Why should commercial real estate brokers represent only one party? Is buying prime real estate at a top price a great strategy? What are some techniquest that buyers and sellers have used when purchasing a property? Top commercial broker in New York, Robert Knakal, Head of New York Private Capital Group for JLL, shares his insights. 

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Part of your business is focused on representing one party only, can you share a little bit about that and the reasoning?

Most brokers represent both sides, I've always focused my entire career on seller representation. As a broker, working with control is important. Many sellers are optimistic about the value of their property, and when the value gets down to the point where it is truly market, there are a few buyers that would buy at that price. I always wanted to work on the seller side for a couple of reasons: 1) We like to avoid conflicts of interest. We don't represent buyers. 2) I don't like to have to remember what I say to anybody. If I'm always working for the seller trying to get the highest possible price, I don't have to remember what I say. And that has worked out well over the years and as a broker to the extent that you can specialize in something, and articulate what you do and how you do it, it enables you to differentiate yourself from others. Back at the old company, we always say that we only represent sellers, we only sell properties, and we only work on exclusives. And that was very easy to convey, easy to understand, and it let clients know exactly where we stood.

George Ross, Trump's previous attorney, always talks about the fact that the best deals were the highest-paid deals. Can you attest to that? And how does one go about the first couple of years of paying top price, waiting on that until it becomes the next phenomenal deal?

In terms of buying property here, there used to be an investor in New York named Saul Goldman. He owned more property than anybody else in New York. I had the good fortune to meet with him back in the mid-80s when I started in the business. I said to him Mr. Goldman you own about 500 buildings, how are we able to do that? How did you amass such a big portfolio? He said Bob, I paid more than anybody else. That's the way he did it and that's the way you have to do it. I applaud him because he built an unbelievable portfolio and, even though at the time, he may have been paying a lot, in retrospect he didn't pay that much.

People must have reserves. The most popular type of transaction in New York is multifamily, and often, regardless of what the cap rate is, there's very little free cash flow in the first few years. You must be able to break even. A lot of folks are counting on appreciation, but it's challenging.

What are some techniques that buyers have used when purchasing a property after going in contract? What is the best way to approach it?

I've seen a lot on all those transactions I've done, but I haven't seen it all. It seems like in every deal there was a new thing that comes up that I wasn't prepared for. From a buyer's perspective, buyers try to get contingencies to their transactions to the extent they can. That's rare in New York, we very rarely have any post-contract execution or due diligence. And by not having that post-execution due diligence, the contract deposit is hard when it goes up. There are times when people will make claims of breaches if they don't want to close, that's generally difficult to prove. But the most common area that creates an issue for a buyer is environmental. And there are several environmental issues we have here, we have lead paint, we have asbestos, we have potential oil leaks, and a number of buildings are still using heating oil. Some of those tanks are very old.

Robert Knakal

@BobKnakal

[email protected]

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