A Conversation with Jack and Alex from the No Cap Podcast

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Well, welcome everyone, to an exciting edition of the Insider's Edge to Real estate investing. And we are here doing a collab with the no Cap Podcast. Jack, Alex, awesome to have you guys here. Really excited for this discussions.

So.

Right.

Okay, so I'm going to flip it. I'm going to back here with no Cap, CRE Daily. We're here.

How this goes.

James Nelson and Insider's Edge. And we're really happy to have you here. It's funny, we just fight back and forth about it.

Yeah, I'm having flashbacks to when I was in China raising money for EB5 and everything I said was then translated, so there was like a little bit of a lag. So I can do my thing and then you could do your thing. But no, Jack, it'd be. First of all, thank you and Alex for everything you guys do for the real estate community. You guys, huge fan here. As a fellow podcaster. You guys put out such incredible content, such valuable information, I think for both of our audiences to understand a little bit of the genesis about how no Cap came to be. So maybe talk about, you know, CRE Daily, you know what that is, in case someone's been living in a cave. And then let's talk about how the no Cap Podcast came to be sure.

And not to flatter you too much, but obviously we're huge fans and you know, I've known you for little bit of time now, probably three or four years. So it's, it's great to be here and it's great to do this with you finally. But CRE Daily is. Is a very popular newsletter in the commercial real estate community. They send out the morning newsletter, no different than the Exec Sum. Probably Biznows Morning briefs. Who else I can think of don't.

Even know what those are.

Well, get in the know, Jack. Yeah, but outside of the newsletter, they wanted to pursue the other media verticals. That's where Jack and I came into play. Me as the brains. Jack's at the looks.

Thanks, man. You're welcome. I'll take it. No, look, this has been going on for about a year now with CRE Daily. No cap like Alex says, was just kind of an extra vertical for CRE Daily. CR Daily kind of came around during COVID and it really blew up. And now there's close to, I believe, around 100,000 subscribers. And these are all commercial real estate professionals. Over half are on the principal side. It's actually more heavily weighted to the institution. So if you look at sort of our viewership base and readership base, it's, it's more kind of high level like that. But we get a nice pool, nice sample of readers and listeners from, from really all over from, you know, the institutions. We just had, you know, head of real estate from Brookfield on our podcast last week. I mean we get a lot of viewers from institutions and then we get a lot of, you know, college graduates who are just trying to figure out, you know, what the hell am I going to do? I want to be in real estate, but I don't know what. And so we've been doing now for a year and it's really blown up and it's so fun because I get to do it with one of my best friends. Yeah. And if, like we were saying earlier, if Alex and I had our choice, we would just kind of shoot the shit and talk about.

Yeah.

Talk about nothing all day.

By the way, how long have you been at this already?

It's, it's been five years and 250 shows and I love it hard. That is, It's a lot. It's a lot. Yeah. And I've been. We're thinking about how to revamp this, so gonna be looking at a co host as well because clearly the banter that happens here definitely mixes it up. And so yeah, and rolling out kind of a whole new lineup. But I love it. I always say that even if no one was listening to the show, the chance to talk and interview with some of the, the top real estate professionals out there, hear what's going on. I mean, I enjoy it tremendously, but I think more importantly for the real estate community, podcasts and the opportunity to have a long form conversation, you know, in this world where everybody's just like scrolling all day long and you've got like an attention span of 30 seconds, someone will actually really commit to listen to an episode, whether they're, you know, at the gym, commuting, whatever, and you can really, you know, go deep on self.

So it's how it should be. It's how it should be. And I think, you know, just talking about Politics and the old form debate. I don't think you should be having debates anymore. My wife and I talk about this all the time. They should just have podcasts and just.

Have real conversations and see who speaks. Yeah, it's. It's a good point. You know, I don't. I don't know how you could take somebody who's so smart with like years of experience and cram everything down to an hour. But it's better insight than nothing else, right?

That's right. We've had a.

We could be like Tim Ferriss. We could just go on for like four hours. I'm sure we got. Between the three of us. I'm good for at least an hour of contest. I think you guys are good too.

Let's do it.

I'm more than happy to.

So how'd you guys meet?

So really interesting. So, you know, I am a multifamily broker in Dallas, the Grace deal. And I do quite a few deals multifamily all throughout the state of Texas. Alex was looking at multifamily with a partner at the time. This was years ago.

Yeah, this is pre show.

This is pre. Yeah, pre Estem, pre shvo, pre. Every other adventure I've had in between, this is even pre pandemic when I was building out kind of a workforce, housing strategy.

So anyway, so we hit.

We.

He called about a listing I had on the market. We hit it off. He's like, I'm in New York. Eventually I said, hey, I'm gonna be spending a lot of time in New York. And you know, a couple years later was spending a lot of time in New York. And we hit it off.

Yeah, I lost all interest in multi, but I gained a friend in Jack.

We stayed friends. So that's. That's basically it. And the cool thing about sort of our friendship and no cap and the podcast is I'm kind of bringing the background of multifamily from the Sun Belt and from Texas, from BMW. Alex is bringing sort of the definitely.

More commercial side of it.

More commercial office, New York centric type background. So we kind of, I think, complement each other in that way.

It's amazing perspective and for you guys to be able to riff off each other. And I'll tell you, this year, so I've taken on a national role. So I Now head up US investment sales for Avis and Young. After being 25 years focused here in New York, New York, obviously that's where we are right now and where I'm spending still a lot of my Time.

Is that hard to transition to doing that from your day to day was beforehand.

