Latest / Industrial Advisors / Panattoni Development: The State of PNW Industrial Markets

Transcript

Panattoni Development: The State of PNW Industrial Markets · Industrial Advisors

• 0:00
  It's the fight, the flight to quality flight to class A. You know, there
• 0:02
  is a new class a. That came about in this e economic e-commerce boom, you
• 0:07
  know, class A of uh, 2000 and uh, 15 is different than Class A in 2025.
• 0:13
  So that flight to quality is definitely there.
• 0:15
  I call it class a first gen versus class a second and third gen still class.
• 0:19
  A beautiful project.
• 0:20
  Maybe it's five years old, maybe it's 10 years old, but it's actually seeing a
• 0:23
  decline in rental rate, which were some, if you're out there buying buildings.
• 0:27
  Please don't run your Argus model on declining rents.
• 0:29
  But, um, uh, you know, I think nobody wants that.
• 0:32
  Nobody wants that.
• 0:33
  But you know, we are seeing that the rents aren't being pushed in those projects.
• 0:36
  They're being pushed in the brand new class A stuff.
• 0:53
  Welcome to our Industrial Advisors podcast.
• 0:56
  You have Bill Condon and Matt McGregor.
• 0:58
  We have a awesome guest today, Travis Hale, partner at, uh, PONI Development,
• 1:04
  who's been certainly more active than anybody on the development side in
• 1:08
  our careers and and of late as well.
• 1:10
  And so Travis is gonna talk to us today about what's going on in the development
• 1:14
  world and uh, it's great to have you.
• 1:16
  With us today, Travis, appreciate you, uh, you joining us.
• 1:19
  Thanks for coming.
• 1:19
  Yeah, thank you.
• 1:20
  Yeah, my, my pleasure.
• 1:21
  Appreciate you inviting me here.
• 1:22
  Yeah, well, always good to have you on.
• 1:24
  Uh, it's not Travis's first time, but tell us maybe as a starting point in some of
• 1:27
  the projects you're working on right now.
• 1:29
  Yeah.
• 1:29
  You know, we've got a lot of, a lot of projects up and down, uh, Washington
• 1:32
  and Oregon, uh, up and down I five.
• 1:34
  We cover Washington, Oregon and Idaho out of our office in Seattle.
• 1:37
  And, uh, we're busy.
• 1:38
  We're definitely busy.
• 1:39
  Um, we, we kind of went deep a couple years ago when everyone else
• 1:42
  kind of pulled out of the market.
• 1:44
  Us and our, uh, one of our other competitors went deep and, uh, I, I
• 1:47
  still think it was a good idea, but we've got a lot of, a lot of projects.
• 1:51
  We have about 14 million square feet just out of the Seattle
• 1:53
  office over about 34 projects.
• 1:55
  And a couple years ago we had about nine starts.
• 1:57
  This year we're gonna have probably five, certainly five starts, meaning
• 2:00
  five new construction projects in Washington and in Oregon.
• 2:03
  Oregon.
• 2:04
  We went big as well.
• 2:05
  And then Seattle, we obviously went big as well.
• 2:07
  So Fred three ten's been our, our.
• 2:09
  Most talked about project that's out in F Frederickson, you know, three 10 acres.
• 2:13
  Very unique naming Fred three 10.
• 2:15
  Yeah.
• 2:15
  Um, we're not complicated.
• 2:17
  Yeah.
• 2:17
  Uh, and uh, we've got two buildings and then he had Big Freddy before
• 2:21
  that Fred, a very unique name.
• 2:22
  Fred, big Freddy Frederickson.
• 2:23
  Yeah, we like that one too.
• 2:24
  Yeah.
• 2:25
  We had Big Eddie, which is a marina down in, uh, Portland.
• 2:28
  Uh, so good.
• 2:29
  You know, start running outta names, man.
• 2:31
  Yeah, we were naming 'em after everyone's kids and then we kind
• 2:34
  of ran outta kids names and Yeah.
• 2:35
  When Tara left.
• 2:36
  Yeah.
