Paul Massey on Massey Knakal’s Growth
Daniel Geiger Nov. 20, 2012, 7:15 a.m.
Paul Massey began his career at CBRE in 1984 but disembarked on his own within months after becoming disenchanted with the company’s hierarchical atmosphere. Senior brokers there, he found, were unwilling to collaborate with or groom younger talent.
It was the start of what seemed like the career of someone bent on doing things his own way.
Four years later, Mr. Massey would launch the scrappy, eponymously named startup he founded with colleague Robert Knakal, overseeing just a handful of staff. The two developed a system of brokerage that no other firm had then employed, in which employees were assigned to specific territories in the city.
Many observers of the firm thought the plan would be a death knell, limiting its ability to recruit talent. After all, what top broker would want to be assigned to some obscure neighborhood in Queens or Staten Island?
The pair eschewed the real estate establishment in more glaring ways, too.
Offended, for instance, by the way guests talked over the speakers at the Real Estate Board of New York’s annual banquet, a lack of etiquette most in the industry consider one of the dinner’s beloved traditions, the pair walked out and didn’t return for years.
The gala is considered the industry’s Oscar night and its signature networking event.
It’s now abundantly clear that Mr. Massey never got CBRE fully out of his head and that he never aimed to be a maverick so much as someone with the ambition to build a brokerage platform no less diversified or sophisticated on his own.
Over the past year or so, Messrs. Massey and Knakal’s firm, Massey Knakal, has been transformed from a company that focused solely on small to midrange sales deals to one that now convincingly offers a suite of services, including retail and mortgage brokerage arms.
In recent months, it began raising millions of dollars to start an investment fund that will provide equity and bridge financing for real estate acquisitions in the city.
While Mr. Knakal has continued to focus on brokerage and has become one of the city’s leading investment sales deal-makers, the company’s quiet diversification has been masterminded by Mr. Massey.
“We’re thrilled with how it’s coming together,” Mr. Massey told The Commercial Observer recently. “We realized there’s a lot of synergy between these different service lines.”
Smart, strategic ideas don’t go unnoticed in a city as competitive as New York, and Mr. Massey’s moves were quickly seen as savvy by rivals. Several of the firm’s peers have since likewise moved into other services in order to broaden their business.
Eastern Consolidated, for instance, recently added retail brokerage staff.
The seeds of Massey Knakal’s recent growth can be traced to the recession, when it was dealt a number of humbling setbacks. When the sales market in the city tanked in 2009, the company was forced to close its Brooklyn office and scrap plans to move into New Jersey.
It seemed the company’s growth, which relied on moving into territories and stationing sales staff to focus on these new areas, had ground to a halt. Even the company’s image took a battering. Ken Krasnow, a top manager at the firm who oversaw sales staff, was found to have let his brokerage license lapse, drawing embarrassing ire from state regulators after a real estate trade publication published the results of its own investigation.
Mr. Massey had the composure to grasp the opportunity of the moment. Companies were shedding staff, and brokers at rival firms were unhappy amid the paltry business. It was during this period that Mr. Knakal hired Garrett Thelander, a former banker at Anglo Irish Bank who had left the embattled institution, to help start a mortgage brokerage arm.
Though the firm had grown to handle more transaction volume than any other commercial real estate brokerage company in Manhattan, with Mr. Thelander’s hiring, Mr. Massey saw the potential to tap into a market more vast than even the pool of 1 million commercial buildings in the city.
“The building sales business was a $35 billion annualized market at its peak,” Mr. Massey said. “The mortgage business is a $40 billion market. It’s a significant market, and many of the clients are the same as on the sales side. I asked myself, why aren’t we doing this?”
The underpinnings of the company’s growth, however, were laid by more fundamental decisions Mr. Massey made years ago. In the late 1990s, he began professionalizing the company’s management, installing chief financial officers, marketing staff and other executives.
“CBRE is the mothership for me,” Mr. Massey said. “They set the model for a professionally managed brokerage.”
With Mr. Massey mostly content to work behind the scenes, Mr. Knakal has always been the public face of Massey Knakal and the archetype of its success.
He built himself into a deal-making power broker not through the corporate heft of his company, but by self-sufficiently crafting his brand, relentlessly working the real estate speaking circuit, authoring myriad newspaper columns and networking.
And yet it’s hard to imagine that Mr. Knakal would have been quite as successful without the platform Mr. Massey has focused on building—a fact Mr. Knakal readily admits.
“I’m a big believer in the territory system we have here, and we’ve benefited from it like everyone else here has,” Mr. Knakal said.
“Paul and I have always just gravitated toward opposite sides of the business, and I think that’s why we’ve been successful working together.”