When I was 12 years old, I visited a Forest Hills, Queens apartment renovation our family was working on. With my aspirations towering over my actual height, I asked one of the workers if I could help jackhammer some of the tiles out of a bathroom for the project. The worker agreed, I pulled on a helmet and safety equipment and started hammering away. It was a joy I had never experienced before. From that moment, I knew I would be involved in my family’s real estate business.
Fast forward to today, I am working side by side with my father, Ed, managing all aspects of both of our family real estate businesses, Kaled Management and The Kalikow Group. The former manages approximately 6,500 residential units across New York City; the latter provides equity financing for construction projects in New York, the Southeast United States and elsewhere such as Texas.
I’m one of many members of my generation who have grown up in their family’s New York real estate business, learning on the job and preparing to one day take the reins.
Individually and together, we’re facing a new set of challenges—some of which have yet to reveal themselves. We are also reaping the benefits of new opportunities—some of which we are creating from scratch.
The headlines broadcast the market’s current status: a glut of residential units from mega-projects and neighborhoods undergoing massive transformation with high land prices and savvy tenants asking for (and getting) concessions that have the potential to outstrip already thin margins.
On the buyer side, the loss of the income tax deduction in the latest federal tax law is hurting the condo and home buyer market, providing less incentive to buy. Investment sales decreased 60 percent year-over-year from 2016 to 2017 and in 2018 already—and that effect is rippling out across Brooklyn and Queens as well.
It seems the only way it makes sense to purchase existing multifamily properties in Manhattan is for a long-term generational hold. I believe you will fall well shy of expectations at this point if you are looking for a quick flip.
Combine that all with an unsure political environment, competition from foreign investment, unrealistic seller mentalities (many who list properties simply as exercise in testing the market) and the Amazon effect on retail, and we have some serious hurdles to overcome.
Enter the opportunities: relationships between families and businesses that have been nurtured over the last generation are now translating to ours, in addition to us developing our own new relationships. We have new ways of thinking about relationships, are quicker to seize on evolving trends and consume information at a terrific clip.
The integration of technology into our business comes naturally to us, allowing faster and more efficient communication and decision-making. Our generation has grown up with technology and so we’re more comfortable using it. At The Kalikow Group, we utilize drones to take videos of our active projects to share with investors for up-to-the-minute progress reports (an idea that came from one of our millennial team members). While the prior generation is still faxing and photocopying, we’re using apps and Google docs to share information, sign contracts and conduct business.
That digital mentality is also translating to deal making: I see investors of our generation looking to invest a real estate venture capital as in an asset class. Instead of buying buildings, some real estate Millennials see greater prestige as investing in the next great app or platform, like Zillow, Streeteasy or Homesnap—even though it carries greater risk and has a lower track record for success than brick and mortar real estate.
The core business—strategic partnerships and deal making—will always remain. But we will continue to seek out larger and more lucrative opportunities with strategic partnerships driving the success of the business. In the hunt for quality partners and quality deals, more doesn’t always mean better.
One thing will always remain, and that’s the values we each stand for, as individuals and as our separate companies.
Our Kalikow corporate mantra has always been to treat people in the company like a family. Following in the footsteps of the generations that have come before us, we need to not only protect and nurture the legacy of what we’ve been handed but grow it to the benefit of the generation that will follow ours.
My daughter—not yet two years old—will hopefully come into the family business when she is ready. When she does, I want to make sure she inherits a strong company that will be ready to serve the needs of our residents, partners and investors. Maybe I’ll start her with jackhammering tiles like I did.
Greg Kalikow is a vice president at Kalikow Group.