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Don Peebles, Chairman & CEO of The Peebles Corporation, joined us for a wide ranging interview. We discussed the advantages of public-private partnerships, the shifting political climate, Affirmation Tower, and why he’s bullish on the hospitality sector.

Daily Beat: Can you please share your background with our readers?

Don Peebles: I was first exposed to real estate as a young child when I was eight years old. After my parents divorced in 1968, my mother got into real estate sales and built a brokerage business.

I initially anticipated going to medical school, but changed my mind when I was an undergraduate at Rutgers and left to work in real estate.

Daily Beat: I gather that you started on the residential side.

Don Peebles: Yes. I started my career trying to sell houses as a real estate agent in 1979. During that time, the industry faced a highly inflationary environment – eerily similar to where we are today. Interest rates were raised to try to control inflation and they ran all the way up to about 15%, which meant real interest rates were 18 to 20%. People wanted to buy, but could not qualify for a mortgage, so I got into appraising when I was 21.

I started as an appraiser apprentice and a few years later started my own appraisal firm. I grew up in Washington DC, so I’d known politics and government for awhile and was able to secure some contracts from HUD.

Daily Beat: What was your first experience with the government?

Don Peebles: My last two years of high school were spent as a Congressional Page on Capitol Hill. At that time, there was a school for us on the top floor of the Library of Congress. Our classes were from 6:00 AM to 10:30 AM, and then we walked across the street to the Capitol and we’d work from 11:00 AM until Congress went out of session.

Daily Beat: That sounds like a formative experience.

Don Peebles: I got a good crash course on politics and time management. We were able to grow the business from there and three years later in 1986, I found a development opportunity and built my first office building. The government pre-leased the property and was our sole office tenant, which made it easier to finance.

The real estate market had a good run in the 1980s after the recession, but we then faced the S&L crisis. During that period, our business focused heavily on consulting and property assessment appeals.

As we were going through this down cycle, we acquired some sites at heavily discounted prices and those became future development opportunities for us in the 1990s as the market recovered.

Daily Beat: How did you get active in Miami?

Don Peebles: I went on vacation in 1995 and loved it! By the following year, we had won the development rights to the Royal Palm hotel. The City of Miami beach redevelopment agency owned the site and was looking to develop more convention quality hotels. This created the primary focus of our business for many years, which was public-private partnerships. This was a great fit in terms of my skill set because I remained actively engaged in local and national politics as I built the business.

I was on Bill Clinton’s national finance committee when he first ran for president and was a corporate co-chair at his inauguration. I was very active in the political process. Between that activity and my real estate experience, Peebles Corporation developed an expertise in the public-private space.

Daily Beat: What are the advantages of public-private partnerships over standard development?

Don Peebles: Throughout our company’s history, we have done many private sector deals and in such cases the buyer is simply looking to maximize profit and high probability of execution. The seller rarely cares about how or what you build on it. They just want to maximize their price and move on.

The public sector is very different. These public-private deals are typically done with a local municipal government like Washington DC or Los Angeles, but occasionally the arrangement is with the state. Across the board, these government entities are primarily focused on ‘outcome’ when they sell.

Governments are not land speculators, they’re not land investors. The amount of money they’re going to get from selling a piece of property is almost meaningless in terms of their overall budget and spending capacity.

In some cases, they might want to increase affordable housing, while in others there might be a shortage of office space in a location. As an example, we recently won a few Requests for Proposals in Miami Beach to develop office space because they felt that based on migration patterns from the Northeast, the growing number of entrepreneurs would need offices close to where they lived.

Across the board, governments are focused on how you take into account the economic considerations of local residents and businesses.

Daily Beat: And in private development, the seller only cares about price.

Don Peebles: Correct. Unlike the private sector where the sole focus is price and the ability to execute, there’s a multitude of measuring and evaluation standards in the public-private process.

Financial capacity, offer, design, and use type. Moreover, the government receives all kinds of revenue that’s generated.

For example, in a place like Washington, DC, where there are city, state, and county functions, they all receive tax revenues. Hotels are very attractive to them because of all the different tax sources and jobs that are generated. The public sector looks for job generating activities and economic stimulus.

