Avison Young Helps Clients Succeed In Uncharted Waters

Avison Young: James Nelson, Erik Edeen, Brandon Polakoff

It has been four years since the Tri-State Investment Sales Team was formed – and those years have been anything but predictable. The pandemic turned the world upside down changing the investment landscape forever. In addition, the New York regulatory environment has now made it more important than ever for investors to have a trusted advisor at their side.

James Nelson, Principal, Head of Tri-State Investment Sales

“We want to be known not just as a source for great opportunities, but more importantly for insight into the market. We want our clients to have the inside edge to real estate investing,” said James Nelson who heads the group. This focus has allowed their 30-person team to complete its 100th transaction A 620,000 SF industrial asset for $73.5M in Jamaica Queens, while also being honored by the Real Estate Board of New York (REBNY) with the prestigious “Most Ingenious Deal of the Year” award in 2020.

Buoyed by that track record of success and acclaim for their clients, the firm is poised for a successful 2022.

The way the group stays ahead of trends is based on its one-unified sales team approach. “We pride ourselves on a unique structure that allows us to share information for the benefit of our clients.” The group meets every morning to discuss the latest trends in the marketplace. Clients will also benefit from the knowledge shared by Avison Young’s 120 offices around the world.

A hot market for 2022

Erik R. Edeen, Principal, Director of Operations

Naturally, the first thing clients look for is market knowledge, where Avison Young’s team excels. And now is a great time to transact, says Principal Erik Edeen, Director of Operations for the Capital Markets Group. “Investors have been speaking with their wallets,” he says, with the group taking advantage of a market where there were more transactions in the fourth quarter of 2021 than any quarter since the third quarter of 2018. The group’s 20 closed sales in the 4th quarter included a $27.5 million retail condominium at 501 Broadway for Vornado and the $46 million sale of a development assemblage on the southwest corner of Sixth Avenue and West 14th Street. In addition, the 16 newly signed contracts in the fourth quarter signaled continued market velocity to carry over into 2022.

Then, despite a short lull in early 2022 due to renewed pandemic concerns, the market roared back with a great deal of optimism and good energy, says Principal Brandon Polakoff, Executive Director of Tri-state Investment Sales in the Capital Markets Group. “We are seeing the narrowest buyer/seller gap in over five years, which is the sign of a healthy market.”

The market is definitely on an upswing and what’s most exciting to us is the equilibrium that most asset classes are seeing, agrees Nelson. That’s the beauty of this market, which has long-term owners eager to see a return on their decades-long investment, coupled with buyers who had been sitting on the sidelines and are now thinking about diversifying, whether to other markets or into new asset classes.

Edeen concurs – “With the pent-up demand and dry powder that has been sitting on the sidelines, 2022 should only increase in momentum,” he predicts. “Every asset class currently has levers and market factors that are changing at a brisk rate, and the effect on property values is significant,” he says, adding that the time is right for potential sellers to take advantage of Avison Young’s free professional evaluation that can help them identify opportunities.

A unique structure that benefits clients

One of Avison Young’s key differentiators is the way its teams are composed – by asset class rather than territory. This silo-free concept benefits clients in several ways, and the first is its extensive market awareness garnered through a daily morning meeting where groups run through their pipelines to sync up the team.

The unified approach makes communication more efficient for their clients, Nelson explains. “Buyers can call any team member with a question on an available property and immediately be tapped into someone knowledgeable, even if the specific listing agent isn’t available. Investors don’t want to have to call a dozen different brokers to get details on multiple listings throughout the City.”

The team believes this framework is reflective of a more sophisticated market where investors or fund owners today are less focused on buying neighboring properties in a specific territory and want to evaluate a wide spectrum of options in various asset types and risk profiles. “Our approach to investment sales mirrors the approach of today’s capital markets environment with solutions for the entire capital stack and all asset classes in the region,” Edeen says.

The specialization also gives teams a deep reservoir of knowledge to really understand the intricacies of the class – expertise they can then impart to clients. However, because they realize that many investors are looking to diversify into other asset classes, education is a key part of the morning meeting, Nelson says. Each day a different asset class team presents to inform everyone about various opportunities, thus offering a forum where they can learn from each other and share nuances that can spur potential deals.