I actually. No. And I'm actually wondering why I didn't do this earlier. Maybe I didn't get the memo. In 2019, it was really here in New York where there was really heavy regulation that was rolled out in multifamily. And then suddenly we started to see our investors just start to scatter. I mean, when I started the business back in my seen Ackel days, there was a really. There was this amount of pride where I only own in New York. Why would I. Why would you ever even leave the island? And then, you know, things change. And look, there's still plenty of believers and we can get into that and talk about, you know, New York maybe is now the contrarian play. Guess what? So is San Francisco. We can talk about that. But the point is that investors today aren't just focused in, you know, 40 or 50 blocks maybe when I started my career with my Chelsea territory, I mean, investors want exposure and they want to see what's out there. And so Avis and Young was the perfect place to do this as well. I mean, we're a global full service firm with 120 offices around the world. We have 60 in the US but really the idea that I brought to them is, look, I want to help us go in and focus in on the top dozen markets, Dallas being one of them. And let's elevate our sales presence in the major asset classes and the amount of connectivity between these markets. And it's so funny. I was in Charlotte yesterday for the day. Like, I ran into three New York investors while I was there. Right.

Small world. I mean, I think to your point, you know, we live in a smaller world today because everyone's online, everyone's using integrated databases that are smart, everyone's on social. So you see what's going on out there. And if you're just limiting yourself to one market, I think you're probably at a disadvantage, right?

Oh, for sure. And I think investors, they want, again, whether it's diversification, they're opportunistic. They want to see what's out there. I mean, I was on the phone with an investor this morning who owns here as well as in Dallas, and he said, look, I'm looking for office. I want cash flowing, distressed office. I said, well, where are you looking? He says, anywhere, you know, and I'm sure he didn't mean it like that, but a lot of investors, there's a lot to do out there.

I think it's hard to find real yield these days. It's hard to find real deals these days. I think you got to look outside of your comfort zone. So you got to look in other markets and other product types. So, you know, I think that's super important. I mean, we have an integrated database at Grace Deals. So you know, what that means is we have buyers in California out of our California office that you know are in our same database and we're all looking at it together. So to bring buyers to different markets and kind of cross pollinate that way, I think it's really important.

Absolutely.

Yeah.

So you like that plug? That was good. It was subtle.

Yeah, thanks.

So, Alex, I'd love. And maybe we could talk a little bit about what you've been doing at East End. That was awesome. You came into our office, you know, talk some of the opportunities. But. But how are you all finding the market? What are you seeing out there that's interesting.

Yeah. So we are primarily New York focused. We will look at some opportunities in, in San Francisco and Miami as two other major markets. But first and foremost we are commercial buyers. We're interested in an office, whether that's value add office, some office redevelopment, core plus kind of portfolios or distressed loans, anything that's office centric is really where we see the opportunity today. We think that New York is on sale. Frankly, when you look at periods where people made their wealth in New York, it was always post some financial crisis. Right. Post 2000, post 2008. Now with this fluctuating recession that was either in Covid or there's another one coming. Now is the time that we think you should buy. So that's where we see the opportunity. I see no shortage of things hitting the market. The question today is really capital. I think capital. And investors are having a tough time pricing risk and determining where if they want to dip their toes back into office, what bucket does that belong in, what it's supposed to look like? Do they start with just basis buying on the core side? Do they. Can they do a value add project? Is that too much capital? So there's a lot of questions that circulate this, but I think that's the most exciting opportunity for us today.

Yeah. Could not agree with you more that New York is on sale and you know, even across the street from us, 529 Fifth Avenue, that went down for $350 a foot. We're going to look back at that trade in five, 10 years and it's going to be completely obvious. But it was tough at that time. And I give a lot of credit to Namdar, who is one of the most active office buyers. Again, private. And that's been a really big theme that we've been seeing across the country. In the first half of this year, over half the dollar volume is coming from private buyers. Even if you look at office, 57% of the buyers in the U.S. top 12 markets are private. Where the institutions now just wait for the institutions to start opening up. Right. Because that's where, when you really want to move the needle. And so that's why when you hear the Blackstones of the world getting off the sidelines, RXR taking down a billion dollar office building, that's a great thing. Not just for New York, that's a great thing for the rest of the country because that's going to give confidence. The biggest challenge that we've had certainly coming out of COVID but then in mid 22 and Jack, you definitely remember the transaction slowdown because once rates started to increase at this unprecedented rate, what happens? I mean, yes, there was downward pressure on pricing, but there really was uncertainty. And what happens when there's uncertainty? Nothing. Buyers and sellers move to the sidelines, most of them do, and say, we're going to wait this thing out. What are we going to do? We're going to wait.

You can look at the Fear and Greed index, by the way, at CRE Daily, another plug just started out with and it's really interesting just to follow the trends month over month. And I think we're finally starting to tilt into the greed side, which is not a bad thing. Let's get deals done again.

James, that's a great point that you bring up. And you know, the, the big LP institutions, let's call it, are typically the laggard. So by the time that they're in, everybody who is in the know has already made their purchases. And even on, you know, you brought up 529, it's a perfect example. When are you going to buy something on fifth Avenue at a three handle? Let's see, let's see that happening.

Because their cost of capital is so cheap, they, they have so many more opportunities than you know, any private capital groups do out there. But they do lag here and I find that just to be very interesting.

Yeah, yeah. Well, I'll tell you, another group along with private investors who've been active in this market have been end users, companies stepping up and buying their buildings. So you know, I could sit here and hit every corner of the block here at 45th and 5th. But, you know, Amazon stepping up and buying 522 for that. I mean, that's huge. Right, because.

And taking the lease directly.

Oh, yeah.

You know, up a block for sure.

