The Bloxspring Essential Eight: Moshe Sukenik

One of New York's Most Expert Tenant Representatives, and the Advocate of Choice for Many of the Country's Most Prominent Law Firms, Enters the Arena

If Moshe Sukenik’s answers lean more towards brevity than some of our other subjects, he has a good excuse: only moments before we spoke, he was notified that his son’s girlfriend had just gone into labor, and so our time together was perhaps briefer than it otherwise might have been.

Or maybe not, as Mr. Sukenik is pretty much always in demand. As Vice Chairman at Newmark, where he’s served for more than 35 years, Sukenik is one of the most respected and accomplished tenant representatives in the United States. While he’s focused on the New York City market and has developed a particularly notable niche among many of the world’s most prominent law firms, his career spans the country and a wide array of notable companies from a diverse set of industries.

Some of his most noteworthy transactions include EY’s lease for 650,000 square feet at 1 Manhattan West; Debevoise and Plimpton’s 530,000-square-foot lease in Hudson Yards; Cleary, Gottlieb, Steen & Hamilton LLP’s 550,000-square-foot New York City lease renewal and expansion; Paul, Weiss, Rifkind, Wharton & Garrison LLP’s 550,000-square-foot Manhattan lease; and the REBNY award-winning land swap that helped create the new Lincoln Square Synagogue, the first new synagogue in Manhattan in over 60 years.

As you might expect from a gentleman with this breadth of experience, our conversation was suffused with insight. From the transition in how tenant representation brokers have been viewed over the course of his career—both by their clients and the market—to why AI is actually good for the commercial real estate market, to the benefits of having a 90-plus year old broker on the team, Sukenik walked us through both where the industry is at and how its evolved over the course of his—if you’ll excuse the very-justified glazing—illustrious career.

1. How did you initially get involved with the real estate industry?

I was practicing law and doing some legal work. I practiced law for 22 months and I said to myself, “Self, why would I want to just do the legal work when the economics are already set before it gets to my desk?” It seemed like it would be a lot more impactful, and a lot more fun, to be able to sculpt the economics, rather than just execute someone else’s development of the economics.

2. What’s the most unexpected aspect of how your career has evolved?

It’s that the school of hard knocks is the best teacher; there’s nothing to replace experience. The fact that you keep learning after so many years in the industry, that’s a little bit surprising. Eddie Gordon (or Edward S. Gordon, known by some as the “godfather of commercial real estate”) at his company, which is where I got my start, had a regular weekly meeting. And once every couple of months, he’d get up and tell the sort of stories that were meant to inspire all of us, stories about how deals come together. And that practical experience, even if its someone else’s experience, can really apply and just multiply over time.

On one occasion, Gordon must have told a story about getting an initial no and somehow pushing through and just keeping the conversation going. So, shortly after hearing that story, it’s early in my career, and I get the Chairman of the Board and CEO of Hasbro Toys on the phone. At first, it sounded like he was sort of interested, so I kept him on the phone. But after a while he said, “No, I’m not really interested.”

But at the beginning of the conversation he said to me, “We just signed a lease. I don’t need space.” And I said to him, “No problem. I’m sure, as Hasbro Toys, you had so much leverage, you probably signed a very, very favorable deal. And I’m sure you’d be able to dispose of it.”

So, after I got rejected on the initial phone call, but rejected with a sense of interest, I spent two days drafting a letter to the CEO. And four months later, the assistant to the CEO called me up and we turned it into my first big deal.

And it was because of the story Gordon told, because of that experience he shared, that I kept pushing. And, sure enough, I was right. They did dispose of the space very favorably. Actually, I think they made their advertising firm take it.

3. What advice would you give to someone entering the industry today?

In commercial brokerage, I think if you’re doing it for six months, you’re going to know if you do or don’t like it. If you don’t really like it after six months, the right thing is to move on.

If you do like it, even if you haven’t earned any money yet, stick with it. Eventually, you’ll be successful if you both like it and work hard.

4. What has surprised you most about how the built world and the real estate industry have changed since your career began?

