Paul J. Massey | CEO | B6 Real Estate Advisors | Episode 50 with a giant in New York CRE

Transcript

DA: Welcome to TEN, the Tenant Experience Network. In this episode, we are connecting with Paul J. Massey, CEO of B6 Real Estate Advisors. In this episode, we learn how Paul’s career journey began while he was still in college in Boston. When a summer job at CBRE in that city didn’t pan out, he instead made a bold decision to join CBRE in New York. Long story short, Paul immediately fell in love with New York and never left. While at CBRE, Paul met his long time business partner, Bob Knakal. Together they left CBRE to start their own firm, Massey Knakal. By 2014, they sold the business to Cushman & Wakefield after taking a large market share, representing about a third of the people selling their buildings in New York. Hearing Paul talk about his partnership with Bob, who he refers to as a pack rat, is inspiring. After several years at Cushman & Wakefield, Paul embarked upon his next entrepreneurial endeavor, starting B6, which stands for, Building by Building, Block by Block. He attributes some of his success to making every mistake in the book, but never making the same mistake twice. As part of his continued efforts to understand the changing needs of tenants in today’s workforce, Bob shares interesting thoughts on hybrid working, vacation policies, and buildings providing common area facilities that reduce the need for individual build-out per suite. Paul has first-hand experience seeing technology being used to improve the customer experience. I’m thrilled to have Paul on the show, and especially proud that this marks the 50th episode of TEN. We’re excited to share this podcast with you, so be sure to subscribe to TEN, so you never miss an episode of the Tenant Experience Network. And now I’d like to welcome Paul to the show. I’m really glad you could be with us today. I’m looking forward to our conversation.

PM: Thanks for having me, David.

DA: All right, let’s jump right into it. My first and favorite question. Tell us about your journey to your current position role. How did you get started?

PM: I met a commercial real estate exec who was a big National Accounts guy at CBRE when I was in college, he was the, I was involved with my fraternity, and he was the alum who was supposed to come by a couple times a year and make sure we weren’t burning the house down. And he got me a summer job at CB during college in my hometown of Boston. When I saw commercial real estate, and when I saw CBRE, which is a great company that I loved and still love, I knew I had to work there. It was actually difficult because the office in Boston was mature. They had one opening. They had people competing for the spot. The boss at the time said that there was no way he was rolling the dice on college kid. So I was crushed. So I went back to my frat connection, and he said, “Well, that’s the bad news. The good news is we’re brand new in New York City, and they’ll take anybody down there.” So my grand plan was go to CB in New York for half a year a year, work my butt off, and make sure they would take me back and give me the job I thought I wanted in Boston. Long story short, I fell in love with New York almost immediately and have been here ever since.

DA: Wow. Well, New York is certainly my favorite city in North America. I can’t get enough of it. A little more about your entrepreneurial journey, because I know you started out maybe at CBRE, but you also had your own entrepreneurial journey and continued that actually.

PM: Yeah, so we ended up doing investment sales for CB. We, meaning I met my business partner, Bob Knakal, right at the beginning of our time at CB, and we volunteered to represent people selling buildings, which was a great niche. We spent five years at CB, and then a long time ago started a company called Massey Knakal, that ended up with good fortune, gaining a big market share in New York. You would have thought that New York was institutional and organized, but it was really the Wild West. So CB had trained us with a high degree of discipline. We went out and fell into a big market share position where we were repping, depending what year, a third of the people who were selling their building in New York, which turned out to be a great business. In 2014, we sold that company to Cushman and Wakefield, and spent several years at Cushman. And then really loving our independence, went and started a new company called B6, which stands for Building by Building Block by Block, kind of dense urban market, commercial brokerage. And we’ve had that business for four years and are really enjoying it.

DA: Well, kudos to you. I mean, you built one company, a big company, and sold out, and you’re right back at it. I mean, it’s sort of what I kind of, I mean, I ran an agency in my own company for so many years, and I’ve gone back to ground zero in terms of building a new technology startup in the commercial estate space, HILO, but really starting all over again. So that entrepreneurial bug really sticks. It was the same for you?