So it's confidence in the market saying we're going to take a long, long term stance. And you know, look, San Francisco, the Bay Area, in the first half of the year, they had the most dollar volume in office sales in the country. You know, the listeners might not, you know, if you read the headlines, you'd say, oh, San Francisco, it's, you know, it's a disaster. I've been there twice in the last couple months. But not anymore. Not anymore. I mean, if you. That new mayor, you know, Dan Lurie has really been doing a great job with quality of life and it's improving and it feels good and you can tell. And people. And the AI boom is. It's real.

James, to your.

That's exactly it. Right. How many office sales need to occur for people to see that? That's a signal. Yeah. The capital doesn't move for.

I think there's another signal there. You're talking about the end users. Right. And I think, you know, the sale leaseback space was a pretty hot space not too long ago just to free up some liquidity for a lot of these businesses. So it's interesting that now it's kind of, that's a good sign, I think, that, you know, groups are believers.

Oh, for sure. Apple just bought their second office building in the Bay Area. They were a tenant and they said, look, we want to control our destiny. So paid $350 million in San Jose. But then, I mean, who would have guessed that one of the top office trades was in Oakland. A utilities company, PS&E paid $985 million for an office deal out there. So that's a great thing in New York. And we've tracked every office sale since the pandemic and a quarter of them have actually been purchased by end users. So it's not just the Amazons of the world. It's Haddad, you know, in the garment business that buys two park, right, for 350 million. And what that does, is it also office space kind of off the roll, so to speak. So the leasing market here, we've seen that the availability rate has gone from, you know, one point over 20%. We're back down to 16. And the other big thing that of course everybody's talking about is office to resi conversions. We've got, you know, now call it 1314 million square feet, which is converted to residential, which is obviously providing much needed housing here. But it's also, it's shrinking the denominator. That's right. So when you go out and you're looking to invest in office, there's going to be, you know, less options out there. Right.

And it's happening in areas that are, you know, kind of what I would call the spillover market right now. So it's no secret that office is really microcosm. And it's not just New York that supplies for San Francisco as well, but it's extremely neighborhood specific. And what's happening in New York, north of 42nd street to 59th with the typical offenders, Park, Madison, Fifth Avenue. There's a reason everybody wants to be there, but there's such pressure and so much demand that it's really spilling over to Lex and it's spilling over to 3rd. It's spilling over to 6th Avenue. So, like, who the next winners are is going to be very interesting.

Again, what's your bet? Where would you say the next. The next area is?

Well, I see 3rd Avenue already going. 3rd Avenue is, I think, at probably the sharpest discount in New York because what people are missing out on is a. The amount of buildings hitting the markets, probably the densest over there relative to office buildings that matter and are fully technically obsolete. And then you have some of the highest density of the conversions happening on Third Avenue.

That's right.

So as these little, like, pinpoints are coming up and they're glowing, you're removing all this, you know, outdated office from that market anyway. So you're only left with a few options. So naturally your rents go up and everything else goes up. Your vacation, you know, your vacancies come down as you're.

Right.

Right.

It's. It's a really interesting time. It's a really interesting.

Well, I'm sure you've been following what's happened in Dallas in the office space a little bit. I mean, it's, it's on fire. And there's certainly like this flight to quality. There's all this new development and uptown really is what I'm thinking of the most part, which is just the place to be. And, you know, this older product that's kind of not there. I think it's tough. Granted, I'm not an office guy.

How is Dallas siloed? Maybe either of you guys know how the neighborhood silos right now? Like, is it more people in the downtown area? Is it still in the suburbs? Like, what's so.

It's actually interesting. As of recently, and this was last year, the population in core Dallas actually shrunk, which is interesting because everyone's like, oh, it's. It's growing so fast. It is growing so fast as a metroplex. And so when you go out of the, you know, CBD and into the suburbs, you start to see almost a different sort of dynamic. It's almost like hubs, kind of like Los Angeles has different hubs and different, like, you know, cities within the city.

Right.

I think that's what Dallas and fort Worth is becoming. So you go out to Frisco now, which, when I was a kid growing up in Dallas was nothing but farmland. And now you have. The cowboys are there. The pga tour just moved there. It's. It's just mega, mega, mega developments popping up left and right. So. So it's a very interesting time.

Got it. So a lot of people aren't living in core downtown Dallas.

Yeah, I think a lot of people are moving out to prosper where I think the average home now is 500,000. This is a town that didn't exist two years ago. I mean, I exaggerate, but, you know.

It'S such an interesting. We gotta figure out a way to kind of study what has happened to these cities post Covid. Because in some cases, I mean, here we could say in Manhattan, clearly, you know, the center of gravity has come back, and the streets are more vibrant than ever. You know, you go to downtown L. A. It's still pretty tough. And so what's happened is a lot of the population is kind of spread out, and people want to be closer to where they work. I'm seeing it in Atlanta as well. So, yes, there's still people going downtown and midtown, but then you start going north even beyond buckhead. And our leasing brokers, you know, Alpharetta, says the leasing activity there is unbelievable because people say, you know what? I don't need to commute into the downtown. My thesis is part of that might have to do with what type of public transportation there is.

Yeah.

So I'm still getting on metro north every day to come into grand central. For the most part, what you guys.

Have here in New York is unlike anything I've ever seen. I mean, it really. It's. You know, if Dallas had something like this just from a public transportation sample, a. I don't know if people would use it because they're addicted to their cars. But I do think it would change the dynamics a lot. I mean, no one wants to drive in from far North Dallas into downtown Dallas to go to a 1980s, you know, outdated office building.

Yeah.

