is not to get to be 250 people again, like we had in the Massey Knakal days. I think 15 to 20 is probably optimal. But we're forming a lot of strategic partnerships with people where we've formed entities to work together.

Aviva (04:43)
Wow.

Bob Knakal (04:54)
We have our own company, they have their own company, but we're doing all work in a certain area together. That's been tremendously accretive to what we're doing. It is also keeping my overhead low. But, you know, I really, I think, you know, being fired has put a fire in my belly, you know, no matter what. And I tell you, being fired was a great thing for me. Got me out of a contract at Old Co that was a not so great contract.

but, I will tell you that, a, know, nobody likes being told we don't want you. so it's kind of, ignited the competitive juices in me. And, you know, we're about six months old, a little over six months. we've closed two deals, a $24 million office building for conversion to, mini storage at $27 million office building for conversion to residential.

We put a $52 million development site under contract and we have 26 exclusive listings now for $1.6 billion. I've never gotten $1.6 billion of listings in a six month period at any time in my career. So, you poke the bear a little bit and sometimes great things will happen.

Aviva (06:11)
I, you know, I know when you got fired, you lit the internet on fire with brokers and owners and just everybody team Bob. but not, that they weren't team Bob before then, but it was unbelievable to see that happen and to, you know, as an owner of a

small brokerage myself who is constantly looking at the bigger shops. A win for the little guy, not that you're a little guy, but for the independent.

Bob Knakal (06:46)
Yeah, no, look,

it was great. I really enjoyed and been extremely pleased with the way social media has gone for me since I really became active in January of 23. And the communities on all the platforms couldn't have been nicer. You know, it was interesting. I was scheduled to speak in Atlanta at a CCC event.

On the night of the 15th, I got fired the morning of the 14th. and everybody was like, you're, not going to come down. You're not going to, so of course I'm going to come down. So I went down, I gave the keynote, talk there and started up by saying, Hey, I'm Bob Knakal and I'm unemployed. And, know, people got a big kick out of that. And, it just really, it's been, was very, very heartwarming to see all the support that I've gotten from people. And, know, I've always tried to.

Aviva (07:19)
Ha

Amazing.

Bob Knakal (07:43)
to be nice to people, befriend people in the industry. I'm proud of the fact that I'm friends with most of the sales brokers who are my competitors in New York. So again, you think New York is this really competitive cutthroat place. I think there's only a few investment sales brokers in New York out of the hundreds that exist here that I'm not friends with. you know, it was really heartwarming to get that nice feedback from folks.

Aviva (08:11)
Hey, it says a lot about you. Now, I know you just talked a little bit about your success in social media, and I wanna ask you, what is a trend or a shift in commercial real estate that has surprised you the most in your career?

Bob Knakal (08:28)
Well, I guess that one of the things and we're seeing it right now is that when you're coming out of a downturn and things are starting to get better, you would expect that the big institutions would be the first ones to jump in and take advantage of it with all their sophisticated modeling and analysts and things like that. but over the years, and I've been through five corrections now,

It's always the high net worth individuals and the families that lead the way out. I think the institutional players, they do have a herd mentality, but nobody wants to be first. And a lot of the folks making those decisions at the institutions don't have their own money in deals. if they move too quickly, maybe their job could be on the line if the deal doesn't work out.

Most of the people who lead the way out of a downturn are the folks whose org chart is just their name in the middle of the page with a box around it. And those are the folks who are free to make decisions, don't have to worry about losing a job if they make a misstep. that was kind of surprising. I always thought the big money institutions would lead the way, but it's always been the smaller guys that have started.

getting things back on the right path.

Aviva (09:44)
It's interesting, when the pandemic hit, we saw this within our company, we manage 110 industrial tenants. And I think this happened nationally as well. When the pandemic hit, the mom and pops were the ones who showed up with their rent checks on the 1st of April. It was the big corporate national brands that were saying, hey, we're not paying rent.

And so there's something to be said about, it's like you said that institutional versus Tom, property owner, not all is lost to the institutions.

Bob Knakal (10:14)
Right, right. That's interesting. I wasn't aware of that, but that's a very interesting data point.

