At the Forbes Business Bridges 2025 conference, Bob Knakal, Chairman & CEO of BKREA, joined leading experts to discuss the evolving landscape of global real estate investment. Speaking from decades of experience and more than $22 billion in closed transactions, Knakal provided a candid look at how policy, pricing, and investor sentiment have reshaped the New York multifamily market—and what lessons can be drawn for emerging markets worldwide.
Key Takeaways from Bob Knakal’s Insights
Global Appeal, Local Challenges – Knakal has sold properties to investors from 72 different countries, underscoring New York’s position as one of the world’s most international investment markets. Yet, local policy shifts have fundamentally altered investor behavior.
Policy Impact on Investment Behavior – Since 2019, changes to New York’s rent regulation laws have driven traditional multifamily investors out, as policymakers opted to restrict owner control rather than encourage new construction.
Capital Flight to Growth Markets – Formerly loyal New York investors now deploy capital in Florida, Tennessee, Texas, and Arizona, chasing more favorable returns. Cap rates, once 150–200 basis points lower in New York, have now inverted—rising higher than other U.S. markets.
A New Type of Investor Emerges – Investors from markets like Nashville and Austin, accustomed to buying at 7–8% caps, are now entering New York at 5–6% caps, assuming they understand rent regulation—though Knakal cautions that few truly do.
Diverging Market Performance – Knakal emphasized that today’s market cannot be viewed uniformly: some sectors are surging while others have lost up to 75% in value, particularly in the rent-stabilized segment where supply is shrinking.
Affordability Paradox – Despite political rhetoric, restrictive policies have made housing less affordable, with no meaningful new supply and free-market rents hitting $100–$150 per square foot—levels comparable to sale prices in major European cities.
Frequently Asked Questions (FAQ)
Q1: What major shift has occurred in New York’s investment profile?
New York’s multifamily sector has seen a dramatic investor exodus since the 2019 rent regulation changes, as many owners now view the market as overly restrictive and less profitable.
Q2: Where has New York investment capital moved?
Investors have redeployed funds into Sun Belt markets such as Florida, Texas, Tennessee, and Arizona, where rent control is absent and yields remain more attractive.
Q3: How have cap rates evolved?
Historically, New York enjoyed cap rates 150–200 basis points below the national average; now, that relationship has flipped, with lower cap rates outside New York.
Q4: What opportunities remain in New York?
According to Knakal, the few investors still active—roughly 10–15% of prior buyers—are “doubling down” in hopes of policy change, while new entrants see potential in discounted valuations.
Q5: What is Bob Knakal’s outlook on affordability?
He argues that policies intended to improve affordability have restricted supply instead, driving rents to record highs and deepening the city’s housing challenges.
Q6: How does this relate to emerging markets?
Knakal believes emerging markets can learn from New York’s missteps—balancing regulation and development to avoid stifling investment while still expanding housing access.