Embarrassingly, we have four offices in LA because apparently no one wants to drive more than 30 minutes. I don't blame them because when I go out there, I try to plan my next day and I say, oh great, it's, it's nine miles away. It's gonna take me, you know, 20 minutes. And that's probably when I'm checking it at 10:00 clock at night and the next morning it's an hour, I'm like, what just happened?

Yeah, right. Yeah. How do you, how do you gauge that? I feel like you get a, you get a mulligan when you're late to a meeting because it's just like, you know, whatever.

So Jack, I'd love to talk about, I mean you've been, you know, the last five years, multi in this, you know, the Sun Belt. There's nothing hotter than this. Right. Maybe too hot. And so a lot of the, you know, has it gone too far? In many cases you had all these, you know, three cap transactions. I mean you might even have gotten into the 2 cap, you know, band. Obviously some of those loans are now coming due and you know, operators having to refinance at today's rates. But then also the question of oversupply and that's kind of another interesting topic as we talk about New York, say versus a Dallas versus Austin. So obviously very challenging to build here. But that also keeps our supply very tight. Whereas I was checking at one point I had heard that Austin vacancy rates for multi were up to 20%. Now I'm seeing 15%. But what, how do you.

So when markets like Austin, the absorption is very strong still. So I think a lot of investors that have some patient capital are still very bullish with that. The problem is how long can you hold on? Right. And so what I'm seeing for example in Dallas is the institutions are buying sub 5 caps, right. But they're banking on a rebound in rent growth by 4 to 5% over the next year or two. And that's kind of how they're coming out of negative leverage to positive leverage. That's the only way they're really making.

But how do you reconcile that when you have, I don't want to say unlimited supply being added, but it's obviously a lot easier to get projects entitled. That's great if you're a developer. If you want to build until the.

Supply died, that's, that's the easy answer. I mean the supply dropped off A cliff in terms of what's new permits and what's still under construction right now. So if you look at to say 20, 26, 2027 deals that come online over the next couple of years will crush it because then there will be a lack of supply and that's just how many people continue to move to DFW and how many people are attracted to Texas in general because of its, you know, business friendly.

What's forcing the supply glut? Is it the, is the city not giving out new permits or is it just capital stopped building because they thought.

It was overbuilt, it got too expensive. Yeah, that's it. It just got too expensive. And tariffs certainly aren't helping. You know, I know that, you know, some lenders are requiring more reserves for that. There's a lot of, I mean there's a lot of un. Untold unknown expenses. And then the capital markets just have made it incredibly tough.

It is scary, huh? What are you seeing in New York right now? Is, is the market developing anything? Forget just the.

Yeah, I mean, look, still selling any. Yes, there is demand for land certainly for boutique condo developments. Condos. And the supply has really tightened up. There's only about 3,000 condo units in Manhattan available right now. And you think about it, you know, in a city this big with over 8 million people, that's not a lot of units. Right. And by the way, a lot of that's concentrated in some big projects. Right. So boutique projects are still selling great. The multifamily development, tough. Right. With this new 45X, with the labor requirements, with the affordability requirements once you go over 99 units. Right. So we are selling land kind of further out in the boroughs beyond zone A and B where there's, you know, the labor requirements are not as stringent, but otherwise like here in Manhattan, unfortunately, it's all, you know, if you're going to do a rental, it's 99 units or less. And it's, it's unfortunate because this housing, there's a massive housing need here. Our vacancy rate is under 2% here. We've got 500,000.

You know, figure out there of how many units here are actually uninhabited because.

Yeah, that number, you know, I've heard, you know, 30, 40,000.

Crazy.

Over 50,000.

The amount of capital it would take to get them back online is not worth the juice of what you could.

You can't bump the rents enough. Yeah, yeah.

So, you know, one thing that I'm curious about is, and we can talk about this, you know, the distress, right. And I'm talking multifamily. I mean this is the conversation I have every day with clients in Texas is where's the distress? Where are the opportunities in multi? For the exact reasons you just mentioned, the rise in interest rates, people over levering, loans coming due, extensions being all out at this point. Is there a sort of distress like that in New York right now on the multi side?

There is. Although I will say that the type of distress, it's not necessarily on the multifamily side with borrowers being upside down like we're seeing on the office side. So there's equity in these deals, but because rates have gone up and lenders have become more conservative, there's clearly less lenders. It used to be a lot of the community banks lending on this multifamily product rent regulation and now with signatures downfall. That's really. And so there's a lot less options out there. So what's happening now is we sold a portfolio in Greenwich Village, Soho and Chelsea where 40 year ownership and they had a loan coming due and at the time they thought when their portfolios were $250 million that they had very conservative leverage at a third. But then with kind of the destruction of values was certainly with rent regulation and with cap rates going up, suddenly had a situation where they went to refinance and the lender said look, you got to pay it down by $20 million. And they said we've owned this for 40 years. We haven't made a capital call for 40 years. We're not about to do it now. And they had to sell.

And is that based. That's based on pro forma look forward expenses and income or that's based on their current income.

It's based on the. I mean the lenders are really just looking at what's in place. I mean they're not giving value to upside or anything.

So there's not a lot from what I, from what I see. Right. Like I hear that you can buy real six and a half caps in New York City, which sounds crazy to me.

No, there are, I mean there are certainly deal. And if you talk about a fully rent regulated building, right. That could be easily be north of a 7 cap. Really? For sure.

So what's the risk there? Is it.

Well, the risk is operating expenses keep coming up and then depending on who our next mayor is, could you be in a situation where the increases are completely frozen? And that's very.

So it's another 7% inflation year. Not that that's super likely or in the books, but who knows, right. Between tariffs and everything else, you get 5% inflation and 3% market rent growth.

