We’re pleased welcome our first guest, Chris Brodhead of B6 Real Estate Advisors on The Real Estate R/Evolution, our show where we make up games based on random skills we pick up as real estate developers and play them with professionals in the industry. Afterwards, we do serious interviews to get their insights on where the market’s headed, particularly on how Proptech is gradually evolving (rather than disrupting) the industry.
B6 Real Estate Advisors was founded in July 2018 by Paul Massey and several other members of the top brass that had ran Massey Knakal Realty Services. B6 stands for “building-by-building, block-by-block” – B6 has deep local market expertise, an owner-aligned philosophy, agents specialized in investment sales or capital advisory, a technologically rich platform, data transparency, and a strong collaborative culture. B6 believes that these 6 tenets of its business allow it to provide outstanding service to its clients. Chris has specialized in selling buildings in Midtown West for the past 20 years.
Here’s the game, Guess the Closing Price:
Here’s the interview:
For the TL;DWer’s out there, here’s what we asked and some highlights from his answers:
YD: Due to Covid, what asset classes and neighborhoods do you see getting hit hardest right now?
Hotels and retail will probably be hit the hardest. One of the neighborhoods that could suffer the most could be midtown. The lack of tourists will not only affect hotels, restaurants, and bars, but also the smaller things like the pedicabs, caterers, and horse and carriages. Shoutout to the Naked Cowboy who’s continued to work with a mask!
YD: Do you think this is going to have a long lasting effect or do you think it’ll be more like the Great Recession and bounce back like a V-shape?
I don’t know what shape we’ll see, I’ve heard of L-shape and W-shape but I do think we’ll bounce back. After 9/11 our offices were across the street from what’s now the headquarters of PriceWaterhouse. The site was just coming out of the ground and everyone was worried that no one is ever going to go back to a skyscraper, and certainly we know that was not the case. After 2008/9 we talked about an economic death spiral, which is worse than an L, but that didn’t come to fruition. I think we’ll see a period of adaption where we’ll have to inch back to the way things were but I’m optimistic and hoping that sooner than later medical breakthroughs will help us get back to hanging out the way we used to and doing the things we love to do.
YD: What is one proptech that is affecting the real estate brokerage industry the most (This includes software, hardware, and services) and why do you think that’s the case?
Property Shark and Reonomy have been a huge asset for brokers and particularly principals. It’s allowing information to become much more transparent to the marketplace.
YD: Is there a pain point in your experience that needs to be fixed?
Gaining access to units is very difficult unless we have a vacant unit. I’ve always felt it’s pretty awkward for someone to pay millions of dollars for a building and sometimes they can’t even see anything. And likewise access to decent plans to buildings. I’ve seen software that allows you to shoot photos and then take one measurement, and based on that it can calculate the square footage.
Another bane of my existence has to do with due diligence, specifically related to rent regulation and rent reconciliation with DHCR. It’s somewhat labor intensive. Reviewing tenant files to see if the leases are in place and if they have a record that the increases were done properly. To take it a step further, these records have to be held. It’s a massive decrease in value when they get lost in transfer from one owner to another, so it would be easier to have the transfer done virtually.
YD: That makes sense because as propsective buyers, if we’re unable to access certain information, instead of guessing we just chop it off the price. We have to factor in worst case scenario. The more due diligence we have and the faster we can get it, the more accurately we can price.
It has to do with momentum too. When the buyer and seller go through all the brain damage to reach an agreement, when we hand it over to the attorneys and we’re gonna start all over again for another 8-10 weeks. So many things can happen and fatigue can settle in. Most contracts really seem quite similar, but you have to find the missing due diligence and a lot of people on both sides go on vacations. If there was a way to have a contract that’s already negotiated, so when you put in your offer you send in a contract. It’s a lot to ask, but it would be nice to speed that process up.
YD: There’s probably some blockchain technology in the works. Maybe one day we’ll see digital contract enforcement solve some of these problems, but all the laywers need to start using the same digital contract system before that starts to happen.
YD: Is New York City still an attractive market after Covid and the rent regulation laws changing?
Without a doubt, NYC is still a very attractive market. Covid is definitely a challenge and the new rent regulation laws have upended the dynamic of those investments. But I think it’s a mistake when people bought them with too short a time frame. I think it’s a mistake with all real estate. It’s gotta be a long term perspective and investment and if you take that approach especially in NYC you’re gonna be fine.
YD: What’s the first thing you wanna do when you can go back to work?
There’s a couple restaurants I wanna go. There’s a great burrito place I wanna go on 10th Ave between 46th and 47th. I want a beef tongue burrito. The other thing I wanna do is I wanna ride the elevator with lots of people without a mask. May not be the first thing but I’m looking forward to that day!