$58 MILLION

330 East 63rd Street

Newly Renovated Apartment Building

RECENT CLIENT SUCCESS

FINDING THE RIGHT BUYER

CHALLENGE
Stonehenge Partners, is recognized as one of the best
investment firms in New York City at creating, maximizing, and
finding value in their assets that is often overlooked by others.
Once they completed their building wide plan at 330 East
63rd Street, spending $3.2 million in capital improvements
and renovations, they approached Team Knakal of Cushman
& Wakefield to potentially market that asset. The property is
an approximately 80,000 square foot mixed-use apartment
building that contains 89 residential units and 3 commercial
units. Of the residential units, only one-third of the units
remains rent stabilized. Although the property had many
positive features, there were major challenges throughout the
marketing process. As the property featured robust cash flow
from the free market units and was efficiently managed, there
was minimal short term upside value that deterred many
local investors from pursuing the opportunity. Additionally,
the units were larger than most other types in the market
which created a potential ceiling as to the rent that could
be achieved due to the inefficient layouts. Furthermore, the
propertys location at the Queensboro Bridge exit ramp was
another obstacle to overcome as it routinely creates chaos
directly in front of the building.

ACTION

RESULT

Team Knakal was chosen to market 330 East 63rd Street due to
our wealth of geographical expertise, expansive global outreach to
market participants, and vast understanding of the local market.
Understanding the assets challenges, the team needed to portray a
long term growth strategy to show value for prospective investors.
Upon being rewarded the assignment, our team implemented
its comprehensive marketing campaign that incorporated the
distribution of the propertys information to an extensive database
of local and foreign investors, territory owners, and cooperating
brokers. Determining that the purchaser would most likely have a
long term investment strategy, our team identified and engaged
countless 1031 exchange purchasers and institutional capital
sources. Team Knakal focused on illustrating substantial future
value through a viable condominium conversion strategy in addition
to the creation of coveted amenity space and rent stabilization
turnover.

Upon being retained to market 330 East 63rd Street, Bob Knakal and
his team implemented a tireless marketing campaign that resulted in
27 offers from a diverse range of qualified purchasers.
Maximized the propertys exposure to the marketplace which
resulted in 115 executed confidentiality agreements and over 50
property tours.
To ensure our client received a maximum price for their property,
the Team implemented a bidding process that procured 15 strong
offers near or above our pricing expectations.
Continued to market the property and explore additional
participants even after the bidding process began.
As a result, the team identified a new investor with a 1031
requirement who purchased the asset for $58,000,000,
outbidding every party in the initial bidding round by several
million dollars.
The purchase price equates to a 2.9% cap rate, one of the
strongest cap rates recorded throughout New York City in 2014.

TESTIMONIAL
We have enjoyed a long term relationship with Bob Knakal and
Massey Knakal (now Cushman Wakefield) for many years. Bob has
provided Stonehenge with valuable, strategic advice and market
data in order to assist us in making informed and timely decisions
relating to our existing portfolio of properties in Manhattan. When

it came time for us to sell 330 East 63rd Street there was simply
no one better than Bob Knakal to lead the initiative on our behalf.
Bob and his team delivered in every sense, period!

275 Madison Avenue, 3rd Floor | New York, NY 10016 | nyinvestmentsales.com

Richard Dansereau, Stonehenge Partners

$42 MILLION

4101 & 4113 Broadway

Two Elevator Apartments Buildings

RECENT CLIENT SUCCESS

TWO ASSETS SEPARATED,

BUT ENCUMBERED, BY A CHURCH
CHALLENGE
Normandy Real Estate Partners and Candlebrook
Properties were evaluating the sale of 4101 & 4113
Broadway, two of the tallest residential buildings in
Washington Heights. The two, twelve-story mixed-use
elevator buildings span approximately 125,000 square
feet on the western block front of Broadway between West
173rd and West 174th Streets and contain 125 residential
units, all of which are rent stabilized, as well as 7 ground
floor commercial units. Five of the retail spaces were
vacant with the remaining space on short-term leases.
While this provided an opportunity for repositioning,
the lack of in-place income was difficult to underwrite
as the eventual purchaser would have to believe strongly
in the projections. Adding to this challenge was the
two buildings were separated by a church that not only
shared a single boiler with the properties, but also held a
long-term lease on approximately 27,000 square feet of
below grade space beneath them.

ACTION

RESULT

After a thorough interviewing and vetting process, the owners

engaged Bob Knakal and his team, in conjunction with territory expert
Robert Shapiro, based on their tremendous experience with the
asset type and their in-depth local market knowledge to prepare an
Opinion of Value. The team was able to present detailed information
on the comparable sales within the neighborhood, supporting their
assumptions and thoughts on value. Their local market knowledge,
a result of Cushman & Wakefields proprietary territory system,
was critical in determining appropriate pricing for this asset due to
the propertys significant amount of vacant retail space along the
burgeoning Broadway retail corridor and the challenges related to
the adjacent church.