Then that is crazy.

But meanwhile, if you have fair market, if you talk about the 3 million housing units here in New York and a third of it's regulated a third of its free market, roughly. I mean, that's just putting more pressure. That's why we have a massive supply issue here. That's why our apartments are so expensive. We need to build. The answer is more, that's how you create affordability. Not trying to, you know, freeze rents. That just keeps everybody where they are.

So certainly it hasn't worked. No. So far, no.

Well, just get astronomically more expensive.

Yeah.

Based on the political.

I'm surprised it doesn't create more animosity because you'll be in a nice, you know, apartment building here, whether it's pre war or new construction, and it's really nice and you're paying for a, you know, 700 square foot apartment, you're paying 5,000amonth, then you have a neighbor right next to you who's paying 2,000amonth.

We could spend an hour on the whole topic. I mean, it's insanity. There's no means testing either. What you have to understand is some of the tenants in these rent regulated apartments, they inherited, maybe it was their parents apartment and they lived, so they took over. Or you could have, you know, a banker making a couple million dollars a year, paying $800 a month.

That's right.

Classic six apartments.

It's the equivalent of winning the lottery.

And once you give it, you can't take away. Right. Like no one's gonna let you take that away from them now. So I mean, that's very, very interesting. Well, I mean in Texas and this, this is what continues to happen as we continue to have the flight to the Sun Belt and we talked about whether Sunbelt is too hot. This has been a conversation that we've had for the last maybe five years now. And the, the repercussions are playing out. Right. I mean almost anyone who bought In Texas in 2021, 2022, 2023, they're underwater or they're certainly not in good shape.

Jack, you wanted to sell me property?

Yeah, yeah, it's a, it's, it's a pro forma.

We'll talk, we'll talk about this later.

Just gotta put. Yeah, it's, it's, it's fascinating and it's, and we're entering this sort of reset recalibration which I think is really healthy because it did get so hot so quick and everyone got caught up in it.

Well, can I ask you, did you guys see any rent growth? I mean, I don't know if you have the numbers or not, but was there any rent growth that was actually.

Had a little bit of negative rent growth over the last year, but projections show 3,4% over the next couple of years just because no new supply coming online after this year. And again, just demographics and more people moving to the state and to North Texas.

Well, let's see. I mean we might end up either moving over there or being those super.

Commuters who travel for, I don't know, more people. I mean, I always say this. I think Dallas is fantastic. It's a great business climate. It is just a really dynamic place. But there's no mountains and there's no water. That's the one thing. So you'll love Dallas, Alex. You can get over that.

I love the mountains and water here in the city.

Yeah. Because you swim in the east river so much.

That's right.

Yeah. So anyways, we could talk about the distress forever because I'm literally dealing with it right now with several clients and the bid ask spread that everyone keeps talking about that you're experiencing here, it's finally kind of narrowing. It was 25% now I see it closer to 10%. So transactions are, are slowly but surely starting to happen.

Yeah, I mean I think the market kind of is what it is now. So if you're waiting for rates to get cut, I mean no one's banking on that anymore. And if you look at where the 10 year is, it's pretty consistent where it's been over time.

Just yesterday said he's holding, he's holding rates.

People talk about. Even if they don't. Right. People just think, okay, the Fed's going to lower rates and therefore like my cost of borrowing for multifamily assets going to be on par are with that. And that's not true. I mean just because you lower the rates doesn't mean that Treasuries are going to come down and that therefore you're.

We're also just not in a historically high rate environment. We're higher than zero, but we're not high relative to.

I do think what's interesting is with, with the big beautiful bill. Obb. Yeah, obb. I do think that that's going to have some, some good legs. Right. Just with a, you know, new bonus depreciation that you can get, there's tax incentives are Huge for people to go back into, you know, assets again and multifamily again. So I think that industrial too, that.

Will help a lot of accelerated depreciation. So yeah, and hopefully some a new opportunity zone program underway. So yeah, a lot of good things happen.

What's interesting is I don't know, and I'm not an economist, but I don't know what that does to just in terms of just creating a more expansionary environment where the 10 year ends up going up more in the long term because we're just. The deficit's increasing with this. So I don't know, in the short term it's good. Long term maybe not so good. I don't know.

I'm definitely not an economist, but I think at this point, look, the. If you look at the capital flows, we're still half of what was happening in 21. Right. So capital flowing back into the system is going to solve a lot of these issues. You see CMBS is opening up. I mean they're lending in San Francisco, in la for office. I mean that's a good thing. So I really feel like we've turned a corner. We're seeing a lot of activity across the board. So that's a great thing for brokers.

What do you see equity looking for right now in your markets?

Yeah, I mean for so long it was really kind of herd mentality towards multi and industrial. And so then everybody shows up there and yields get compressed. And so now I think equities maybe certainly take another look at office condo because you can actually get a big multiple. That's why that can definitely look good. And then there's a lot of these specialty assets now. Right. Where investors are getting very specific look, data centers especially, you know, we have a lot of clients who are out there looking to get land assembled and powered. You know, that's kind of like the modern day gold rush. So there's a lot of stuff to do out there.

Yeah, the condo projects in New York still amaze me. Like the first of all, just the sheer volume that's going on. You have the Naftali project on the Upper east side where they bought the dirt for $800 million or $850 million. Something crazy huge.

It's gonna be the best site in the city. I mean, it's overlooking Central park, no question.

Best site in the city.

That's a big, big bet.

Leonard Stern building all the.

But you're saying it's a no, Robertson, you're saying it's a no brainer is.