Finding outlier buyers

This ability to provide a line of sight to the various deals the team is handling is the firm’s secret weapon to identifying the ideal buyer, notes Nelson. “It’s part of our value proposition for sellers. We recognize there are two sides of the transaction, and we pride ourselves on finding outlier buyers who bring something fresh,” explains Nelson.”

One distinct way they accomplish this is through targeted digital marketing and a robust social media presence.

There are some who prefer a more private process, in which case Nelson touts the firm’s reputation for being strategically plugged into the right markets and offering a combination of ways to reach those buyers, both through their existing relationships and finding new avenues.

Brandon Polakoff, Principal, Executive Director of Tri-State Investment Sales

This is an area where Polakoff holds particular expertise. While many brokers might concentrate on known buyers in Manhattan and Brooklyn, he has a talent for working with those who may be new to the New York real estate market and therefore need a little more advice and nurturing. “There’s a temptation to want to return to the tried-and-true buyers you know; however I find that those who might be considered ‘easier’ aren’t always going to pay a unicorn price. I am willing to take the time to guide a new prospect from start to finish and in the process might get a price my client otherwise might not attain.”

In his experience, there are two types of buyers. The first are those looking for a “value-added” deal, who can see the potential in a building that needs work and have the capacity to put in the time to improve it to current standards. Then there are those who are seeking a clean asset, who are often coming from overseas or out of state or who are conducting a 1031 exchange – groups whom Avison Young is ideally equipped to service. More specifically, out of the 102 properties Avison Young’s Tri-State investment sales team has sold since inception, thirty-five buyers were either a user, high net worth or foreign first-time purchaser. Even more, the team transacted with sixteen 1031 buyers, a number of which were new to New York City’s real estate scene. These figures represent 50% of all properties TSIS sold, a remarkable feat given the premiums these buyers pay.

Culture drives success

Creating a strong team, which includes nurturing up-and-coming professionals, is foundational to Avison Young’s success, explains Edeen. “Prioritizing daily in-person meetings provides a level of collaboration other shops are typically less willing to invest time in,” he says. And that pays off for the clients in a team that has knowledge three or four layers deep, and also in reduced turnover which results in increased collective knowledge.

We offer an environment that naturally fosters development in newer associates, and it’s incredibly rewarding to see individuals grow, he says. In addition, Avison Young reaps the benefits of a more committed bench of talent, given the firm’s unified approach and the training they offer in asset specialization.

The structure is designed to encourage all brokers to market properties as a team. “Everyone is incentivized to participate in a collaborative effort,” Polakoff says. “That means we are all rowing in the same direction.” And ultimately it offers the best outcome for clients, Nelson says. “By cultivating more interest in properties, the organic competition ultimately yields higher prices.” Adds Polakoff, “Clients are looking for a team that has expertise but is also analytical and responsive, and we deliver.”

Education sets Avison Young apart

Another competitive factor is the team’s devotion to continuous improvement, not just within the team but by being thought leaders for the greater industry. For example, Nelson hosts a popular podcast, Real Estate Investing – Live from New York, which explores the fundamentals of investing in various asset classes, and has a website, JamesNelson.com, which acts as a resource hub for investors. “A big part of my job is staying ahead of the game for our clients, to let them know what’s on the horizon,” Nelson says.

He also regularly guest lectures at top universities, including Columbia, Fordham, NYU, Wharton, and Colgate, his alma mater, to help cultivate the next generation of real estate professionals.

For his part, Polakoff develops a regular comprehensive report that tracks and analyzes New York City sales building by building, an effort that reveals what attracts people to certain properties, which will then sell for a premium, or what shortcomings might hint at a potential deal. “This method offers insight that allows me to give candid feedback when I’m doing due diligence on a prospective opportunity,” he says.

And that’s really the tie that binds together all their efforts – a desire to do the best they can for their clients, says Nelson. “Our ability to outperform the market is a testament to how we work as a team to provide value to sellers and buyers.