Throughout the marketing process, Bob Knakal, Rob Shapiro and their
team:

The owners subsequently retained Bob, Rob and their teams to

immediately implement their proven comprehensive marketing
campaign that included the distribution of the propertys informational
setup to an extensive database of thousands of local, domestic and
foreign investors, neighborhood owners, and cooperating brokers.
Throughout the marketing process, the Cushman and Wakefield team
highlighted the tremendous room for upside through repositioning
of the retail and below grade space, rent stabilization turnover, and
the ability to add additional bedrooms to the oversized units.

Maximized the assets exposure to the marketplace, which

resulted in over 35 property tours.
Implemented a competitive bidding process that resulted in 25
offers near or in excess of initial pricing expectations for the asset.
Produced a purchaser who ultimately paid $42,000,000 for the
asset, a figure over $1,500,000 above their reconciled value.
Negotiated for a 12% deposit and 30 day close, providing the
owner with security and confidence that the deal would close.
Sold the property at a 3.55% cap rate, an incredible figure nearly
35% below the average cap rate for mixed-use elevator buildings
in Northern Manhattan.

TESTIMONIAL
Bob Knakal and Rob Shapiro really hit the ball out of the park
for us on this transaction. They were able to generate dozens
of offers from a variety of different types of buyers, including
investors from overseas. Additionally, they stayed on top of the
marketing process every step of the way from due diligence to

contract signing to closing. Ultimately, we sold the property at a

level above what we had expected. We would happily recommend
Bob and Rob to other potential sellers.

275 Madison Avenue, 3rd Floor | New York, NY 10016 | nyinvestmentsales.com

Gavin Evans, Normandy Real Estate Partners

$28 MILLION

150 West 85th Street

Educational Facility / Development Site

RECENT CLIENT SUCCESS

EDUCATIONAL INSTITUTION
OUTDUELS DEVELOPERS
CHALLENGE
The seller, The New School, occupied the entire building located at 150 West 85th
Street which is located mid-block between Columbus and Amsterdam Avenues and
contains approximately 30,009 square feet of above grade space with an additional
6,142 square feet of usable basement space. As historic districts consume majority
of the Upper West Side, the subject property is ideally positioned for development
as it is not hindered by landmark status or historic district jurisdiction. However,
the existing structure is overbuilt and therefore prospective developers would
lose approximately 3,709 square feet of valuable residential development rights
upon razing the building. Additionally, The New School required free rent until they
moved into their new home. Given these caveats, it was challenging to determine
both the highest and best use, along with negotiating a contract once a viable
purchaser was procured.

ACTION
The New School retained Bob Knakal and his team to assist them with evaluating
their options and marketing their asset after an interview and valuation process.
While their initial valuation was $25,150,000, they suggested going to market with
an asking price of $27,000,000, a premium they were confident that they could
achieve, based on their expertise of the market and experience with potential
development sites. Bob Knakal and his team determined the site would be an ideal
opportunity for both developers and end-users, thus implementing their proactive
marketing process which includes reaching out to the most active developers in
the NYC area, domestic and international investors, 1031 purchasers, institutional
investors, as well as the brokerage community to ensure that all end users were
also aware of the opportunity. These efforts ensured maximum exposure for
the property, which resulted in a bidding process between a handful of credible
developers and institutional parties who desired space in the severely supplyconstraint neighborhood.

RESULT

RESULT

The Knakal teams rigorous marketing campaign resulted in the sale

of the property to an end-user willing to pay a premium after a formal
bidding process.

After several rounds of bidding, a hard contract was signed at

$28,000,000 which translates to a price of $930 per square foot
and surpassed the asking price by $1,000,000.
Team Knakal also played an integral role in successfully
negotiating free rent for The New School until they relocated to
their new home.
The sale of 150 West 85th Street became the second successful
transaction Team Knakal handled for their client in just one year
and is a testament to their global outreach, extensive marketing,
and territory expertise.

Within three months of launching their marketing campaign,

Team Knakal received over 60 confidentiality agreements and
conducted over 20 property tours to prospective candidates.
Several top prospects were identified, which resulted in a formal
bidding process for the property.

TESTIMONIAL
Bob Knakal and his team had just completed another sale
transaction for us very successfully so, when it was time to sell
our property on 85th Street, our choice of broker was not difficult.
This property was a to-be-vacant school building so the user
market was a primary group of potential buyers. Therefore, Bobs
long-time practice of proactively engaging with the brokerage
community was something that really resonated with us. The

marketing program implemented by Bobs team produced many

offers from users, several of whom were represented by outside
brokers. We feel this approach produced maximum exposure for
our asset and, ultimately, the highest possible price.