Governments will also look to support investments that they’ve already made like a convention center and request that hotels are developed nearby. They’ll evaluate based on those criteria and price will have some relevance, but rarely will you see price being more than a third of the evaluation criteria.

Daily Beat: This presents some excellent opportunities for developers like you.

Don Peebles: Overall, we like this approach because it gives us the opportunity to be competitive without having to pay the most money. Structurally and fundamentally from a real estate investor perspective, if you can buy assets at below market prices by providing other types of benefits that are not necessarily costly to you as a developer, that’s much more attractive.

The private sector is looking for very quick execution on the purchase, while the public sector generally does not allow a developer to close on the acquisition until you’re ready to commence construction. If you don’t ever get to that point as a developer, they’ll take the property back and go through the process again.

While that presents a risk, we see that as an opportunity because then we don’t take entitlement and land carry risk. We like the public-private process because we don’t close until we’re ready to dig a hole in the ground.

Granted, we risk a smaller sum up front, but that is offset by the fact that we don’t have to pay to carry the property and the land arbitrage we get on the price.

Daily Beat: A misleading report from city Comptroller Brad Lander’s office unfortunately helped shape the media narrative surrounding 421-a in New York City. It claims that the city will lose $1.77 billion in tax revenue from the program in 2022. The reality is that without the tax abatement, developers would not build these housing units in the first place. Can you please discuss these political headwinds? How do we combat this?

Don Peebles: This has been a two-to-three decade process.

Developers were initially perceived entrepreneurs and innovators who were improving communities by building urban infrastructure and developing suburban markets.

However, as the process of relocating back into urban cities and the progressive nature of politics, there became this view that developers were gentrifying communities and pushing people out. The narrative started becoming more negative.

To combat this, I encourage a greater focus on economic inclusion because development stimulates economic activity. If we could have a broader lens of who we give opportunities to and make it more reflective of the population, demographics that we are building, then we’d be perceived as job generators. Jobs were being generated from outside the communities and this created this narrative of an anti-development approach.

Politics has unfortunately always been about misinformation. How you take a fact and spin it. That’s why they’re called the spin doctors and the messengers because they take a basic fact and mislead the voters with it.

Daily Beat: Who can forget about Amazon in Long Island City.

Yes. There was a false narrative that the deal was going to cost the government $8 billion. In reality, Amazon was going to provide New York with $30 billion and would get a rebate of that $8 billion to make the economics work. Now, we’re sitting here with zero revenue.

The same thing is true with 421-a. The government incentivizes certain uses; namely, affordable housing. In markets like Los Angeles and New York where construction workers are heavily unionized and land is expensive, the cost to produce housing is higher than other states and developers are forced to build higher revenue generating products.

Providing property tax incentives to developers to build affordable housing helps close the tremendous gap between revenue versus cost.

Bricks and mortar will cost the same overall – whether you build luxury or you build affordable housing – it’ll just be some of the finishes that’ll change the price perspective. The government needs to look at that more closely. Now they’ve eliminated 421-a in New York State, that’ll have a chilling effect on the development of affordable housing.

There’s minimal profit for a developer in affordable housing because there’s no upside of owning the real estate. Most developers look to use that as a stepping stone. This is a sector of the market that is going to need greater incentives. Unfortunately we’re in a political narrative where there’s an anti-development and anti-wealth environment. I think that the Comptroller is making a mistake.

It’s a false narrative that any kind of tax abatement for affordable housing has been costly to the government because the alternative would be that the government builds this housing and they wouldn’t do it.

Daily Beat: We wrote in our publication that more than half a dozen affordable housing projects in California are costing more than $1 million per apartment to build. Developers must be part of the solution. Tenants could be getting very nice houses for that amount!

Don Peebles: Yes, I saw it. We’d be better served by allowing people to go out and buy private housing on the market.

Daily Beat: Are these migration patterns to nicer climate and Sunbelt sustainable?

Don Peebles: We’re going through a very transitional period in this country in terms of how Americans are going to work. That was all accelerated as a result of COVID and the whole country working remotely and learning how to do that more efficiently.