• 2:37
  So, uh, big Friday's big.
• 2:38
  We have two, two buildings left to build there.
• 2:40
  We'll build, uh, roughly a 390,000 square footer this year, and we've got a three
• 2:44
  19 or so that we can build, uh, we'll start breaking ground this year, but it'll
• 2:48
  be, uh, really a 2026, uh, construction.
• 2:51
  So, uh, and then, you know, we we're active in the Ctech market.
• 2:54
  We've got our Des Moines Creek, uh, phase six.
• 2:56
  Call it, if you count all of our Seattle Gateway stuff we did
• 2:59
  there, um, 470,000 square feet.
• 3:01
  That's a great little project.
• 3:02
  Uh, just finishing the slab, we've got walls tilted on a five 70
• 3:06
  in, uh, the Ridgefield Vancouver market, 570,000 square feet.
• 3:10
  That'll, uh, Mount Vista.
• 3:11
  We call that.
• 3:12
  We really like the big box right now.
• 3:13
  We just successfully leased up about 300,000 square feet in two
• 3:16
  leases down in the Vancouver market.
• 3:18
  I should be signing a 60,000 square foot lease today and
• 3:21
  another project we have there.
• 3:22
  So it's been a, a busy, it's been challenging.
• 3:25
  We call it a knife fight, you know?
• 3:26
  Yeah, you gotta one, get the tenants, you gotta get 'em to
• 3:28
  sign, you gotta get the projects.
• 3:30
  Equity kind of went through a slow turn or slow time.
• 3:33
  The banks went through a slow time.
• 3:35
  So it's been hard to get everything firing on all cylinders.
• 3:38
  So the fact that we can actually get a project to closing, meaning we
• 3:41
  find equity, we get permits, we find equity, we find a bank loan, and we
• 3:45
  can go vertical with it, is, is, is an accomplishment in this market.
• 3:48
  But I feel a little naked on land positions right now, but I think
• 3:51
  the spigot's been turned back on.
• 3:53
  I think people see the, the future is looking brighter than it was,
• 3:55
  even though vacancy in Seattle is roughly 10% vacancy in Portland's.
• 3:59
  6.8%. Those don't sound like awesome numbers, but we're building, I think, you
• 4:04
  know, in our sub-markets, a big, big box.
• 4:07
  I think the, the pedal's down, time to go.
• 4:09
  Yeah.
• 4:09
  And as we know, not all vacancies treated equal, so 10%.
• 4:12
  But to your point, the big box, if you look at the deals that are out there,
• 4:16
  there's about 5 million feet of kind of signings and acquisitions that.
• 4:20
  Are taking place right now with what, 3.1 million under construction.
• 4:25
  So the vacancy's gonna change on the big box step quickly is dissecting the market.
• 4:29
  And that's a very important thing if, if you can dissect the market, peel back
• 4:32
  the layers of the onion, what is really vacant, what's being built, our vacancy,
• 4:35
  you know it sounds like a terrible number, but you're right in the big box.
• 4:38
  It's actually pretty good.
• 4:39
  And what we're hearing is coming down, the pike's gonna make it even better.
• 4:42
  I think the other part of the story is the rent growth.
• 4:44
  The rent for the big box as we reign the steam.
• 4:46
  I've been waiting for that other shoe to drop.
• 4:48
  Luckily it hasn't, but, uh, you know, in Inland Empire, for instance, uh,
• 4:52
  rental rates went the other way.
• 4:53
  They went down our class.
• 4:54
  A flight to quality in the Pacific Northwest has stayed
• 4:57
  strong, if not climbing.
• 4:59
  I don't know if it's advisable to underwrite that forever,
• 5:01
  meaning trended rents forever.
• 5:02
  But we've been very fortunate.
• 5:03
  Certainly the class A product across the board for the most part over
• 5:08
  the years here has, has, has held strong, you know, and been the
• 5:11
  first to lease held their rates.
• 5:13
  It's the secondary class B market that's been hit the hardest for sure.
• 5:17
  Yeah.