What you're saying the project's a no brainer, but then you hear, you know, like an average sellout of 10,000 bucks a foot, which is crazy. And again, it's a great site. Nothing's been developed over there. I think it's the first condo project in that area for like 40 years.

Where the money comes from. I mean, you know, I guess three fourths of these units are. No one's living in them for most of the year.

The thing is. Yes, and I think with these mega projects on billionaires row, it takes a long time to sell the depth of buyers who are willing to pay over $10 million. You know, it's not like there's thousands of them out there. Right. So it takes time in your underwriting.

Interesting, interesting.

So Jack, I'd love to hear, you know, just, you got, we've got two brokers here, we got a principal. And I'm curious, you all have obviously been very successful focusing in, on multi. In a very competitive market. You don't have to throw any of the big names under the bus. But just as you're going out there competing, what is that landscape like when you're showing up to the table, you're winning business? How are you doing that compared to maybe some of the more, you know, the bigger names. The bigger names? Who?

Yeah, that's a great question because I love talking about this.

That was kind of a slow pitch softball, you know.

You know, it's interesting. Everything sales, right? I mean, everything sales. Everything sales. And I think, you know, I used to work at a big law firm and I remember us getting business sometimes that we had no business getting. In other words, we weren't the best litigators, but we had a big name name. It was a big name law firm. So clients could kind of cya, right. And cover their asses.

Right.

And say we wanted the big name law firm. I think a lot of that happens in real estate too. Happens in a lot of, a lot of industries. You go with a big name because if something, you know, God forbid happens, you can say, hey, look, we went with, I won't name them, but we went with a name that kind of, everyone knows. I will say first, I think our name, Gray Seal is becoming more known for sure. And I'm seeing that happen. But I think the other thing is often things are just that they're just a name. And so if you actually peel back the layers and you look at what makes it. I think, I think a lot of our clients kind of see it. I think they see like the special sauce. I mean I mentioned, you know, it sounds cheesy, but I mentioned that database. If you look at a lot of the big names, they really don't share the same database. And I'll tell you why and you might totally understand what I'm talking about. They're competing with each other.

That's right.

So why would broker a share his contacts of buyers and sellers with broker balance? Yeah, they don't, you know, so what we have is kind of a unique situation because we do work off of an integrated database. Everyone has their territories, their product types and we're all incentivized and encouraged to actually share that info. So I have no problem providing real buyers and sellers in the database because I know it's not going to come back and you know, and hurt me and vice versa. So it's a very powerful tool. And actually I would challenge. I mean, I think a lot of the tools we have have in our database in the back end I think are much more institutional in scale than a lot of the institutional brokerages. Seriously. I mean I can at any given moment. And we track competitor listings, for example, which is very hard in Texas because Texas is a non disclosure state. So non disclosure state. You don't know what a deal is on for the market. You don't know what price they want for it because everyone kind of keeps the pricing a little bit more secretive. We have the pricing for almost every deal that's on the market and it's in our database. And at any given moment I can pull up our database and I can pull up a map in the database and I can say, show me every deal that's on the market that was built between 1980 and 1990. That is over 200 units right now. It'll pull up and it'll pull up the guidance for the price, it'll pull up the offering memorandum, the package and the same thing goes for sale comps. I can find almost any sale compared to in our database. Why? Because we're all encouraged to keep track of sale comps because it helps all of us. So anyways, that's.

Yeah, no, I, we definitely have the same playbook because. Yeah, when, when we're going into these listing presentations, we'll say, look, you know, you might think that you're getting this, this big global firm maybe behind, you know, some of these brokerage firms, not all, some are very collaborative and work the same way we do with, with one database. But sometimes the two or three people in the meeting that's who you're getting, right? And so, you know, we're the same way. We want to open up our listings or opportunities. We have a team here in New York of two dozen people we meet every single morning. We go around the horn and talk about, okay, what are we listing? Who's active buying, selling. So you're getting the intelligence of everybody in that room in one database. That's key because you're right. I mean, old school brokerage is all about the silos. And I'm going to keep the information to myself because, because basically you're in competition. But Alex, in fairness though, the flip side to it is you got capital put out. You need deal flow. And let's face it, the big shops out there, they have product, right? And so there is a little of that give and take. Like, hey, Alex, if we're gonna show you deals, what do you got to sell? How do you would love to. How you approach that? You know, are you working with all the brokers? How do you navigate that?

Yeah.

So I'll tell you this. When I started as an analyst, first time in dc, I worked for a really big shop. And the big shop had that mentality. It was spread the love. You spread the love, then you're talking to everybody and you're seeing everything. And then that's, I wouldn't say it's a double edged sword, but you, you have to think about that as well, right? Because there's a lot of shops, there's a lot of people to give love to. And if you really have silos in each shop, then that's a lot. You know, that that tree branch starts to expand even more down. So I like to think of it as like, give everybody the love and go with the squeaky wheel. You know, go with the squeaky wheel because you, you'll always pay attention to it. It's easy to meet with someone and say, hey, here's really what we're interested with. You know, show me something, you know, and then you on the other side are going to, okay, well, yeah, him and everybody else is interested in this. Why do I need to sit here and necessarily focus my time? So I think it also comes to having good follow up, right? So I know me and any of my brokerage partners, whether it's you, whether it's, you know, somebody who I'm specifically focused on studio space with or multifamily space with, I'm calling those people as often as I can. I'm talking to them as often as I can. That's what's important. And the people who are returning my phone calls, that's who I'm working with.