Obviously that’s going to have an impact on office demand and shift where people work. It’s also going to change what amenities are going to be available in apartment buildings and condos. Amenities like business centers with office, conference, and video conferencing capabilities are also going to be attractive. The speed and reliability of the internet is going to be very important.

Daily Beat: The fact multi-family deals in certain markets are trading at 3 caps has concerned us for the past few months. How do you see things shaking out with the rise in interest rates?

Don Peebles: We’ve operated from the perspective that cap rates have been too low on rental apartments for a long term hold. Interest rates have been so low for the past few years and the only place they could have possibly gone was up. We always thought that’s a risk in multi-family and it’s now coming to bear.

This will result in more development because you could still develop in the Sunbelt in places like Miami at 6 to 7% cap rates, which gives you a nice arbitrage and cushion. I think cap rates will go up.

But since rents in the Sunbelt are rapidly going up, I think values – despite the move in cap rates – will be relatively preserved. This is because the cost of housing is so expensive and there’s not been a lot of new inventory. With mortgage rates doubling in a very short window of time, that has priced a lot of people out of buying, which leads to more renters.

The mindset of the housing consumer has changed with a different generation.

Daily Beat: Lumber is already down 55% from its January high. Where do these costs for materials stabilize? When projecting hard costs for your development pipeline in the next few years, how do your numbers compare to before the pandemic?

Don Peebles: I think it will settle down to a rea- sonable price increase based on where we were in 2019. We’re building a lot in 2023-2024, and we think prices will level off by then.

Daily Beat: Do you raise individual funds or is it open ended. What’s the typical deal structure?

Don Peebles: Our typical structure has been one off fundraising. We retain our earnings and self-fund all of our pre-development work. We create a lot of value in that process and then bring on institutional partners.

We’re now in the process of beginning to do a private placement around our public-private business, because the scale of our business has gone up. We’ve got seven plus billion dollars in the pipeline and want to add to it because there’s tremendous opportunities for us, so we’re adding more structure now to our GP fundraising.

We also have some strategic partners that we’ve worked with in the past on the LP capital and plan to continue working within that pool of institutional investors on a one-off basis.

Daily Beat: Favorite REIT?

Don Peebles: Park Hotels & Resorts. The hotel sector was beaten up and luxury travel is back in a very big way. I anticipate corporate travel for meetings and business conferences to join in the recovery.

The pandemic has led to the closure of unproductive and marginally profitable hotels, which has led to a much stronger hotel base. Rates continue to increase.

I like Park Hotels & Resorts because they have a combination of conference hotels like the New York Hilton, but also like the Royal Palm in South Beach, which I developed.

I’d short and have shorted office built office REITs. I did that before the pandemic and was focused on New York office REITs because fundamentals were going the wrong way.

Daily Beat: Can you please share an update on Affirmation Tower and Site K?

Don Peebles: The Empire State Development Corporation owns the site and they issued a request for proposals.

We looked at answering the two moments that the country was really dealing; namely, COVID and the unprecedented protesting around the nation surrounding racial, economic, and criminal justice. We wanted to build a development that would address those two moments.

I partnered with McKissack, a black-woman-owned and run construction company and paired them up with our friend John Fish at Suffolk who is our contractor there. We wanted diversity and the tower will be 80% African American owned.

I then brought in my friend, Steve Witkoff who has extensive experience on super tall buildngs. The idea is to build something very unique – it would be the tallest building in the Western Hemisphere Two hotels, offices, an observation deck.

We are close to working out an agreement to house a civil rights museum. It would be a transformative project. The state and Governor Hochul are the decision makers and I anticipate that getting addressed this fall.

Daily Beat: Does this need to go through ULURP?

Don Peebles: No. Because it’s a state project, the governor could have a general plan and we’re planning for something that’s allowed within the current zoning. This should allow it to move forward expeditiously.

*The interview has been edited and condensed for clarity.

Eran Polack, CEO at HAP Investments, joined the Real Estate Daily Beat for an interview. We discussed his early development experience in Eastern Europe, the Manhattan condo market, construction costs in this environment and other interesting topics.

Daily Beat: What are your thoughts on the condo market in New York City?

