Exclusive Interview with Jacob Frydman, Chairman & CEO of United Realty
Jacob Frydman turned a $20,000 profit from the first real estate transaction he ever made, while he was still in high school.
The rest, as they say, is history. After spending more than 30 years in the commercial real estate industry, Jacob’s extensive track record speaks for itself. Having completed more than 5 million square feet of commercial transactions, at a value of more than $2 billion, across a variety of different property types, you’d be hard-pressed to find someone with a more concrete and well-rounded knowledge of the industry than Jacob.
For this News Funnel Q&A, we were lucky enough to have Jacob share his thoughts on topics ranging from his beginnings in the business, to his favorite types of property transactions, to his views on the intersection between real estate and technology.
You undertook your first real estate investment when you were still in high school. When did you first realize that you loved real estate? What was your first job in the field?
Jacob: Actually, I was twelve years old when I got my first “job” in real estate – reading complex real estate documents to my father, an immigrant from Poland, who had built up a modest home building business. I would have much preferred to be out playing ball with my friends at the time, but I’m grateful for the experience today, because it gave me a huge head start in the business.
I made my first $20,000 in profit on my first real estate deal while still in high school – and after that, I was hooked. While in college at Boston University, I supported myself selling commercial real estate and doing deals, including my first large project, an 11-home subdivision. After law school, I started out specializing in real estate syndication, but I quickly realized that I’d rather be buying the real estate than handling the legal work.
You've completed deals across a variety of different property segments. Are there any in particular that you enjoy dealing in more than others? Are there any specific ones that can present unique challenges?
Jacob: I love the challenge of ‘broken deals’- those that, for one reason or another, just aren’t working and require a creative approach. That generally means a value-add or opportunistic approach to reposition, remarket, re-tenant, or redevelop a property. Those deals give me the chance to think outside the box, and then create reality out of concept. Those are the kind of deals that get my blood flowing.
Your past deals have amounted to more than 5 million square feet of property at a value of over $2 billion, with notable developments like Two Dag Hamerjkold Plaza and the purchase of NBC New York television studios from General Electric Corp. What advice do you have to offer about completing deals of this magnitude?
Jacob: In many cases, a $100 million deal isn’t necessarily any more difficult than a $10 million deal. You get a great amount of interest from capital providers on the larger transactions, but the larger and smaller deals generally require the same amount of time and the same ups and downs. So, if you are going to take on a deal – it might as well be a bigger deal. Of course, you need to get a track record behind you to attract interest from capital sources for lending or investment, but once you can move up in size, you will find that the larger deals are just as tough as the smaller ones, but with potentially greater rewards.
With over 30 years of experience in the industry, is there any advice you would like to impart on the new generation just entering the business now?
Jacob: The business is different today. When I started, there were very few institutional alpha investors. Today, it seems that every private equity shop has a real estate component, and all the institutions play at all levels of the investment hierarchy. That makes breaking in and getting deals done more competitive, and more difficult. However, the massive amount of data and information available has leveled the playing field to some extent. Doing deals is more challenging today, but also more rewarding.
The News Funnel: What are your views on the intersection between real estate and technology?
Jacob: Technology has and will continue to have a huge impact on real estate. It certainly impacts which asset classes become more valuable, and which become less valuable. For example, Internet-based shopping has negatively impacted brick-and-mortar retail strip centers. Technology has also made data more available, and therefore helped people underwrite transactions. There are technology enhancements that have made real estate more profitable – like hotels and apartment complexes - that are able to change their pricing based on algorithms of occupancy and pricing within a market. They can even adjust pricing multiple times per day in order to achieve the highest benefit. As we move ahead into crowdfunding, we will also see massive changes in capital availability and the sources of that capital.