Robert Knakal plans to release book on dealmaking
Speaking last week at a luncheon in midtown, Robert Knakal said that he had difficulty preparing for the talk he was about to give.
The New York chapter of CCIM, the real estate organization that was hosting the event, had asked Knakal to speak about his eponymously titled brokerage company, Massey Knakal Realty Services, which he co-founded in the late 1980s with Paul Massey. The two have since built into one of the city’s most prolific sellers of real estate.
Knakal is a frequent participant on the city’s circuit of panels and conferences. He also writes at least two long columns a week and speaks periodically on news shows and industry podcasts and webcasts. He demonstrates fluency and insight on topics he most enjoys to discuss most: politics, the economy and, of course, the real estate market.
But after coming to the podium, Knakal admitted that he didn’t have as much practice verbally distilling the lessons he’d learned with the analytical muscle that his audience is accustomed to.
“I do a lot of speaking,” Knakal began. “But when I was asked to talk about building a brokerage business in New York, and what are all the elements that went into it, I had to put some thought into this.”
Knakal identified 30 lessons, arranged roughly in chronological order, that he has picked up during the arc of his 27 years in the business. After the speech, Knakal said that he is working on a book that would include some of the content from the talk, although he clarified that the focus of the book would be more of a guide for the investment broker, and less a history of the founding his company.
In front of a full room of CCIM attendees at the Cornell Club, Knakal started with his chance entry into the real estate business as a freshman at Wharton. Most of Knakal’s peers were fixated on landing jobs on Wall Street or at investment firms. Knakal followed suit, but while he was dropping off resumes he happened to notice Coldwell Banker. Thinking that it was another bank, he popped in. Later, when he learned that the company was a real estate brokerage, he said he nearly didn’t show for the interview.
“I took the job and ended up loving it,” Knakal said. “Lesson number one, keep an open mind. I remember there was a graduate of Wharton who came in and spoke with us and said he had wanted to be a Wall Street guy like everyone else, but that he ended up selling dog food and that he made $20 million a year doing it. He used to feel uncomfortable telling people, but he loved it. That was one of the greatest lessons I learned, and I decided to go into real estate because I loved doing it.”
After graduating, Knakal joined CB Richard Ellis and met another young broker at the firm, Paul Massey. After the second day of working together the pair decided they would team up and split whatever deals they did 50-50. The two have been in business together ever since, in large part Knakal said because they share a similar work ethic.
“I think that if you looked at the time we’ve put in over the last 20 years, there’d be about a 10-hour difference in total,” Knakal said. “And that’s important. You have to have to be putting in the same level of work.”
Knakal said that at CBRE, he was assigned a territory in which to do deals. Focusing in a certain geographic boundary made sense, but Knakal tired of the way senior brokers were allowed to arrange deals within his territory without having to include him in the transaction, a courtesy he was required to pay them if he did deals on their turf.
“The rules you have, have to apply to everyone equally,” Knakal said. “At Massey Knakal, the rules we have apply to me just as they do to someone who starts tomorrow.”
In the late 1980s, Knakal and Massey broke off from CBRE amicably and started their own brokerage firm, handling smaller deals. The decision to specialize in smaller properties paved the way for Massey Knakal’s eventual success, because it was an abundant segment of the market that had been neglected by other firms.
“We couldn’t get hired to sell the Empire State Building, so we started with smaller deals,” Knakal said. “The niche was something we happened into. It wasn’t by design. We had to sell small buildings.”
Knakal said that an early insight he and Massey had about the brokerage informed the company’s practice of assigning each of its brokers a specific territory, a model he credits as a core reason for the company’s success.
“You have to know exactly what business you’re in,” Knakal said. “We are in the information business. We realized that right from the beginning and that guided the platform.”
Knakal and Massey assigned geographic regions because they realized that the superior market knowledge a broker could amass through such specialization would give that person an advantage over competitors who covered a wider geographic swath. It also allows the company to market properties with an approach better tailored to a certain area, rather than simply following wider market trends that may not, in fact, be applicable to a particular sale.
Massey Knakal had gotten off to a strong start, but by the early 1990s the company was in trouble.
“The Savings and Loan Crisis hit,” Knakal said, noting that the recession that followed put a major crimp on the firm’s business. “We went to every bank, finally we got $60,000 worth of credit card lines, took them down, and for a while we ran the company on credit cards. Always keep a few dollars set aside. The early 90s taught us a few things.”
After riding the rising market back to success through the 1990s, Knakal said that he and Massey hit another turning point for the company when they decided to hire a management team in the early 2000s.
“After 9/11 and those tragic events, we saw a lot of companies downsizing,” Knakal said. “There were highly qualified people on the market, lawyers, accountants, managers. We said, let’s hire a director of human resources. At the time Paul and I did everything ourselves. We took turns taking the garbage out, we even painted and moved ourselves when we changed offices. But soon we went from 21 people to 200 people. You have to be willing to delegate responsibility.”
Today, Knakal said his family takes top priority.
“You remember those marathon three or four hour games of Monopoly you played as a kid? I feel like my career has been a 27 year game of Monopoly,” Knakal said. “No one on their death bed said, ‘I wish I made more money, put more time in the office, worked more.’ In order to really succeed, my older brother Jeff told me, you will have a deep profound sense of peace in your heart. Those who are able to find that, develop a clear sense of their highest priorities and for me that’s my wife and two and a half year old daughter, who I love to death.”
In a follow up conversation with Real Estate Weekly, Knakal said that he plans to release his book by the end of the year, which he has been working on with a writer whose name he said he couldn’t yet disclose.
“The guy approached me about about three years ago when I was 45 to do a biography on me,” Knakal said. “I told him that I felt a little too young to have a bio written about me, but we sat down and talked and the conversation morphed into the business I’m in.”
Knakal clarified that, unlike the speech he gave in front of CCIM, his book will not focus as much on the story of Massey Knakal as on his experiences and advice on sales techniques and selling investment properties.
“There is some overlap to all the lessons I learned building Massey Knakal with Paul and my experiences and views on being a broker. A lot of the values and the perspective and theory applies to both those things,” Knakal said. “The book is going to be more focused on being a broker and insights about the profession and how to be successful in it. There’s going to be references to different transactions I’ve done, some specific, some veiled to protect the guilty.”
Other posts by REW Staff