275 Madison Avenue, 3rd Floor | New York, NY 10016 | nyinvestmentsales.com

Roy P. Moskowitz, The New School

ROBERT KNAKAL
Chairman, NY Investment Sales
Office: 212 660 7777
Mobile: 917 509 9501
robert.knakal@cushwake.com

CUSHMAN & WAKEFIELD

275 Madison Avenue, Third Floor
New York, NY 10016

During Mr. Knakals 32 year career, he

has sold over 1,700 buildings having
an aggregate market value of over $13
Billion. He is a graduate of The Wharton
School at The University of Pennsylvania
and formed Massey Knakal with Paul Massey in 1988. In 1990, he
was awarded Crains New York Business 40 Under 40 awarded
annually to 40 business people under forty years of age for
outstanding achievement in the New York business community.
He has twice been the recipient of the Robert T. Lawrence Award
in the Real Estate Board of New Yorks Most Ingenious Deal of
the Year Contest. Since 2009, Mr. Knakal has been named one
of the Top 10 Investment Sales Brokers in the United States by
Real Estate Forum magazine. In 2010, he won REBNYs Louis
Smadbeck Broker Recognition Award for Lifetime Achievement in
Commercial Brokerage.

NEW YORK CITY INVESTMENT SALES MARKET UPDATE

As we enter the fourth quarter of 2015, there are many questions
about where the investment sales market in headed in the next 12 to
24 months. Will the market crash or will it keep running on its upward
trajectory for several more years?
In order to try to determine where we are going, it is important to
look at where we have been.
2014 was the best year I have witnessed in my 32 years brokering
in New York City. The dollar volume of sales was a very healthy $58
billion, which, while being up a whopping 51 percent from the $38.4
billion in 2013, was still shy of the all-time record of $62.2 billion seen
in 2007. More remarkably, and why I look back so fondly on 2014, the
number of properties sold last year was 5,533, an all-time record for
the city by more than 10 percent. This epic year was created by a
surge in the supply of properties for sale. And these properties were
easily absorbed by the overwhelming demand that was exhibited by
thousands of buyers hungry to purchase properties in the Big Apple.
The swelling supply was caused by increasing property values which
rose by nearly 20 percent. Potential sellers found these new values
far too compelling to sit back and decided to take advantage of the
fantastic conditions by putting their properties on the market.
Over the years, the supply/demand relationship has almost always been
dominated by supply with respect to how the market has performed.
On average, over the past 32 years, just 2.6 percent of the total stock
of properties has traded hands annually. To illustrate what this statistic
means, when someone purchases a property in New York City, they
hold onto it for an average of 40 years! With supply generally limited,
and demand always high, the number of properties on the market for
sale is the most important factor which determines market performance
(It is noteworthy to mention that in every year except 1992, demand
has greatly exceeded supply. In 1992, the RTC was dumping thousands
of properties from failed banks and supply exceeded demand causing
property values to plummet more that 50 percent. By comparison, the
diminution of value in this past recession was 38 percent).
Coming off the record number of sales in 2014, we predicted that
we would see a reduction in the number of properties sold by about
10 to 15 percent in 2015. This was not because of a pessimism about
the market but, rather, for two other reasons. The first was that we

BY: ROBERT KNAKAL

believe that over time, this metric reverts to the long-term average
and we have never seen two successive cyclical peaks in successive
years. The second is that we believed that the tremendous price
appreciation in the second half of 2013, and into 2014, caused a wave
of discretionary sellers who would find these values too tempting.
History shows us that discretionary selling generally ebbs and flows
in waves caused by market conditions.
As expected, after a very robust first quarter, the slightly constrained
supply at the beginning of the year started to be felt in 2Q15 in
which there were 1,232 properties sold, the lowest quarterly total in
seven quarters. We have seen supply continue to slow. Annualizing
the sales in the first half of 2015 show a pace that is about 7 percent
below last years record. We believe the presently constrained supply
will lead to a further slowdown resulting in an annual total within our
predicted range.
In January, we had also predicted a new dollar volume record for this
year of approximately $65 billion. Through 1Q15, we were tracking
towards $80 billion and through 1H15 the tracking dropped to $75
billion. The third quarter numbers will be finalized within the next
couple of weeks and we expect that the yearly total will be closer to
our $65 billion projection than the current $75 billion pace.
On the demand side, we are seeing an increase but not an even
increase from all demand segments. Many of the investors who have
been active in the local market for decades have recently decided to
sit on the sidelines or purchase assets in other locations as they feel
the market in the city is over-inflated. However, the new first time
buyers from around the US and around the globe, have swooped
in to fill this void and more. So with demand growing and supply
tightening, upward pressure on value remains.
Even with reduction in the number of properties sold this year, it will
still be outstanding given the absolute number. So, will 2016 bring
the market correction that an increasing percentage of market
participants are anticipating or will the market continue to run
for several more years? If rates stay low, and demand continues its
torrid pace, we could see continued growth. Time will tell, but how
the market performs in 4Q15, could be very insightful in terms of
creating our forecast for 2016.
(Reprinted from The Commercial Observer)

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