PM: We kind of knew it when we sold our business to Cushman. There was strategic reasons to sell, for them and for us. But personally, I was very open with them that I would likely, when my contract was up, look to be independent again. So for that reason, when I did, we didn’t burn any bridges. We still have a ton of friends at Cushman, and they kind of knew what the program was, and they got their part of the bargain. They were acquiring companies like us to flex their muscles, grow their revenue. Ultimately, their plan shortly after buying us was to sell the whole business, which they very successfully did. So kind of everyone got their part of the bargain, I think.

DA: Right, a win-win. Well, as you know, I had Bob on the show as well in the fall. A great conversation, very generous guest, and I’m thrilled to be having this conversation with you today.

PM: Yeah, we’re still like brothers.

DA: It sounds like it. And I actually love watching, Bob’s been very prolific on social media lately, sharing all the stories of your early days, and photos, and that long hair of his. That was something.

PM: God, he’s a pack rat with that stuff, but I do love it. It’s really fun to see it.

DA: It really is fun. And it’s great to see, kudos to the two of you, it’s great to see longtime partners still very close and still extolling what an amazing time it was, an amazing journey. Sadly, you see too often those kinds of partnerships not going the right direction.

PM: We grew up together and so did all the people that grew up in our company. So that’s a real bond. And we have it at the new company. It’s a predominantly bunch of young people and a big part of the fun for us is mentoring, and watch them grow, and watch them develop. And so we’ve got that here, and it’s really rewarding.

DA: That’s great. So just curious, why do you think you were so uniquely suited to this opportunity? What has helped you to be so successful?

PM: The company?

DA: Well, just in general, I mean, your entire career, right?

PM: Well, we’ve made every mistake in the book. That helps. And fortunately, not too many twice.

DA: That’s key, that’s key.

PM: Yeah, and we love what we do. It’s funny, you get to this point in your career and people are asking you about retirement, and it’s just not a word. Why would you consider that if you really enjoy this that much? Plus, we’ve always been work hard, play hard. We have great family balance and I’ve got a million hobbies. And the sales business is fantastic, because you’ve got freedom. No one’s going to die if you don’t show up for an appointment. And you can do a lot of what you like and at the same time have a lot of success commercially.

DA: Right. Well, I’m definitely looking forward to tapping into your thinking with all those years of experience, and from your perspective, through your lens, I think you’ll agree commercial real estate has gone through one heck of a time period. Perhaps one of the most turbulent. I’m sure you’ve been through various ups and downs. This one’s got to be ranked up there. We’re still dealing with buildings that are experiencing relatively low levels of occupancy, although we are starting to see those numbers across North America come back to better numbers, more normal numbers. And we also at the same time, we’re seeing a lot of disruption in the industry by technology such as HILO, a tenant experience platform, just helping building operators deliver better experience and engage with their customers in a different way. You know, I think we can all agree that this, the impact of COVID has really changed the way in which we view the building. It’s a much, buildings are now really much part of a much larger work space or workplace ecosystem. And while buildings are at the core, you know, we’ve got to realize and accept that hybrid will likely win the day. People will continue to work from, you know, their dining room table, a vacation property, a local co-working space. Just wondering what you’re seeing from your, you know, through your lens of the industry. What are you seeing in the industry? How do you think is it, to what extent is it beginning to reimagine its purpose and/or how it meets the needs of people and buildings?

PM: Well, I’d politely maybe argue with you a little bit about hybrid winning the day, I think.

DA: Okay. All right, let’s do that.

PM: I don’t have that many people on my side of the of the table at the moment, because I think everyone’s dealing with the current reality. But I thought it was great. Ken Griffin from Citadel announced last week that they had a record year earning 22 billion dollars and he credited all of it for the fact that his people came to work.

DA: Wow.

PM: And I think you see great leaders like Jamie Dimon from JP Morgan who have been, the poor guy has been walking it back five or six times, but kind of, you know, five or six rallying cries to the troops to come back to work. I think people really need that collaborative environment. And I think it’ll trend back to that. I’ve been thinking that for four years though and have been wrong. So we’ll see.