• 5:17
  Yeah.
• 5:17
  It's the fight.
• 5:18
  The fight, the quality flight to Class A, you know, there is a
• 5:20
  new class A. That came about in this e economic E-commerce boom.
• 5:25
  You know, class A of uh, 2015 is different than Class A in 2025.
• 5:30
  So that flight to quality is definitely there.
• 5:33
  I call it class a, first gen versus class a second and third gen still class.
• 5:37
  A beautiful project.
• 5:38
  Maybe it's five years old, maybe it's.
• 5:39
  10 years old, but it's actually seeing a decline in rental rate,
• 5:42
  which were some, if you're out there buying buildings, please don't run
• 5:45
  your Argus model on declining rents.
• 5:47
  But, um, uh, you know, I think nobody wants that.
• 5:50
  Nobody wants that.
• 5:51
  But you know, we are seeing that the rents aren't being pushed in those projects.
• 5:54
  They're being pushed in the brand new class A stuff.
• 5:56
  Yeah.
• 5:57
  Can we talk about, a couple of you talked about land positions.
• 6:00
  There's a potential trade down in the.
• 6:03
  Down in the, in the Grand Mound area?
• 6:06
  Yes.
• 6:06
  And then there's was a potential trade up in the Fife area that you were playing on?
• 6:10
  Both.
• 6:10
  Can you talk about those?
• 6:12
  It goes back to, uh, uh, if a project was, uh, listed before, it's
• 6:16
  always gonna be listed, meaning, uh, there's a pro, the Grand Melllon,
• 6:19
  for instance, doesn't feel like it was really listed in the market yet.
• 6:21
  We all showed up at the same time and played on it.
• 6:23
  And that was a kind of an interesting little, uh, play.
• 6:26
  So it wasn't fully capital market, but.
• 6:28
  Rumor mill.
• 6:29
  Got it.
• 6:29
  And guys started lobbing it off.
• 6:31
  Yeah.
• 6:32
  And you, you're crazy if you're gonna let your competition grab it from you or at
• 6:34
  least grab it from you for a cheap price.
• 6:36
  So I think we all lobbed in an offer there.
• 6:38
  There was I think six or seven offers, to be honest, is kind of what I'm hearing.
• 6:41
  Yeah.
• 6:41
  I didn't run the process.
• 6:42
  Granted there wasn't really a process, but um, so it was kind of musical
• 6:45
  chairs, a bunch of brokers grabbed the developers and just ran in.
• 6:48
  Totally.
• 6:48
  Okay.
• 6:48
  Totally.
• 6:49
  And we've offered on that project a couple times, uh, three or four times.
• 6:52
  And we, unfortunately.
• 6:53
  Panton didn't get it, which I think is an interesting sign that the
• 6:56
  market's turning on a little bit.
• 6:57
  On the land side, unfortunately I wish land prices came down a little bit.
• 7:01
  We did see a reset, but um, you know, construction prices has
• 7:04
  fallen, rental rates have stayed stable and loans have come down.
• 7:07
  So it's kind of catching those land prices where they are.
• 7:09
  I think we've kind of hit the, we've plateaued or at least bottomed out
• 7:12
  on land prices, and so you're seeing even at that, what I believe that's
• 7:16
  gonna actually trade at, it's gonna be, in my opinion, uh, a little higher
• 7:19
  than probably the market really was.
• 7:21
  Or is, yeah, it's amazing to that down there.
• 7:24
  Now with, with removing that site, the big ones you really have
• 7:28
  left is I five distribution and then the Winlock stuff, right?
• 7:31
  Yeah.
• 7:31
  Yeah.
• 7:32
  Outside of that, there's not, it doesn't seem to be a lot there, there doesn't
• 7:35
  seem to be a lot, you know, but everyone always invents new, new land for sure.
• 7:39
  Um, we're outta land.
• 7:41
  Yeah.
• 7:41
  It's like, what was that Gary Bull truck, uh, said like 25 years ago
• 7:45
  that, you know, the last piece of land, I, I go down to the Portland
• 7:49
  market and it was, we're outta land.
