UNLOCKING THE FUTURE OF CRE: KCM'S VISIONARY APPROACH CAPITALIZES ON $2.2 TRILLION OPPORTUNITY
Frederick Knapp, Founder and President of Knapp Capital Management (KCM), outlines the symptoms of execution failure and provides a forward-thinking strategy to navigate and capitalize on the sector's challenges.
NEW YORK, Aug. 15, 2024 /PRNewswire/ -- The CRE market is experiencing significant upheaval, with $2.2 trillion in distressed property maturities expected through 2028. The reported factors driving this crisis include remote work trends, urban decay, rising interest rates and mounting property debt. To weather the current storm, firms are offloading valuable properties in their portfolios at steep discounts.
To weather the current storm, firms are offloading valuable properties in their portfolios at steep discounts. Frederick Knapp, Founder and President of Knapp Capital Management (KCM), believes that the root cause of today's market conditions is something entirely different and endemic to the industry. His unique perspective attributes the core issues to systemic execution failures rather than solely external economic pressures.
"Execution failure is the root of distress in CRE. Organizations' inability to change, leadership blind to culture and consumer expectations and an ingrained commoditization malaise are the origins in what should be a service industry," says Knapp. "Every market cycle presents an opportunity for correction and Knapp Capital Management was conceived to set a new bar for competition in urban multifamily and commercial ownership."
A Proven Leader in Real Estate
Knapp Capital Management (KCM), launched in early 2024, is a vertically integrated real estate capital, investment, management, and services firm centered around diverse leadership, a forward-thinking culture, and the deployment of frontier technologies that redefine legacy approaches from day one.
Founder and President Frederick Knapp brings over 35 years of experience to KCM. As Executive Director at Hudson Yards, he orchestrated the creation of a dynamic service platform and organization to oversee asset management, operations, security and built a team encompassing over 1,000 people. His award-winning work in the US and UK have cultivated Knapp's unparalleled market intuition.
Factors leading to CRE execution failures:
Knapp has identified key factors leading to execution failure in CRE:
- Exuberant Underwriting: Flawed exit strategy at acquisition, assuming constant rent growth, favorable interest rates, and cap rates have doomed many high-quality assets while shorting the investor, lender, and occupants.
- Organizational Change: Change management is a highly complex and time-consuming process. Change amid a storm is incredibly risky and exceeds the time to deliver the value required to stay profitable.
- Technology: Functional technology is an enhancement, not a solution. To be done right, technology must be ingrained in a culture; it can be, without a doubt, a game changer but far too often a painful failure. Technology must be systematic in its practice and valued by leadership, who are too often reacting instead of having prepared the organization to compete in today's markets.
- Power over Culture: Autocratic structures, intellectual silos, ego-driven leadership and prescriptive power has depleted/repressed the talent pool over the past ten years in the real estate industry; process has replaced creativity, autocracy has replaced critical thinking and leadership ego has destroyed passion.
The Knapp Capital Management (KCM) Solution
- Leadership and Talent: Execution requires leadership, first and foremost, and KCM has attracted the brightest and most integral minds in business today in every single vertical.
- AI Integration: KCM will use artificial intelligence to enhance its acquisition and underwriting processes, positioning itself ahead of competitors by optimizing operational efficiency.
- Cultural and Structural Innovation: The firm emphasizes creating a transparent, forward-thinking culture from the outset, contrasting with the legacy issues plaguing traditional firms.
Dr. William Putsis, a renowned economist with a PhD from Cornell University and a long-standing educator at Yale University, London Business School and the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill is now Principal/ CEO at Knapp Capital Management. "I have consulted with hundreds of organizations and multi-national executives' teams over the past 30 years." Dr. Putsis says, "This market is primed for a new, clean and unencumbered organization created with new cultural objectives to seize market share. As CEO, I will guide this group through a storm I have seen a thousand times."
KCM is the creator and managing member of The Navigo Group, which uses Artificial Intelligence technology to enable its acquisition and management teams to be more efficient, resulting in enhanced scalability, quality and increased speed to execution. "Technology is not the cure or a solution. Technology used to enhance human intelligence, connect people faster, and mine for insights the human capacity cannot conceive is an opportunity," says KCM's Senior Managing Director of Evolution, Jeremie Miller, creator of Jabber/XMPP, an open-source instant messaging protocol that has become the foundation for popular applications such as WhatsApp and Zoom. "Technology is no longer optional; it is expected."
"KCM was born from the realities of today's market. We crafted a new equation: Integrity, Passion, Purpose, and Commitment are the drivers of success in this evolving market cycle," says Leah Caruso, Principal and Brand, Culture and Experiential Officer at KCM. Leah, who has shaped brand strategies and experiences for New York City's most significant developments, including the retail sectors of the World Trade Center and Hudson Yards, continues, "We've embedded culture into our foundation and seamlessly integrated game-changing technology into our workflow. Net/net, we don't want to be just good—we want to be great."
Conclusion
KCM's approach represents a bold reimagining of CRE management, focusing on a blend of cutting-edge technology, dynamic leadership, and a robust cultural framework. By addressing the execution failures that have hindered the industry and incorporating a visionary strategy, Knapp Capital Management positions itself as a formidable player ready to tackle the $2.2 trillion opportunity in distressed CRE.
About Knapp Capital Management (KCM)
KCM acquires, invests in, plans and manages multi-family and commercial real estate in domestic urban and surrounding suburban markets with an opportunistic eye on international high growth hospitality markets. Learn more at knappcapitalmanagement.com, LinkedIn, Instagram and X.
SOURCE Knapp Capital Management
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