Kevin Shannon is the president of the west coast capital markets team at NGKF, where he specializes in selling high-priced commercial properties.
He moved to NGKF in January after nearly nine years at CBRE, where he was vice chairman and managing director for the West Coast Institutional Investment Group.
Shannon has brokered some of the most significant commercial real estate deals in L.A., including the $437.5 million sale of One Wilshire in 2013. We caught up with the influential dealmaker to get his take on the state of the market and the best steak in L.A.
How’s the market shaping up so far in 2016?
The first quarter is looking to be a stronger and healthier quarter compared with the fourth quarter of last year. I think there was some fatigue from capital in the fourth quarter because 2015 was the second busiest year in history. Now, we’re seeing that the debt market has improved although the CMBS market is still a little choppy. There seems to be an abundance of capital. We’re going to have another very busy year in terms of sales velocity.
Where are we in the cycle?
You’re not seeing the over-leveraging you saw in the last cycle. The fundamentals in nearly every market are improving, albeit slowly. But we’re clearly in the later stage of the cycle. I don’t know if we’re on the sixth or seventh inning but clearly we’re not in the first half of the ballgame right now.
Where is the capital coming from?
All buyer groups are in play. The change of the FIRPTA laws at the end of the year means we’re probably going to see 20 percent more foreign capital, after a year where we already saw $90 billion in foreign capital come in. If you have a CBD asset, foreign capital is going to be a major player. That’s less so for suburban product.
Which foreign players are leading the charge in the LA market?
The foreign capital that we’re seeing most active right now is from Europe and Asia. Downtown L.A. and West L.A. are the top two destinations for them.
How do you get into real estate?
I took an introductory real estate class at USC taught by Rocky Tarantello. He was a great professor and ended up getting me hooked. It was so exciting to me. After taking that class, there was no other career path for me.
Is real estate in the family?
No, my dad was an accountant.
What were you like as a kid?
I was summa cum laude in high school and graduated fourth in my class. I was a good student. At USC, I wasn’t such a good student. I probably had too much fun and the GPA dropped.
What made you make the move to NGKF?
I’ve found change to be good thing throughout my career. It reinvigorates you. Newmark is much more nimble and entrepreneurial. It’s looking to grow its capital markets team first and to be a part of that with Rob Griffin (the U.S. Head of Capital Markets) is so exciting.
How has the industry changed since you started in the business?
I think transparency is the biggest thing. There’s so much more information as your fingertips, whether it’s vacancy rate, rent growth, stacking plans. The asset class gets safer as it becomes more transparent, which is why I think you see increased allocations towards real estate overall. The amount of information and the accuracy of the information is so different than it used to be.
What would be your advice to a broker that’s new to the business?
It’s a marathon. It’s a relationship business. You don’t develop the trusts and the relationships you need immediately. That trust is earned and it takes time. Knowing when to tell a client not to sell gives you more credibility when you tell them you think it’s time that they do sell. Your integrity is critical. If you don’t know something, say you don’t know it but you’ll find out.
Where do you live?
Palos Verdes. It’s a great place to raise a family. I have an older boy and three younger girls.
Where do you like to eat?
The Arthur J in Manhattan Beach. For the steak.
What’s been your favorite transaction of your career so far?
Probably the sale of the Amazon corporate headquarters in December 2012. It was for over $1.16 billion, the biggest deal in the country that year. It was cool to have the biggest deal in the nation.
What’s your strategy for dealing with competition?
Competition is good. Focus on what you’re doing, work hard and the chips will fall in the right places.