• 7:50
  I'm like, no, you're not.
• 7:51
  There's a lot of land down here compared to Seattle.
• 7:53
  Yeah.
• 7:53
  Um, so it's just a matter of perspective.
• 7:55
  Agreed.
• 7:56
  Uh, and, and how creative you are.
• 7:57
  Uh, but easy land sites.
• 7:59
  Very hard to find.
• 8:00
  Yeah, they're environmental.
• 8:01
  They're on the side of a slope.
• 8:03
  They've got high groundwater, they've got entitlement issues slash quasi
• 8:07
  moratoriums, meaning high permit costs or high development costs.
• 8:10
  Not all lands created equal, but it's very, very hard to
• 8:12
  find, find good land these days.
• 8:14
  It's just greenfield flat.
• 8:16
  Yeah.
• 8:16
  I'd love to go back to Fife a couple years, you know, 10 years
• 8:18
  ago, 15 years ago, you just kept building and building and building.
• 8:21
  Yeah.
• 8:21
  Talk, talk about that at about the beginning of your career
• 8:23
  versus now on entitlement.
• 8:24
  Because as you know, bill and I just spent an finished an
• 8:27
  11 year entitlement process.
• 8:29
  Right.
• 8:30
  So I would say the average now on raw land is probably.
• 8:34
  Four or five years, right?
• 8:36
  It's, yeah.
• 8:36
  We are closing on a, a piece of dirt, uh, coming up here.
• 8:39
  It's been a four year process.
• 8:40
  It is definitely, I don't know if it's called passive aggressive or
• 8:43
  what, but you know, the municipalities aren't motivated to necessarily give
• 8:47
  you your entitlements very easily.
• 8:48
  I'm not saying they're all.
• 8:49
  Holding it hostage, but it's definitely not easy.
• 8:52
  There's not a lot of motivation to drive the entitlements in order to
• 8:55
  produce these buildings that produce jobs that, that take land from an
• 8:58
  underutilized use and turn it into something good for the tax rolls.
• 9:01
  Bottom line is development's good for the cities that's built in
• 9:04
  and, and you know, what's better?
• 9:05
  A vacant or a fallow old nursery or a brand new state of the art
• 9:09
  industrial building that's providing jobs and paying high taxes.
• 9:12
  I think the latter.
• 9:12
  I mean, let's, let's get, uh.
• 9:14
  You know, the tax rolls up.
• 9:15
  Let's get jobs.
• 9:16
  Let's get people to stop commuting all the way to Seattle.
• 9:19
  Let's put jobs back in the communities where they live.
• 9:22
  And you, you've seen us do that in Taha, for instance,
• 9:24
  down in the Bonney Lake area.
• 9:26
  We're putting jobs back in the communities in which people live.
• 9:28
  You know, it sounds like a catchphrase, which it probably is, but we
• 9:31
  honestly are, these communities are competing for the jobs.
• 9:35
  They're competing for their citizens to stop driving north on I five
• 9:37
  or south on I five and put those jobs where those people live.
• 9:40
  You know, we don't have a job, we don't have a transportation problem.
• 9:42
  We have a job distribution problem is, is a, a famous quote that
• 9:46
  one person once said to me, and, uh, I think it's kind of true.
• 9:49
  Yeah, if we can distribute the jobs better, then we can one, save on traffic.
• 9:53
  Two, provide a better place for people to work.
• 9:55
  I should know this, but did you guys ever land a deal on the large to Hawley site?
• 9:59
  I know you did some smaller stuff.
• 10:00
  Yeah, so the large, we have a, a site under contract out there.
• 10:03
  We can do a 330,000 square footer, uh, on the one of the large to Holly sites.
• 10:07
  The pitch there is, would you rather drive 20 minutes to f Frederickson?
• 10:10
  Keep in mind I own property in f Frederickson.
• 10:12
  Or would you rather drive 15 minutes up the hill?
• 10:14
  If you're sitting in downtown Sumner, you know, one of the best markets we have.