DA: Well, I don’t know that you’re wrong. And when I say I think hybrid will in the day, what I firmly believe is that remote 100 percent is not going to win. Mandating, you know, the notion of mandating, enforcing that people come back is not going to win. I believe that hybrid, from the perspective of work where it’s best, but to your point, I actually also believe that we will start to see more in person than remote. But it’s going to continue to evolve and there’ll be, you know, ebbs and flows in all of that. But I agree with you that, you know, ultimately I think people are going to find their way back to each other, because that’s how we build great companies historically. And I’m not suggesting that it’s not okay to work from your dining room table when you got a proposal to bang out, and you don’t want to be distracted, and you can avoid a two-hour commute. Why not?

PM: In the same breath, I will tell you that we have an interesting no-vacation policy here. And the other day I was interviewing a young person and they said, “You don’t allow vacations?” But the policy is, you can take as much vacation as you want. We also really have allowed and encouraged work-from-home for people who it made sense for for years. And in both those cases, you know what happens with an A player. They probably don’t take enough vacation, and they’re probably working seven days a week on some level. So we have to watch them, that they don’t tire themselves out. So I think you’ve got to be reasonable about, you know, how people live and how people work. And it was funny, the other day, we were interviewing a high-level marketing person for a new spot at our company. And she mentioned, you know, what about Fridays? And it alarmed me, because, you know, I see so many of the Gen Z’s really looking at things very differently. And, you know, it makes me nervous, it makes me frustrated. So I called up one of our board members who is a dynamic woman. Her name is L.J. Louis. She’s a high-level H.R. recruiting person at a big ad conglomerate, WPP. She was a former Korn Ferry partner. I mean, she’s had an amazing career. And I was describing my nervousness about this candidate. And she goes, “Answer a question, Paul. Is work a noun or a verb?” And I’m like, “Okay, tell me what you mean.” She said, “Well, to Gen X’ers, work is a noun. To Gen Z’s work is a verb.” She goes, “Think about it, Paul.” And so she said, “Meet the person where they are. That’s my advice to you.”

DA: Wow.

PM: It was a great conversation. It was really helpful to me. And we ended up hiring this person, and she’s fantastic, and she’s sitting right next to me.

DA: Oh, my goodness, that’s amazing! That’s a great story, and great advice, and great that you had that ability to inquire and go deeper and sort of maybe adjust your thinking. I was, you know, until you told me you hired the person, I was going to remind you that my background is in marketing. I was going to brush off my resume and send it in, but I guess I’m too late.

PM: Anytime, David, I think you’re probably pretty busy though with HILO.

DA: True enough, true enough. So, again, just because I got to tap into your what you see, your lens, your unique vantage point. What is activity like right now, specifically in New York? And is it more so, are you starting to see more activity maybe at the B and C class level, where maybe there is going to be some more movement from those that maybe have weathered the storm, but maybe need to rethink or repurpose some of their assets? What’s sort of the pulse of New York right now?

PM: It’s kind of by asset class is the answer. So about half of what we sell are multifamily buildings. So there’s two and a half million individual residential apartments in New York. That asset, it’s fascinating on every level. The multifamily world went through a complete upheaval in 2019. So just a couple of years ago, when the legislature basically promulgated some new rules that said effectively you can’t raise your rents, and you can’t fix up units and pass through the expense to tenants, which was meant to protect people who struggle, and it really crushed the market. So that market went into slow mode. And then we had COVID the next year. So nearly seven or eight months of zero. And then we had a slow move towards interest rate hikes. And that has radically affected the office market, and Midtown New York and downtown New York retail is completely linked to office occupancy. So it’s been like, what are they going to do next, send the locusts? The market is really dislocated, but it has been for quite some time. And the office occupancy is hovering around 50%. So people are very wary of office, especially B and C office. But we’re starting to see movement in that area. And a lot of times when you’ve got that dislocation, especially in the B and C office building market, that puts those properties within reach of non-for-profits, missions to the UN. Basically, the owner-users are starting to come out in force. So that could be the beginning of what we’re hoping is a real uptick in velocity. Multifamily will find its way. The regulations will likely have to get eased, because the city is radically dependent on the real estate tax revenue from those buildings. Forty-five percent of New York City’s $101 billion annual budget comes directly from those buildings.

