By Roland Li
Glen Kunofsky has always been careful.
When the Rockland County, New York native attended Arizona State University, he began buying single family homes and renting them out, eventually expanding to multifamily properties. Kunofsky was interested in steady returns, rather than speculation, and deliberately calculated expenses. While working in Arizona from 1989 to 2000, he avoided risky deals that relied on future market performance, preferring the steadiness of immediate profit.
“Speculating in real estate is dangerous,” he said.
Kunofsky moved back to New York just prior to Arizona’s housing boom, missing out on a spike in home values – he estimates a 50% appreciation during his 11 years, and then a 300% increase in home prices from 2001 to 2007. On the other hand, he also avoided the recent crash, which brought Arizona’s housing prices back to earth.
Having majored in hotel and restaurant management, Kunofsky gained insight into the needs of restaurant tenants, above all locations with high volumes of traffic, whether in feet or automobiles.
Upon returning to New York, Kunofsky would begin working at brokerage Marcus & Millichap, and after a decade, he is now senior director of the national retail group and net leased properties group, specializes in selling triple net leased properties. He is one of the firm’s top producing brokers and works mainly around the country and in the outer boroughs of New York.
Kunofsky focuses on commercial triple net leased buildings, in which the tenant pays for taxes, building insurances and maintenance, as well as rent and utilities, working with many national retailers and restaurants, including Burger King, Walgreen’s and Chase Bank, as well as industrial tenants.
His buyers include institutional investors, public and non-traded real estate investment trusts and high net worth individuals.
Instead of focusing on a quick return, buyers of triple net leased properties expect steady, predictable income. The relative stability of the investments have made them attractive investments in an uncertain economy.
“It’s definitely gained in popularity,” said Kunofsky.
Although many retail leases in Manhattan are structured as triple net leases, they are generally only part of an overall, mixed-use building, said Kunofsky. Such properties are rarely on the market, compared to the rest of the country.asdasd
“There’s not the velocity in Manhattan,” said Kunofsky.
But there are some deals: Kunofsky completed a triple net lease in a downtown retail condo for Chipotle, where the asking rent was $250 per s/f. At the height of the market, banks expanded aggressively and paid twice or three times the rent of other tenants, securing desirable locations.
Overall, rents along prime retail corridors have not suffered excessively because of the downturn, said Kunofsky, but landlords in less desirable areas could find themselves giving concessions or lower rents to hold on to a tenant, especially if vacant space was available nearby.
But the strength of many triple net leases is that a strong, long-term tenant is secured for 10 or 15 years, with a fixed rent that is not susceptible to dips in the economy.
“You’re protected from the variation in the market rents,” he said.
Kunofsky lives on the Upper West Side with his wife and 7-year old twins, a boy and girl. He is an avid outdoorsman, fishing, boating hiking and camping, although these days, he is mostly working. For 10 to 20 days a month, he travels throughout the country, always insisting that he visit’s the properties, no matter how commonplace they seem. The key to succeeding in real estate is knowing the buildings, he said.
“I really encourage and insist with the buyers that we advise that we go and look at buildings,” said Kunofsky. “You’re buying real estate. You have to understand and know properties.”
In the coming months, he plans to launch a new real estate fund, called STNL Investors.