Aviva (10:19)
Yeah, hey, let me ask you, now I'm going for a selfish question. When you are cold calling in New York City and you're calling a big dog who owns a big property, how do you get over being intimidated by any individual?

Bob Knakal (10:36)
gosh, I got over that a long, long time ago. you know, fortunately you have to have very thick skin in any sales business and every sales business is the same. I think that the probability of success is different industry by industry. But if you know what your probability of success is, then things are not so bad. So I'll give you as an example, you know, in Manhattan.

Aviva (10:38)
I

Bob Knakal (11:02)
South of 96th Street, there's 27,649 buildings. And the average turnover of that stock in the average year over the past 40 years is 2.6%. If you figure on average, half the stuff that goes on the market actually trades. That means 5 % of the stock is on the market. And that means only one out of 20 people are gonna wanna do something. So...

You you have to have that mentality that, I'm making my calls. If I get hung up on 19 times in a row, I should be feeling great because the probability the next call is going to be a good one is very, very high. And I think that's the mentality you have to have. Also, I think what takes away a little of the maybe feeling of being intimidated is having something of real value to offer that person. If you're aware of a market trend or a recent transaction or a recent legislative change,

Aviva (11:48)
Hmph.

Bob Knakal (11:55)
that may add value to that particular owner's property, they'll want to hear that. So you should feel confident that you're calling them up, offering them something of value, something that they'll be interested in hearing about, and they'll want to talk to you. that's, you we want to call people that want to talk to us. So you have to call with something of value to offer them. And then you should look forward to making the call, not be intimidated about making the call.

Aviva (12:01)
Yeah.

I love that. I'm going to put that in my cup of coffee tomorrow morning when I get back and hit the streets. So tell me, looking back over your career, what is one deal that taught you the most, whether it was a success or a failure?

Bob Knakal (12:26)
you

Yeah, well, Aviva, I will tell you unequivocally, I have learned so much more from the failures than from the successes. When you have successful deals, you may encounter new techniques, new strategies, new tactics, new things people say or ways to get around certain impasses.

You have a successful resolution and you pop it in your brain and you remember it. And then the next time that situation comes up, you can use it again. But the best learning experiences I've had are from the failures, from the deals you didn't get or the deals you did get, but you didn't sell. And why didn't they sell? Often it's because the seller just is not realistic on price, but sometimes it's about something about the property, about the

the way the negotiation went or about the capital stack or something that you can learn from. I'll you, one of the things that really has served me well over the years is every time I pitch business and don't get it, which is often I have only outside of the recent success in the map room, I've won 26 % of my pitches over the 40 years. So 74 % of the time I'm losing. but every time.

I will call the seller and I usually wait two or three weeks, but I'll call the client, the potential client and say, Hey, you you didn't give me the, the assignment you hired X, Y, and Z, but you know, what could I have done differently? What could I, what, what did I say that made sense to you? What did I say didn't make sense to you? Was it my approach, my valuation? Did you not like the color of my tie?

to whatever it is, please tell me. really would appreciate it if you could give me feedback. And sometimes you kind of surprised by what they say. But I think those are the moments that I think every time someone has given me some really good critical input on why they didn't hire me, that sticks with me. And, and I will, you know, hopefully never make that kind of mistake again or

Aviva (14:32)
Hmph.

Yeah.

Bob Knakal (14:50)
you know, treat that the next assignment a little bit differently. And, those are those are the best learning opportunities is when when you don't win. So, you know, often I think it's human nature to say, that person didn't like me or didn't like my pitch. forget about them. Let me just go on to the next one. But that person has some golden nuggets in their brain that they can share with you that are going to help you very, very much so.

really incumbent upon you to call them up and go over with them why you didn't get it. And hopefully you don't make that mistake again.

Aviva (15:26)
it's brilliant. I love it. So if you were starting today as a commercial real estate broker in 2024, what is one piece of advice you would give your younger self?