DA: Yeah, that’s a big number.

PM: You cannot be beating on or killing the golden goose.

DA: Exactly, exactly. We’re spending a fair bit of time now in New York. We were recently brought down by the Consulate General of Canada in New York as part of a Smart City Accelerator program, and helping to promote HILO and make introductions. And we’re really looking at particularly the B and C class, which, as you’ve heard about the flight to quality, obviously, we don’t think it’s so much the flight to quality. We think it’s the flight to experience. And people are looking for more than just physical space. They’re looking for other things in that building to attract and engage. And so we’re helping some of those B and C class building owners provide a more competitive service offering through the use of technology, because they can’t necessarily build a green roof, or a gymnasium, or outdoor space. So how do they ramp up their offering in other ways?

PM: Can you describe that a little? I’m definitely curious.

DA: Yeah! So, HILO is really a workplace engagement platform, and it helps building operators through technology just deliver better experience, be able to connect with people no matter where they are. So we have a notification system that can connect people, whether they’re in the office or not. It can promote different services and programs. It can advise them of new cleaning protocols. We can engage them in various amenities that might be offered in the building. And we also connect buildings to all of the local businesses, which you spoke of, at street level to further amenitize the building experience and provide offers and incentives at, you know, different kinds of, whether it be a fitness studio, or a dry cleaner, or you know, a convenience store. So again, really just trying to strengthen the connection between buildings, between those that work in buildings, and between the businesses in and around buildings, and just deliver more of an experience above and beyond the physical space.

PM: That’s great, and it makes a lot of sense.

DA: Yeah, so it’s exciting. I’m just curious, just continuing from that thought, in terms of bringing people back to the workplace, what do you think that building owners, I mean, we, I think it used to be that it was very much on the employer, and building owners were very much build it and they would come, our job is to make sure that the lights are on and there’s heating and air conditioning, but we’re starting to see more collaboration between building owners and their occupiers, the employers, to create that experience and to help them bring people back to the workplace. So in your line of sight, are you seeing any of that, or in conversations you’re having with building owners, any conversations that you’re seeing in that area?

PM: Yeah, I think the public space, the meeting space is, it has really become a thing where you can, you know, tenants are really embracing the fact that they don’t need, you know, simple example, a massive conference room, shared space. Now more than ever, I think people are getting that, and that that’s healthy. That builds efficiency. So that is just, that’s one simple example.

DA: No, it’s a great example. And I think that’s it. And again, I think that’s an opportunity for even the B and C class buildings to think about, taking, you know, a unit or a floor and creating some common spaces that ultimately get charged back and divided between all tenants. And that’s less space that the individual tenant needs that is rarely used. So I think that’s a great example. We think a lot, obviously about buildings and communities, and you talked about the tax base that buildings, you know, the role that it plays in the New York ecosystem. We don’t see buildings as just silos. We see buildings really as, you know, really such an important part of the fabric of neighborhoods and communities and cities. Any thoughts on the role that building owners need to play, you know, in those neighborhoods, either, you know, with the city or with BIDs, business improvement districts, to help create a more dynamic building and a more dynamic workplace for people?

PM: Yeah, I think, I think the retail climate is such that it’s ready for improvements. So that’s an area where, you know, what are the personal services amenities? And those could be organized by neighborhood and community as much as they are per building. And there’s been such transition in retail. I mean, I thought retail had hit bottom just pre-COVID, and obviously that wasn’t correct, but the technology had eliminated the tenants that it was going to eliminate pre-COVID. So when I look at, I’m involved with a strip mall company called Phillips Edison, and it’s a national platform. When I look at the personal services business that they have focused on within their supermarket-anchored malls, they’re 97% full. So it’s an amazing story. It’s a testament to their operating model, but it also is an acknowledgement that if you’ve got the right tenant mix, the community benefits, the community is happy, everyone’s using those. So I think focusing on the retail from a macro level in neighborhoods is probably a really good idea, and building owners can take advantage of that and help with that.

DA: Yeah. And maybe, you know, pull up a page from the playbook of those more strip plaza type, you know, suburban communities as to what they’re doing and apply that more in the urban setting as well.

