COLUMNS
The Map Room Speaks: The Power of Local Nothing beats local market knowledge. Not even the farcical myth of the “foreign buyer.” Some brokerages have offices all over the globe; some have just one office in the local market. I have always maintained that understanding the market in the most granular way is the best competitive advantage a broker can have. Let me explain.
Bob Knakal Chairman and CEO BKREA New York, NY (917)509-9501
I have been active on social media since January of 2023 and it has prompted many younger brokers around the country to DM me, email me and text me questions looking for advice and tips on how to be better brokers. The first question I ask them is, “What area of the business do you specialize in?” Let’s say they respond by saying they specialize in selling multifamily buildings in Kansas City. My next question is, “How many multifamily buildings are in Kansas City?” No one ever knows. Sometimes people will guess at a figure. I then ask them many questions about market metrics, and they never know any of the answers. Their concerns are always the same: how to compete with senior brokers in their markets who have been doing what the young broker wants to do for many decades. The first thing I tell them to do is to purchase a map and draw a line around what they consider to be the boundaries of the market. Once that is done, do some field work and drive/walk every block to count and catalog the buildings. Do a comp study for the past three years for that particular product type, and dice and slice the data so you know all the numbers. Then call a potential client and impress them with your market knowledge. I can picture the call now: “Hi, Mr. Owner, I’m Jeanette and I sell multifamily buildings in Kansas City. There are 4,327 apartment buildings in the market, and last year 216 were sold. The year before 185 sold, and the year before that, 224 were sold. Last year, the average price per square foot was $154 per square foot which was up 17% from the year before. The average price per unit was $179,000 and the average sale price was $8.6 million, etc.” Think about the reaction that owner would have. They would be impressed and would always want to take Jeanette’s call. Furthermore, I guarantee that the brokers with decades of experience in the market have no idea what those numbers are. This is the way to differentiate yourself, and that differentiation leads
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to a significant competitive advantage. This is true because local market knowledge reigns supreme. And you don’t have to be at one of the big global giants to gain that knowledge. The global firms try to claim that their international networks are a big advantage because they are going have the brokers in the Antarctica office bring the billionaires from there to overpay the local owner for their asset. This is the biggest bunch of b.s. that has ever been concocted. My opinion is based on personal experience. I spent over four years at CBRE (1984-1988), three and a half years at Cushman & Wakefield (2014-2018), and almost six years at JLL (2018-2024). During those approximately 14 years, I sold 552 properties. How many of those buyers do you think were brought to me from any of those brokers in offices around the world? Zero. Further, how many offers do you think were brought to me by brokers from any of those offices around the globe? Zero. It’s all b.s.! It’s a great talking point in a pitch, but that’s about it. Certainly, foreign capital is a part of the market but mainly in two asset classes. Foreign capital in New York is typically active in institutional office building sales and operating hotel properties. And many of those entities have satellite offices in New York City already and are known to most brokers here. When it comes to land sales, the fallacy of the foreign buyer is even more pronounced. Recently, what was probably the best development site in the entire world — a large site with about 276,000 buildable square feet right on Central Park at the northeast corner of 61st Street and Fifth Avenue — was put on the market for sale. The brokers (from a big four global firm) pitched the sellers on their international reach and said they would provide equity for the buyer from foreign sources. After an extensive marketing program, the buyer was a local developer (to whom I had sold five sites) and their equity source was the same source they had used on their past few deals. If a foreign buyer was not going to purchase that site, what are they going to buy? Nothing beats local market knowledge — nothing. Especially when you know the numbers forward and backward. Be the market authority, and no one will be able to beat you — especially those big firms with the mythical “foreign buyer.”
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