Eran Pollack: I think that after a very long time, the condo market seems healthy again. Sales at the Maverick on West 28th Street are very strong.

If you combine the resurgence in the market with how difficult it has become to build rentals in the city, I think condos are the only options for development unless you’re 100% affordable. Even a 70-30 project with a tax abatement is very challenging in this environment.

With condo inventory going down significantly and demand where it is, condo land deals are also much more attractive.

Daily Beat: Can you discuss the recent sale of your 49% stake in the Maverick Chelsea to your JV partner Daiwa House Group?

Eran Polack: ​​We partnered with Daiwa House – a very large Japanese real estate company – and they wanted to hold onto the rentals, so they bought us out. We are still managing the project for the next few years. It was a win-win deal where everyone achieved their goals. Our investors typically like exiting an investment once its complete, while our Japanese partner has a longer-term outlook.

Daily Beat: When I was raising money from another venture, we met extensively with Japanese investors. The cultural experience was fascinating. How have you found it?

Eran Polack: We have an amazing broker. She’s Chinese and lives in Japan – she’s still working with us even after getting paid her commission. She helps with cultural differences and still comes to meetings.

I personally get along with them very well. We have a good relationship and I’ve learnt a lot about Japanese culture by reading books. Daiwa is also a very open minded company with people that also understand other cultures.

Daily Beat: How long did it take to get the deal done?

Eran Polack: It took a full year. They are very loyal and stand behind their word.

Daily Beat: When you are underwriting a new condo deal and projecting hard costs, how would you compare the costs today versus before the pandemic?

Eran Polack: I think it’s a very interesting question and a great topic. The buzz word now is inflation, but there are many things that are canceling each other out. In areas like materials, prices have certainly increased; however, there are a lot of GC’s and sub contractors that don’t have jobs and are available.

If you really need to build something and it’s ready to get out of the ground, you can still build it at the same price as 20 to 24 months ago. Maybe some components in your project will be more expensive, but others are cheaper and things will cancel each other out.

Daily Beat: So even labor shortages in the broader economy, you’re saying when it comes to the GCs, everyone’s looking for work, so developers have leverage?

Eran Polack: GC’s are doing projects for less profit. You look around New York and there aren’t so many new projects coming out of the ground.

Daily Beat: Are you still seeing foreign investors? Who’s the buyer been in Manhattan recently?

Eran Polack: I’m very bullish. There’s been very strong absorption in the past six months – inventory is going down and New York is coming back. We see a lot of people that buying to live in the city, not just foreign investors. That’s why I was using the world healthy because eventually a strong market is one where people are buying to live in. That’s the purpose of condos or co-ops. I’m not opposed to investors buying an apartment, but I do think it’s a healthier situation when you have enough buyers who want to live in apartments because they are willing to pay more. An investor doesn’t really care as long as the investment is good, but someone that wants to live in the building will pay a better price than an investor.

Daily Beat: And I guess that brings me to 65 Franklin in Tribeca. I know you landed $94 million in financing from G4 in 2019. How’s that project coming along?

Eran Polack: We are working on the foundation and making a lot of progress. I think it’s going to be an amazing project and be a great addition to Tribeca. The market is right there for us to sell the product we are building in that neighborhood.

Daily Beat: Have you landed financing for your planned Jersey City project yet?

Eran Polack: We are negotiating with four groups on equity investment and financing. We are working with Noble Construction on the CDs and GMP etc… with plans of trying to get into the ground.

You see what’s going on in the neighborhood! Kushner finished their building and it’s renting extremely well – they’ve already started their third building. We hope to start construction in a year. There are a lot of developments in the area, but the fundamentals for real estate are so strong there. There’s an amazing train station – the easiest commute that you can have to Manhattan and I think it’s smoother than anywhere in Brooklyn. Our project is a thirty second walk to the station.

The Kushner project has been so successful because you’re getting brand new apartments with so many amenities – everything you can imagine – with great transportation and it’s half the price of Manhattan. It takes like 10 minutes to get to the World Trade Center.

Daily Beat: Can you speak to your earlier experiences developing in Eastern Europe like Ukraine?