PM: Exactly, yep. They know what works. They know what people want, and they have a similar communication platform to HILO. And it’s really working for them. And they don’t call them tenants. They call them neighbors, which I think is a neat perspective. But the neighbors are very happy and their satisfaction with the building operation and the building owners is very, very high because of the work that you’re doing.

DA: Very good. Yeah, that’s awesome. Thanks for sharing that. Let’s take a short commercial break and we’ll be right back.

COMMERCIAL BREAK

DA: All right. I’d like to welcome back to the show Paul J. Massey, CEO of B6 Real Estate Advisors. Again, I’m so glad you could be with us today, and I’m looking forward to continuing our conversation.

PM: Thank you, David.

DA: We’ve talked a little bit about technology. Obviously, that’s sort of where my head is at, understanding how technology can play a role in shaping how building operators can deliver great experience. Workplace engagement is certainly uppermost in everyone’s mind as we look to sort of do things differently. Just curious, from your perspective, with a focus on meeting the evolving needs of people in buildings, any technologies that you’re seeing that is gaining traction and contributing to a better experience? You spoke a little bit about perhaps your, the client on the strip plaza level, maybe you can share a little bit more about that or any other technology that you’re seeing that is helping building operators deliver great experience.

PM: That’s a big one. I’m on the board of a company called Phillips Edison, which is a national strip mall owner. We were talking about the fact that they’ve got a tenant engagement technology platform, which is communication, community, communication, community-minded information. The tenants, or in their case, the neighbors, love the service that’s provided, building-wide notification. They get to report their sales stats on the platform, so everything’s meant to be easier for their tenant.

DA: Easier and better, that’s the goal, right? We can’t send people to five apps, three websites, and two portals. Those days are gone. It’s not a great user experience, right?

PM: Right.

DA: That’s awesome. An opportunity to get to know you a little bit better, our closing speed round, a little bit less about the business, more about you. I’m just curious, you’re clearly very passionate about what you do and still entrepreneurial, but what do you enjoy doing when not at work? I think you mentioned some hobbies.

PM: Yeah, I got a bunch of hobbies. Right now, I’ve always been into some form of martial arts, but about a year and a half ago, I picked up Brazilian jiu-jitsu. I wrestled in school, so people always used to say jiu-jitsu is not quite like wrestling, but it’s a lot like wrestling. My comfort level with it is very high. I’m having a blast. I’m paying 26-year-olds not to hurt me. I’ve lost 10 or 15 pounds, and I’m feeling great. I go three or four times a week, and it’s my new fun thing. It’s really great.

DA: That’s amazing. I love that. What is your favorite beverage of choice? Hot, cold, alcoholic, non-alcoholic?

PM: I think everybody knows I love Mount Gay Rum, with a little pineapple and a lime, but that’s far and away my favorite beverage of choice.

DA: Maybe on the beach or by the pool, I think.

PM: It started as a thing with an old friend who I went sailing with down in the Virgin Islands, and then it became a, so the association was that, but then it became the weekends and the summer, and then it became all year round.

DA: Love it, I love it. What is your favorite movie or current TV series that you are watching, if you watch at all?

PM: No, yeah, I occasionally watch. I would say “Sound of Music” is up there. I’m not about musicals, but that’s the one.

DA: That’s a classic for sure. Name one way in which technology has improved how you live or work.

PM: Amazon. I love it. I made a small investment in Amazon, which worked out pretty well, because I started using it and thought to myself, there have to be tens of thousands of Paul Masseys who haven’t discovered this yet.

DA: Right.

PM: And they were.

DA: For sure. It took me a long time to get there as well. And eventually I did. There are aspects of it that maybe you question, but at the end of the day, when you can order something at five o’clock in the afternoon and have it delivered at nine o’clock the following morning, it’s a pretty powerful value equation.

PM: Well, I am a little ADHD, on some spectrum like that. So being able to not go to a store is a happy thing.

DA: I think I know the answer to this question. But what is your personal choice for days spent in person working with your colleagues versus working from anywhere?

PM: Yeah, no, it warms my heart to walk in this office first thing in the morning. It’s just I know I’m going to enjoy almost every minute of it. And we all have good days, bad days, and everything in between. But just seeing the smiling faces when I walk in and being here for people and with people is my favorite by far.