Bob Knakal (15:38)
Right. Well, I will tell you that there are three traits that I see consistently in top producers. Number one is expertise. You have to be the go-to person. You have to be the one that when somebody thinks about that type of transaction, they think of you. And so...

picking a niche, a very narrow niche, as narrow as possible so that you can really be a true expert, and I call it getting real estate under your fingernails. You want to know everything about that particular thing, and small enough so you can know everything about it, but big enough that you can make a great living doing it. You could be the greatest expert in one building, but you can't make a living in one building.

It has to be big enough so you can make your rate limit. So that expertise, number one. Number two, you have to have passion. When I talk to lot of young kids, college kids and, you know, mentor some students to Wharton School where I went to school, and I tell them all, look, you're interested in real estate. What does that mean? There are,

hundreds of different jobs you could have in real estate. What should you do? Well, what do you like? Don't ask, don't say, how can I make the most money? Because if you're in any type of business, if you get to the top of anything in business, you're going to make a lot of money. So in order to get to the top, you have to love it. And why do have to love it? Because look at the real estate market, the real estate market is cyclical. It always has been.

Aviva (16:55)
Yeah.

Bob Knakal (17:05)
It is and it always will be. And no matter how good you are, you're to have tough times. It's the love of the business that keeps you going, you hanging around for those better times that will inevitably come. So I think you have to love it. Understand as a young person, take a look at the whole field of everything involved in real estate. Do you want to be a broker? You want to be a developer? You want to be an investor? You want to work in a read? You want to be an analyst? What do you want to do?

Pick the field that you really, really love that'll make you want to get up. Your alarm clock goes off. Forget about hitting the snooze. Get up, get showered, get dressed, get to the gym, go get to the office and do real estate. Even if you wanted to be a broker, what does that mean? Do you want to lease apartments? Do you want to sell condos? Do you want to sell single family homes? Do you want to rent office space, rent stores, get mortgages, raise equity?

Sell buildings, if you want to sell buildings, what type of buildings do you want to sell? Where do you want to sell them? Million different things you can do. Find what you're passionate about. And then the third trait, which is really, really important is having the ability to use discipline well. And I say use discipline as opposed to have discipline. We all potentially have the same amount of discipline. We have access to the same amount of discipline. We just all choose to use it differently.

And I love the quote from Abraham Lincoln, who said that discipline is choosing between what you want most and what you want now. And so, you know, you have to keep your eye on the big picture, but those are the things I would say, you know, become an expert, pick something to do that you truly, truly love, and then be disciplined about what you do. And if you have those three traits,

Aviva (18:37)
Wow.

Bob Knakal (18:54)
then the success available to you in this business is virtually unlimited.

Aviva (19:00)
It's so interesting, you know, I'm a third generation warehouse schlepper in Denver. No, I'm not a schlepper, but, and I've, I've had that, you know, I've asked myself that question. Do I, do I really like what I do or is it because I happen, you know, cause that's what my old man did and that's what my grandfather did. And I wake up and I just feel like the luckiest person on earth that I do love it. And I wouldn't do anything else in the world. So.

it really resonates. And if I could be 1 % of the broker you are, it'll be a good, good career.

Bob Knakal (19:37)
I know you're doing great. follow you on social media and you're doing fantastic. It's very, very clear that you're an expert in your warehouse field and you're passionate about it and you're very disciplined about the way you do things. So that's how you get to the top.

Aviva (19:43)
There.

Hey, one foot in front of the next. So you've been doing this for, you said 40 years. You go through a lot of properties. What is the strangest thing you've ever encountered in a property tour?

Bob Knakal (19:59)
Mm-hmm.

The strangest thing I ever encountered was we were putting an assemblage together in the 80s over on Second Avenue and there was a business called Gasnick's Hardware Store. And I go down into the sub-cellar and there's a two foot by two foot metal plate in the middle of the cellar floor.

And I asked Mr. Gasnik, I said, what is that? He said, let me show you. He lifts up the plate. There's a hole in the floor and it sounds like there's running water. All of a sudden he pulls out a fishing pole and he puts the fishing pole down into the hole. And there actually is a stream running underneath his building. There are

streams and waterways running under Manhattan. And I never thought I would see anything like that, but these guys actually would fish out through the basement floor.

Aviva (21:16)
an amenity.