Eran Polack: Each market is extremely different. I was developing in those places about 15 years ago and a lot has changed. When I was developing in Eastern Europe in like 1996, it was not so long after communism fell, so there wasn’t any local competition. A few international fans and individual smaller developers like me were involved. The market was created in those years. You couldn’t get a mortgage in those countries back then.

The market was very different and I think it was much easier with much smaller numbers. The best apartment in Budapest went for $100,000 to $200,000.

Daily Beat: How about the Israeli market?

Eran Polack: Israel is a completely different market. It’s very structured and most sales are done on paper before you even start construction. When you finish a project and hand the keys to the buyers, usually 80% to 90% of the building is already sold – some of the time even 100%. The margins are lower, but the equity that is needed to do a project is also much less than what you would need in New York.

Daily Beat: There’s not as much risk earlier on because so much is pre-sold?

Eran Polack: A lot is pre-sold and you can use the money from the sale back into the project.

Daily Beat: When you were out in Eastern Europe, were these projects for tourists or was it actually for residents of the country?

Eran Polack: I was building for residents of the country. For example, many Hungarians during Communism left Budapest and lived in Austria or somewhere in the West. When Communism fell and things started to normalize, a lot of them came and wanted to buy an apartment in the city. It was an amazing market back then because those people were living in the west and were making and saving money.

They could afford what we were selling and had a different perspective on real estate. I also developed a 110-unit, short-term rental project that was geared for corporate employees who were opening and sending people to Eastern Europe.

Daily Beat: Did you know someone in the government? How did you get started there?

Eran Polack: I started buying from individuals who were living in apartments and when communism fell, individuals got to own their own apartment. As a result, there was a massive opportunity to buy buildings with four apartments from each individual owner and then you’d demolish and build 10 luxury apartments.

Daily Beat: It reminds me of what Bill Brodwer did with Hedge Funds! His book Red Notice is a great read! Are you still doing projects there?

Eran Polack: I’m hundred percent focused on New York and Jersey now. I moved with my family nine years ago and have four kids. We have officers in Israel, but mostly for investor relationships and things like that. I’m involved in Tel Aviv on a very small scale.

Daily Beat: Which neighborhood in New York do you think has the most untapped potential?

Eran Polack: Mott Haven in the Bronx is will eventually become a very strong market. Long Island City has gone through phases of hype, but I really it too. But I’m most bullish on Jersey City!

Daily Beat: Why haven’t there been so many bond issuances in the Tel Aviv Stock Exchange this year? Is it simply because the exchange rate of the Shekel makes it expensive?

Eran Polack: I think the market in Israel got hit with a lot of issues and problems. I’m not sure that they had enough knowledge to do some of the deals they were doing. There’s a lot that’s going to be changed in the near future.

Right now, they are considering changing the whole grading system, which will make it even more difficult. I think there are a few companies that did well like Silverstein and Extell. People are still raising money, but it’s much more quiet.

*The interview has been edited and condensed for clarity.

Delving into the world of residential brokerage, we sat down with Ryan Serhant to discuss his new firm and the luxury housing market. Is it possible to generate so much exposure, while preserving scarcity in one’s listings? In a wide ranging interview with the Real Estate Daily Beat, the celebrity broker made famous by Million Dollar Listing, addresses this and many others topics.

Daily Beat: The scarcity created by Vornado’s Steve Roth at 220 Central Park South always stood out to me. He was essentially a one man co-op board and would personally interview every prospective buyer. The optics were brilliant and very effective. With all of the exposure you’re able to generate through the media and Instagram, how do you maintain the fear of missing out (FOMO) necessary for sales? How do you protect that?

Ryan Serhant: It’s like what I tell every developer. The most important marketing we can do is sell apartments. You can sit back and be a stickler for your price, but unless you’re on the water or on Central Park, then you’ve got heavy competition. So you’ve got to make deals, and then that’s how you create a fear of missing out by showing people that you’ve got contracts signed. Things are happening, buyers are coming through. And if a buyer does make a low-ball offer, you can say no problem.

Daily Beat: Sales velocity is obviously key.

