print header

# 1 Commercial Real Estate Information Company

  • Find Properties 
  • Market Properties 
  • Analyze Properties 
Commercial Real Estate News

Jones Lang LaSalle's Knakal Expects Gains in Manhattan Office Prices to Extend Through 2019

Demand Driven by Tight Labor Market, Low Turnover in Offices Valued at Less Than $100 Million
September 12, 2018


New York City's office market, the nation's largest, will probably extend this year's gains through 2019 because of federal tax changes, a tight labor market, and low turnover in most office buildings selling for less than $100 million, according to the new head of local investment sales at leading global commercial property broker Jones Lang LaSalle.

Robert Knakal, who is in his first week as chairman of investment sales within Jones Lang LaSalle's Capital Markets - New York division, has been involved in the sale of $18 billion in commercial real estate, or more than 1,864 properties, over 34 years as a New York City broker.

In an interview, he called 2018 a transitional year in terms of investment volume, noting that the dollar volume of sales increased in the first half of the year versus last year.

"We expect the number of sales to be trending upward over last year," he said, based on current economic conditions.

According to CoStar data, 183 Manhattan office properties sold during the first half of 2018 for a total value of $8.6 billion. In the first half of 2017, 143 properties traded for nearly $7.3 billion in sales volume.

In 2019, Knakal said, he and Jones Lang LaSalle expect Manhattan’s office values to increase further, as a strong economy enhances demand for office space.

"There is no doubt that government tax reform has had an effect, companies have had increased after-tax profitably and they invested that savings into hiring more employees, leasing office space, buying equipment," said Knakal, who joined Jones Lang LaSalle this week from brokerage firm Cushman & Wakefield.

Improving economic indicators, such as an expanding labor participation rate and gross domestic product growth near a decade high are strengthening commercial real estate fundamentals, Knakal said.

"Positive pressures will be exerted on property values, particularly if the interest-rate environment remains at relatively low levels historically," he added.

Emphasis on offices that sell for $1 million to $100 million, referred to as the middle-market sector, is crucial, according to Knakal. Citing turnover rates from office sales below 96th Street in Manhattan as an example, Knakal noted an average of 2.6-percent turnover over the past few decades within the total stock of 27,469 buildings in the $1 million to $100 million, middle-market range.

"This tells us that there is rarely a lot on the market and also that when an investor purchases a building in Manhattan, they hold it on average for 40 years," Knakal explained. "The deviation from the average is more acute for institutional assets where turnover can swing from the 4 to 4.25 percent range to as little as 1 percent. The turnover for middle-market assets is in a tighter bank of 2 percent to 3.7 percent. Therefore, middle market sales are more consistent."

At Jones Lang LaSalle, known as JLL, Knakal is responsible for growing the number of middle-market transactions the firm closes in New York. He will also work to expand the institutional business nationally.

"Our objective is to create a balanced practice between the institutional and middle-market sectors for JLL," Knakal said. He will work with Managing Director Mo Beler, who heads the investment sales division. Knakal said he wants to grow and expand investment sales at JLL while working as a broker simultaneously.

Last year, the New York City office of JLL arranged more than $1.6 billion in investment sales, notes, debt and equity transactions.

Knakal, 56, was one-half of Massey-Knakal Realty Services, the commercial brokerage and advisory firm started in 1988 that Cushman & Wakefield bought in 2015 for a reported $100 million. After Cushman & Wakefield’s buyout, Knakal worked at the company as a chairman of investment sales. His contract there expired in June 2018.

Knakal’s former partner, Paul Massey Jr., is fleshing out his own investment sales and brokerage firm focused on the middle-market sector, B6 Real Estate Advisors. That firm opened this summer.

Peter Riguardi, president of the New York Tri-State region for JLL, called Knakal "an acknowledged leader in the New York City real estate industry" with "an unparalleled track record."

Diana Bell, New York City Market Reporter  CoStar Group   
GET IN TOUCH        Contact CoStar News Team:

 Find us on 

Welcome To CoStar's
Award-Winning News

Winner of three Journalism Awards from the National Association of Real Estate Editors (NAREE)

Award-Winning News