And brokers need to do that too, Right? Just staying in front of people, staying fresh, I think is really important. I mean, I will say there's differences, right? If you're a merchant builder, you're not beholden to anyone, right? You're not looking for new product to buy, sure, you're looking for some dirt, but it's not that give and take as much. So I think in those cases, who cares, right? You go with the brokers that you think are going to work the hardest for you and that you like the most. So I really think it's a relationship business in that way. And I actually, I really believe this. There's been so many times where we've gone to market on a deal and vastly outperformed some of the bigger shops with the bigger names. Because we work it harder, it means more to us. It's that simple. It just means more to us. So I think, you know, I think that's something that a lot of owners need to think about.

I've also always felt like when you go to, you know, back when I was looking for multi each market, you immediately know who the team in that area is. And to your point, it's not necessarily, it's not a big shop, but if I go in and I talk to one other owner that I know in that area or talk to a number, I'll find out immediately who the top player in that area is. Right? So I feel like you can kind.

Of figure out, I would ask them to, you know, hey, you mind sharing your screen? I'd love to see kind of what your database looks like a little bit. I mean, I don't know what you're scared about. They're gonna steal some info. I mean, I think there are all sorts of things. Have a talk, like, have a real honest conversation with the brokers you're interviewing or talking with and get to know them. I don't know. It's a real people. This is a people business. And that's why I think, you know, while AI is gonna ruin literally everything else, I think brokers will still have jobs because at the end of the day, it's like, it's connections.

James, I have a question for you on that. When you know, you came from Massey Nackle, which was Bob's mentality, was always, we only sell buildings. We sell buildings on behalf of owners. How has that. Do you keep some of that?

Yeah, no, it's really evolved. So after we sold to Cushman, which was a great thing and had three incredible years at Cushman, did a lot of business there and I saw the benefit of working for a global shop. Full service, right. And it's really what's best for the client. Right. And so now at Avis and Young, I always say we're the best of both worlds because we're a privately owned company. I'm one of 750 owners. The company, very entrepreneurial, but we're still global and we're still full service. I think clearly the most synergy that we have is with our debt equity group and we're working hand in hand with them and in some situations we're dual tracking. So we went out with a 200 unit apartment building in Long Island City. We're looking to sell it. And look, turns out that Scott Singer and his team were able to pull together a great debt quote which gave the owner a little more Runway to kind of perfect the asset before selling. But yeah, I mean for sure I think having full service is helpful, but still it's a specialized business. And I think on one hand, yes, I'm going out now in this national role. That does not happen with having great partners in these local offices because I'm really relying on them for their local expertise, but bringing these opportunities to a larger audience. But I couldn't agree with you guys more about the relationship piece of this and also about the fact and this is a big premise and maybe a quick plug for my book, the Insider's Edge to Real Estate Investing. Here's the book. But also, you know, I've got my, so I've got the book, but I don't, I don't have the hat yet.

So I need the insider's edge.

Yeah, people want the hats. Well, it's the trucker style, especially in the summer, you get a little will.

Be the first crossover collab in real estate.

You get a hat.

So the whole premise of the Insider's Edge, and this is why I love investing in real estate, is because it is an inefficient market. Right. So where's AI pulling from? It's pulling from data. And you know, the reality is most brokers do not share a lot of the information. So you don't know the story behind the trade. Sure you got the price, except in Texas, which even makes it harder in a non disclosure state. But you don't know how something traded. And look, some assets are brought out fully to the market and everybody knows about it and they're bid up, others are sold off market. And so there's a lot of inefficiencies in the market that you can capitalize on. And unless if you've got perfect data, I don't see how that changes. But this is very much a people business. And when I. The first podcast episode I ever did was with Bruce Ratner. And I kept asking Bruce, how did you build over 50 buildings here in New York? He said, james, it's about the people, the team. I had incredible people. He just kept saying the people. I went back and counted. He mentioned over 50 times in an hour long interview. Same thing. You interviewed the current CEO, Brookfield. I had Rick Clark on my show. Same thing. Hey, Rick, you all are the largest owners in the world of real estate. How'd you do it? He wouldn't take any credit. It was all about having the right people in the right markets.

Ben said the exact same thing. You know, he pointed to the people over and over again.

Well, I got a question for you. You mentioned something. So you said off market. So when a client comes to you and says, I want to sell this off market, what's your response to that? I always am kind of. I always scratch my head a bit. When a client wants to sell off market versus going to market, I can see some of the pushback. But ultimately, if you want to prove the market and make sure there are no inefficiencies there, why not go to market?

Yeah, I'm so glad you brought that up. I was certainly not just going to ask you guys because it's such a great topic. And I know Alex is going to have a lot of thoughts on this as well, because if you polled most buyers, do you want to buy on market or off market? 9 out of 10 or probably, you know, 9.9 out of 10 are going to tell you off market. Right.

But if it's down market versus versus up market, there are pros and cons to.

I think, yes.

I'll just throw this out. I don't believe in off market. I don't believe that's even once it's off market.

Is it really off market?

I don't believe in. As someone who's. To me, the only way that you have off market is if I picked up my phone directly, called another. Another owner and said, hey, I'm really interested in your building. Can I buy this? And it's not being, it's not being sold. That's the only off market. But anything outside of that conversation, I.

Think generally speaking, when someone has an off market deal, you have to assume that other brokers also have that off market deal. It creates a bunch of confusion. It actually ends up being more work for the owner of the property because they're having to answer the same questions to different brokers. There's no efficiencies and I don't think it's an efficient process. I don't think you get the highest price that way at all.

What do you guys consider off market? What's an off market?