Ryan Serhant: The person in the relationship who has all the power is the one who cares the least. So if you’re on the sell side and you don’t care if this buyer buys, now the buyer really wants to buy because you don’t care about them. And so you’re the one in that relationship who’s got the power. We just signed a contract for the first resale at 220 Central Park South asking $33 million, Unit 55B. Steve Roth got personally involved in the freaking resale. We should close on that shortly.

Daily Beat: Why do you think he’s getting involved in a resale?

Ryan Serhant: There are Picasso’s in the lobby. It’s a limited building for a certain select group of people, and so they take it very seriously. It’s still a condo – they’re not going to deny people, but they check everything out.

Daily Beat: As you know, things are tough for developers and sponsors out there – condo inventory loans are obviously on the rise. When you sit down with a developer and he’s like, look, Ryan, I love what you’re doing with your new firm, but we’re going to have to talk about the commission. Do you take the hard line and say this is our fee, or is there flexibility in this market?

Ryan Serhant: There’s definitely flexibility. You gotta be willing to negotiate and make deals. There are active buyers. You can wait, but you just gotta do the math on the patience.

Daily Beat: Carry costs are pretty expensive and add up.

Ryan Serhant: You’ve got to see if a developer has something that’s limited. Exclusivity is created by something being finite. 220 Central Park South was finite. It was on the south side of the park, it had the porte-cochere circular driveway, Robert AM Stern –– it didn’t exist. If you liked 15 Central Park West, and you wanted the new one with the runway view of the park, this was your building. 

Daily Beat: Regarding Manhattan’s supply glut of condos, Extell’s Gary Barnett recently said that half of his six active projects are in the red. But with that being said, we’ve now seen twelve consecutive weeks with more than 30 contracts over $4 million –– the market is clearly picking up steam. What are you seeing out there and what’s your outlook for the next 12 months?

Ryan Serhant: Everyone loves a deal, but only when they feel safe about them. So the best deals in New York City went into contract last summer, and then closed into the fall and winter. For example, I sold the penthouse at 565 Broome Street for just over $22 million, a 25% discount. We also sold the biggest discount on the market, representing a buyer in a $16.75 million deal for a fully furnished unit at One57, which was 51% off. So that’s when the best deals were taking place, and they’ve now been recorded. 

Leases from one year ago are starting to come up. People are starting to realize that maybe they’re not cul-de-sac people, and miss the energy in New York. And their friends are coming back, enjoying the restaurant scene. They are now second guessing, especially as companies begin returning to offices. So they are now coming back and panic purchasing just to try to get the last deal. They are asking me: Can I still get a deal? Are prices still down?

Daily Beat: So you’re seeing a lot of FOMO out there. People don’t want to miss out.

Ryan Serhant: Yes. FOMO is real man! You also have investors who want to take advantage of good deals. You have people buying sight unseen who know that you never bet against New York. The market is doing incredibly well.

Daily Beat: On both the lower-end and higher-end of the market? Any difference there?

Ryan Serhant: It’s across the board. I think 2021 will be the biggest year of my career by far. We sold the most expensive house in the history of Florida for just under $140 million two months ago. We closed on another place in Palm Beach last week, sight unseen, totally virtual for $15 million. We’re putting every townhouse we have on the market into contract. Listings that haven’t been selling for years are now trading.

Daily Beat: The Manhattan townhouse market has been languishing for years and really needed a boost. 

Ryan Serhant: We had a townhouse on the market all 2019-20, and the seller got exhausted and said, “screw it, New York’s dead, I’m taking it off the market.” We took it off the market two months ago, and a contract was fully signed last week at a great price in an off market deal. People are asking, is it still available? And I’m like, it was available for three years!

Daily Beat: It’s a New York deal. I love it.

Ryan Serhant: It’s crazy. So the activity we’re seeing is really incredible. And we’re able to attract buyers in a lot of different ways. We have our Studios Team that creates content for everything. They put it out there as a resource to all our agents and they’re crushing it. The views, the clicks, the traffic is just nuts. And so it’s very exciting – it’s a good time for New York.

Daily Beat: From a developer’s perspective when it comes to social media, Instagram, TikTok, and Facebook, some fail to understand the potency of it. I used to hear from some of them that it’s cute, but it’s not how deals are done. Take someone like Gary Barnett [SERHANT. is currently marketing Brooklyn Point and launched sales on an Instagram Live] who still uses a flip phone. How do you explain the value of social to him?