So if you could do any other job for one day, what would it be?

Bob Knakal (21:24)
Aviva, you know what? I've been asked that question a few times and I've never answered it because I've never really thought about it. I'm going to try, because you're so nice, I'm going to try to come up with an answer. I think if I had to do one job, it probably would be something sports related.

Aviva (21:32)
You

Bob Knakal (21:40)
You know, I mean, the years have gotten under my belt a little bit now and can't play sports the way I did. But probably today, I would say probably something in the front office of a professional sports team. I think that would be that would be pretty cool.

Aviva (21:59)
Hey, I think you can do it. I think you got it in you. It might not pay as well as brokerage, but I digress. I got a couple more questions. Mo told me to ask you, what did you buy after your first big paycheck?

Bob Knakal (22:17)
my gosh. All right. So let me take you back to 1984. Just start my career. I'm living in Northern New Jersey with my dad. My mom had passed away a couple of years before, so was just my dad and I at home. And I was commuting into the city and I had two suits, a blue suit and a brown suit of all things, and five shirts. They were

permanent press. So every weekend I would put them in the washing machine. When the wash was done, I'd take them out, put them on hangers, hang them on a clothesline in our basement. And for about seven, eight months, I rotated two suits and five shirts. And so Paul and I closed our first deal. I think it was in March of 1985. We sold 1421 Third Avenue.

And I made my check was $12,500. I felt like I was the richest guy in New York City. And immediately went to Brooks Brothers and bought a new suit and several more shirts that were the kind you actually took to the dry cleaner as opposed to throwing in the washing machine.

Aviva (23:37)
I you know before the first time I met you I was gonna be on a panel with you and You know I didn't know you I you know and somebody said to me that was what they it was Beth Azor She said Aviva you better show up. He's gonna be in a three-piece suit he's gonna be dressed to the nines and and you were and Actually the first time I met you I was wearing my security shirt because I think that's hilarious, but

Bob is not only a top grossing salesman, but he's one of the best dressed you ever saw. Bob, we always end this podcast with the same question, which is what makes you happy with what you do in commercial real estate?

Bob Knakal (24:25)
I think there's two things that I think I get the, the biggest high from. one is that aspect we talked about earlier, which is the winning aspect, the, the finding out the owner wants to sell, the finding out that you're going to be hired after you've given the pitch, the finding, the agreeing to price and terms on a deal and sending a contract, that getting the contract signed, closing the deal.

But I think the biggest rush I get is when we get a really, really high price. You for my whole career, I've only represented sellers. I've kept my value proposition very, very simple and clean. Only sell buildings, only represent sellers, only work on exclusives, only work in New York. And every time we get a really great price for our client and they...

They express how happy they were and say congratulations. That just feels great. Of course, I love working for the big institutions that own a lot of real estate or folks with giant portfolios that are real estate pros. But we have a lot of buildings here. We have over 176,000 investment properties in the four boroughs of New York, not including Staten Island.

And a lot of those folks own only one building. And maybe they ran their business out of the building or maybe they inherited the property. And it's the largest asset these folks have. And so when you represent them, you're really determining the quality of the future of their life. And if you get a really, really great price for them, that really, really feels good. So I think that when you

When you know you have to, that folks are really, really depending on you and then you're able to come through and do a good job for them, that is overwhelmingly rewarding.

Aviva (26:29)
Yeah, I say that in commercial real estate, you are selling the biggest ticket item of somebody's life. And it is a really special transaction to be able to see that through. And like you said, at the highest price point possible. Bob, for the listeners, where can they find you and follow you on social media?

Bob Knakal (26:52)
Sure. Well, you can go to see my website at BKREA.com or you can go to BobKnakal.com on which I have 40 years of information that came out of 22 boxes that were rattling around in my attic for decades. Or feel free to follow me on social media, DM me. I'm on all the major platforms and always enjoy hearing from folks around the country and around the world.

Aviva (27:22)
And Bob comes out swinging with value. So make sure to go follow him. Bob, thank you so much for being our 100th episode on Commercial Real Estate Secrets. And for everybody listening, we'll see you next week.