Well, off market would be anything that's not in my mind, exclusive to a broker. Right? So if you have an exclusive broker, they can still run a very quiet or private placement process. And sometimes there is a time and a place for that. You know, if there's sensitivities where, I don't know, maybe something with the lender, maybe there's something with the tenancy that you don't want to get out. But by the way, it's really hard to keep secrets in this business anyway. So you know, people are going to find out anyways after you, just to.

Be honest, transparent, be honest with your management staff. Just, just, just, it's going to come out and you want to be a trustworthy person, you know, and offer them the bonuses or whatever it is you need to keep them in cine to keep property going.

I think if you're selling, I mean, unless if you have a really good reason again for that confidentiality or whatever it is about the property. I mean, there's just so much risk in not bringing it out to the widest audience. I mean, look what I just said before. Over half the buyers in the US are private buyers. There's no broker, you know, out there who knows every single private buyer. They're showing up foreign buyers, new 10, 30 ways.

You, you just made me think of something that just kills me. So you just mentioned over half of the buyers out there are private buyers. When you go to the big name brokerages, okay, they go to the institutional buyers. But guess what? Everyone knows the institutional buyers. There's no secret sauce. We all have contacts or ways to get in touch with the institutional buyers. We all know them. It's the private buyers that are more difficult to find and to get in front of of. So that's when you have like an integrated database like ours. We're bringing private capital, private buyers to deals and of course the institutional buyers. I mean if it's an institutional product, that's the easy part. So it is, I mean this is just and you know this too, James. It's like the bigger assets are usually the easiest to sell. And I don't care what you say. There's always, there's always circumstances here and there. It's those, it's, it's, it's the private space where it can be more difficult for a number of reasons. But. Yeah.

Well, guys, this has been. I knew this would be an amazing conversation. It was funny because we were going back and forth topics and this and that, that we both showed up, we're like, you know, we're gonna, we're gonna have a conversation, talk about politics.

Damn, man.

Yeah, well, I, I did, I did learn something that I might have to beef up my resume here. So. You know, Jack, you're obviously a co star power broker. You got a lot of fancy awards, but you also pulled put your dog in your bio.

So I have bio you're looking at, by the way.

Your dog, Bell.

Yeah. Yes.

We do our, we do our research. Insiders edge. I don't know what kind of operation you're running at no Cap. But I want, I want family, I want pets. I want.

So he's putting us on notice here.

And, and, and Alex, this whole thing about being like a competition jiu jitsu, but also getting this. Is this an avid Brazilian? Is this not true?

It's 100% true.

I just.

Where is this coming from?

Look, we got people we know how.

So you have a dog, Bell, also.

I do. I do have a dog. So I need to. Maybe I need to put her in my bio.

People like dogs.

Yeah, but, but Alex, the whole thing that on one hand you're beating people up in the ring, but then you're also rescuing animals. Like, I mean that, that is, that seems like people.

I love animals. Except you guys. You guys are good at my book, but aside from that, I don't like most people.

Well, this was a tremendous amount of fun. So how do people engage with CRE daily with no cap. And by the way, you guys are doing a live event I saw in Dallas, right? When is I'm gonna come? When, when is that?

The beginning of November in Dallas, Texas. And we're gonna take it on the road. It's gonna go. You know, Dallas is our first one and then the other major markets next. It's free, so anyone can come. You just got. Who doesn't like that time. Yeah, and, and, and I'm not going to tell who the special guests are.

Yet, but there is some special guests.

Some very impressive.

It's not going to be me. Because you guys haven't asked me yet, but.

Well, you're coming either way. I just assumed that's. That's my point. It'll be a lot of fun.

I mean, look, the whole thing is there's a million of these real estate conferences out there. Yeah, they. We've all been to them. They're great, but they can be the same thing over and over again. Very boring. Very, you know, very. It's just mundane and it's just more chill. Everyone just get together, hang out, you know, talk about deals, get to know each other, whatever.

Love it.

Yeah.

So. So that'll be fun.

So I'm excited to. Excited to see you there.

And it's called Nightcap.

Nightcap. Wow.

I know.

Is that. Can I have a hat as well, or. No, it's the whole.

We should talk to the CRE Daily team and get some more swag.

We should. We're going to make a Nightcap merch.

Yes.

A whole site.

I love it. So how does everyone plug into you guys? I mean, for my stuff. James nelson.com. that's where everything is. You can get the book, you can listen to the podcast, the show notes, the whole deal.

I would say a. First and foremost, subscribe to CRE Daily's newsletter. It's a great newsletter. I start every morning with it and I'm not paid to say that. That's a promise. I would also say hit all the socials, follow James, Me, Jack, all on LinkedIn.

Yeah. And by the way, like. And subscribe the podcast.

Yeah.

Yeah.

If you're listening to this right now and you don't already subscribe to no Cap.

That's right.

Or that's a great idea. We're introducing. We have audiences right now. We're introducing them to each other. You guys should hang out.

Go subscribe right now.

I will say five stars.

New episodes drop every Sunday. We are in our third season, fourth season.

We've done it for.

I think we just wrapped up our third season.

We've done it now for 13 months and our guests are amazing. We have a lot of fun. We don't take ourselves too seriously, as you can tell. So I don't think this is a very. It's not too dense of a podcast, but hopefully just dense enough to where you learn something.

And by the way, next time we're coming around, we're gonna have some stuff on you that is going on anyway, on any site, anywhere. We're gonna do such deep homework.

Okay. Well, luckily, when I was in college, there weren word cell phones and social media. So that's another topic. But I want to thank everybody in the audience for joining. Thank you to our producer, Nick, who does such an incredible job for us. And look, we just appreciate everyone engaging with this. So until next week for both of our shows, thanks again.

A lot of fun having us here.