Ryan Serhant: They get it now. It was a struggle in 2013 when Instagram came out. It was a struggle in 2015-16, and then it started to become a little bit more normal. But the proof is in the pudding. These developers are now spending all this money on firms that do social media handling and advertising. They spend a lot. And they’re seeing that when we run these ads on social, people come through.

I just got hired by a developer of a really large project. It was between my new firm and one of the big ones that’s been around for 10,000 years. This developer was 50-50 and didn’t know what to do. But his daughter follows me on Instagram and his son sent him one of my YouTube videos. And he was like, listen, this building is going to be sold to younger people and here’s this broker that’s getting the attention of my kids. 

Daily Beat: Running those small New York Times ads in the residential section won’t really move the needle. 

Ryan Serhant: Other firms have the developer pay for StreetEasy featured ads and to take out an Architectural Digest ad for $40,000. There are 4 million people that follow me on social media! And then there’s the trickle down from there – who do those people know? I can sell that way and developers totally get it now. They also just spent a year at home with their kids on their phones – they all have social, they’re all on it and see everything. It’s no longer a secret. They understand how important it is. 

Daily Beat: There are tea leaves left by an investor based on the actions they take in the market (e.g. acquisitions, dispositions, financing activity). KayoCloud has built machine learning models to help firms achieve this on the commercial side. How do you approach technology on the residential side where most buyers are only going to acquire one, two, or maybe three houses their entire lifetime?

Ryan Serhant: We have a large tech team that we’re hiring people for every month that lead a group that we have called ADX – it’s our amplification data exchange. It puts our listings in front of more eyeballs than anybody else using Foursquare check-ins. It’s a passive data collector and anytime you go out with your phone, they are tracking your steps. So if you go to that brunch spot all the time, SERHANT. can target you with a listing that’s above the brunch spot. We also use census data, API feeds, and information from city agencies to help try and predict where real estate values are going to go up. 

Daily Beat: The residential brokerage space has been getting a lot of press recently – especially with the Compass’ IPO. Many have pointed out their artificial growth, as they’ve been the leader in poaching brokers with large signing bonuses and high splits. How do you plan on growing SERHANT. in the next few years? Are you going to be poaching brokers? What’s your recruitment strategy?

Ryan Serhant: To be honest, we don’t need to poach. There’s so many people that come to us from every other firm. We are incredibly selective. I have no need or interest at the moment in rapid scale agent count for the sake of growth. Quality is far more important to me. But listen, if I had billions of dollars, would I also buy success and market share? I mean, I don’t know, probably.

Ryan Serhant: You can do anything with $1.5 billion.

Daily Beat: Ryan, you should just call yourself a tech company. It’ll do wonders. 

Ryan Serhant: Look at Elon Musk, look at Bezos. They’re like, what should I do? I’m going to go to Mars. That’s what I’m going to do because you can do anything when you have that much.

Daily Beat: I mean, think of WeWork. Look how much money they were able to experiment with.

Ryan Serhant: It all comes down to brand and story. Same thing when we are selling apartments. What’s the brand of that building; what’s the story of that listing? If people just bought based on brick and mortar, windows appliances, the whole real estate market would be upside down.

Daily Beat: Creating that narrative is definitely a major factor. On a related note, the New York Times recently ran a story about how residents at 432 Park Avenue are complaining that the trash chute “sounds like a bomb when garbage is tossed.” It was reported that loud noises and leaks are apparently happening at other projects on Billionaires’ Row as well. Are you getting any questions about this? 

Ryan Serhant: No one’s ever brought that up to me. I lived in a building with a trash chute for a long time, and you do hear things, but you get used to it. Yes, there are sirens, but this is New York City. There’s certain noise and lifestyle elements that you just kind of have to get used to, but no one’s ever brought up these types of noises to me.

Daily Beat: Thanks Ryan. It was great chatting. 

Ryan Serhant: Yes, thanks. Congrats on all your success Joe. Talk to you soon.

 *This interview has been edited and condensed for clarity.