DA: Yeah, I’m going to agree with you. My team, we’re still working remotely currently. We are looking to come back into a physical workplace. Last Thursday, I had the opportunity to go downtown and have some meetings and meet with a number of different people, do some presentations. And I’ll tell you, my energy level later that night and the following day went from, you know, maybe like a four or five to like, this is out of 10, to like a 15. It was so invigorating and reminded me again how important it is to be with people and connect with people. And interesting, some of the people that I met with had met me on Zoom. But when they met me in the room, they didn’t recognize me.

PM: Wow, yeah.

DA: Right? And then, of course, that physical interaction completely changes the dynamic of the relationship. So, you know, it’s good to be back. And I want to thank you, Paul, so much for spending time with me today and sharing a little bit about your story and your view of the commercial real estate space. And I hope that this is the first of many conversations that you and I will have.

PM: This was really fun, David. I was glad to talk with you today. So thank you very much.

DA: Awesome. Take care and we’ll talk soon.

PM: Thanks.

DA:  Bye now. I want to thank Paul J. Massey for joining me on this episode of “TEN” and for contributing to the global conversation around buildings being part of a robust ecosystem, helping to build great companies, and that they are vital in the effort to cultivate and support great people and teams. The future of the workplace will likely take many forms. We will continue to explore what that looks like together. Subscribe to TEN for more conversations with leading CRE industry professionals and experts who all have something to say about tenant experience and the future of the workplace. We love hearing from you. So if you enjoyed this episode of TEN, please share, add your rating, and review us through your preferred podcast provider. 

If you or someone you know would like to be a guest on a future episode, please reach out to me directly at david@hiloapp.com. And until our next episode, I wish you all continued success in building community where you work and live, thank you.

Ryan Speers | Partner & COO | Workhaus | The future of work is flexible

Season 5 / Episode 7 / 41:20
In this episode, we learn that Ryan’s business is at the forefront of the hospitality and customer experience conversations that are happening as CRE continues to up its game on this front by offering essential amenities to help drive user engagement and enjoyment. Tune in to learn more about Ryan’s perspective on Workhaus being a tech-enabled business versus a technology business.

Lisa Davidson | Vice Chairman | Savills North America | An inspiring journey from Tenant Rep to Proptech investor

Season 5 / Episode 5 / 46:17
In this episode, Lisa sheds light on key market drivers influencing real estate decisions, such as the rise of amenities and spec suites. She describes the future of work as “accommodating employees with great space.” The impact that unique community spaces have on potential tenants as they are touring prospective spaces is something else she sees in the market.

Rob Kumer | CEO | KingSett Capital | Trends and success strategies in CRE

Season 5 / Episode 4 / 53:34
In this episode, Rob shares his 3 pillars for success in the office category and speaks about the importance of experience and the technological advances impacting all asset classes. KingSett is very focused on decarbonization, and energy management including deep water cooling and implementing new lighting systems.

Ryan Speers | Partner & COO | Workhaus | The future of work is flexible

Season 5 / Episode 7 / 41:20
In this episode, we learn that Ryan’s business is at the forefront of the hospitality and customer experience conversations that are happening as CRE continues to up its game on this front by offering essential amenities to help drive user engagement and enjoyment. Tune in to learn more about Ryan’s perspective on Workhaus being a tech-enabled business versus a technology business.

Lisa Davidson | Vice Chairman | Savills North America | An inspiring journey from Tenant Rep to Proptech investor

Season 5 / Episode 5 / 46:17
In this episode, Lisa sheds light on key market drivers influencing real estate decisions, such as the rise of amenities and spec suites. She describes the future of work as “accommodating employees with great space.” The impact that unique community spaces have on potential tenants as they are touring prospective spaces is something else she sees in the market.

Rob Kumer | CEO | KingSett Capital | Trends and success strategies in CRE

Season 5 / Episode 4 / 53:34
In this episode, Rob shares his 3 pillars for success in the office category and speaks about the importance of experience and the technological advances impacting all asset classes. KingSett is very focused on decarbonization, and energy management including deep water cooling and implementing new lighting systems.