Early in my career, and it goes back a ways, tenants were not necessarily hiring exclusive brokers. And all I do is represent tenants. And then you hit a downturn in the economy where so many tenants got stuck with so many shitty deals, while at the same time the market was getting more and more complicated, that basically all of the tenants started to hire an exclusive representative so they could get impartial advice. That is probably the signal biggest change that I’ve witnessed in my career.

Also, owners pay commissions on signing now, by and large, rather than payouts. So, instead of fighting about when the payout is, which used to be the case four or five years ago, now it’s just assumed, by and large, that the owners will pay on signing.

Another Eddie Gordon anecdote: when I started at his company, he told me a story about how there was a broker, Henry Baker, who was 94 years old. And Eddie was negotiating the commission agreement after a deal had closed, and the owner wanted to give a three-year payout to the brokerage team. So Eddie says to the owner, “No problem. Let me just send the broker down to talk to you.” And he sent 94-year-old Henry from the brokerage team, and Henry came back with the full commission check.

5. What’s your favorite aspect of working in the real estate industry?

What I do is leasing, representing tenants. And what I love about it is that you get involved in so many different things in order to be effective.

You have to understand the finance, you have to understand the architecture, you have to understand the physical plant, you have to understand the psychology of both parties.

The fact that you have to deal with air conditioning system performance as well as finance, as well as making sure the egos are all intact—that’s what makes it fun.

6. What’s your least favorite aspect of working in the real estate industry?

Oh man, you’re a troublemaker (laughs). I guess I would say dishonesty.

I think that there are too many people in the industry who think it’s their job to say whatever they have to say, whether or not it’s truthful.

So many times a landlord’s leasing agent thinks their job is to say whatever they have to say in order to get the tenant engaged. And there are many, many, many brokers who act with integrity. There’s many owners who act with integrity, and, unfortunately, you’re going to meet some who don’t. My statement that I’ve made all the time is, “as long as the landlord’s broker and the landlord don’t lie to me, they’re doing a hundred percent of what I would want.” And, unfortunately, even that yardstick is not always satisfied.

7. What do you think is the biggest challenge facing the industry today?

I think, like everywhere else, it’s kind of trying to wrap your mind around AI. What’s going to be the impact? And that uncertainty is less than optimal. And you have a situation where so many entry level jobs are no longer needed, so how do you train people who will be the experts towards the top of the heap, the senior people? You don’t need the junior people, but you do need the advisors whose judgment and experience is valuable.

How do you get to year 10 if you don’t go through years one through five?

But I do think, to a great extent, anytime a company has a long-term point of view, there’s no choice but to take in these younger people with no experience and give them the training so that you’ll end up with senior people. And that’s the way the bigger institutions are really developing the business model. Many of the bigger institutions on the tenant side that I deal with, they’re not really cutting back on the new hires. They more aggressively winnow out the people with two years experience who aren’t seen to be potential leaders, but not the number of initial hires. The big companies that understand what they need in the future are not necessarily cutting back.

8. What makes you optimistic about the future of the built world?

I think that COVID has kind of proven that face-to-face interaction, getting groups together in a room, having them all work together—whether it’s cultural, social capital, whatever you want to call it—COVID has proven that element of business is here to stay. It’s not changing, it’s not going away.

I think, in fact, it ties into why the better buildings are doing so much better right now. Because of AI, each employee is responsible for generating more revenue—by a lot. You see businesses that say, “we’re expecting revenue to be up by 10%,” and the workforce is down by 10%. That means each employee who still has a job and is showing up in the office is generating more revenue. So, if you have employees who are each individually responsible for generating a lot more revenue, the relationship between the rent expense relative to the revenue per employee changes—it becomes a lower percentage. So, in a sense, office space as a component of cost is going down. And that means that the quality of the building, and the ability to pay more dollars towards rent, arguably makes more sense.

And that’s a small component of the reasoning behind the flight to quality. Look at some of the numbers out there, how much revenue is generated per employee, you’ll see the data. It’s increasing, and the expectation is that the rate of increase is going to keep going up. That’s the impact of AI. But that impact means quality office space is going to be more in demand, and the pricing will be somewhat less of an obstacle.