• 10:17
  Yeah.
• 10:17
  Where would you rather drive?
• 10:19
  And it makes you pause and because Ali's gonna have that, that new road put in.
• 10:23
  They fix that.
• 10:24
  Yeah.
• 10:24
  The new, is that done?
• 10:25
  No, it's gonna be done at the end of, um, the end of, uh.
• 10:28
  Uh, 2027.
• 10:30
  Okay.
• 10:30
  Yeah.
• 10:30
  And so that'll make a big difference.
• 10:31
  It should be end of 2026, uh, not 2027.
• 10:34
  Okay.
• 10:34
  So that's gonna make a significant difference.
• 10:35
  They're waiting on the building the bridge and putting the roundabout
• 10:38
  and the ording Highway Highway.
• 10:39
  Got it.
• 10:39
  But that's absolutely gonna unlock, that will unlock that area.
• 10:42
  And it goes back to, would you rather a 300,000 square footer?
• 10:45
  It's still in the market at least, you know, visually you can
• 10:48
  kind of see it from the market.
• 10:49
  You can see Sumner from Taha in a way, or would you rather drive all the way up
• 10:52
  to Frederickson, Lakewood, all markets that we all love and we own property in.
• 10:57
  But you know, maybe there's a, a couple deals that should go up there.
• 11:00
  Y you know, you guys, you mentioned Bonnie Lake and you guys have been
• 11:04
  definitely like the most pioneering.
• 11:06
  Developer in our careers.
• 11:08
  Yeah.
• 11:08
  I mean, you built out Sumner before anybody was there.
• 11:10
  Yep.
• 11:11
  You, you, you mentioned Bonnie Lake, you've Frederickson, f
• 11:13
  Frederickson, some of the market.
• 11:15
  Spokane.
• 11:16
  Yep.
• 11:16
  Right.
• 11:16
  And you've had great success in these markets.
• 11:18
  But oftentimes you're the first one in and then everybody follows.
• 11:22
  Yes.
• 11:22
  And there's a benefit to being the first one.
• 11:24
  Yeah.
• 11:24
  And there's also risk to to doing that.
• 11:26
  Yeah.
• 11:26
  How do you continually stay ahead of your competition when you're looking
• 11:31
  at these markets and know when it's time to enter into a market?
• 11:34
  You know, you say that and this morning I was thinking on the, you know, for
• 11:37
  instance, like the Graham Allen thing, dogone it, we are usually the pioneers.
• 11:40
  Right?
• 11:40
  Right.
• 11:41
  We usually are.
• 11:41
  And, and, and, uh, you know, I appreciate you saying that.
• 11:45
  It, it is a little crazy.
• 11:46
  It's, it's a little, it's certainly gutsy.
• 11:47
  Our pitch is, you know, we live here.
• 11:49
  You guys live here.
• 11:49
  We live here.
• 11:50
  We understand traffic, we understand where people live.
• 11:52
  On the weekends I'm doing property tours.
• 11:54
  You know, we're not, but we're driving around where we live and so it may
• 11:57
  look pioneering to the outsiders.
• 11:58
  But you know, Mount Si, for instance, which is our North Bend property,
• 12:02
  it's a long I 90, uh, the east side has very little industrial property.
• 12:06
  If anything, industrial property's being.
• 12:08
  You know, trying to be eliminated.
• 12:09
  Mm-hmm.
• 12:09
  So building new Class A on the east side anywhere is, you know,
• 12:12
  we think is a really good idea.
• 12:13
  Mm-hmm.
• 12:14
  Sure.
• 12:14
  Um, and, and we think that because we live here, we think that, so
• 12:17
  we are being pioneering, but it's not without some logic to it.
• 12:20
  Yeah.
• 12:21
  And again, people want to.
• 12:23
  Work where they live.
• 12:24
  And so that's one of those plays as well.
• 12:26
  Is it getting any, any easier with equity?
• 12:28
  Equity?
• 12:29
  'cause it feels like last year a lot of developers had a problem raising capital.
• 12:33
  So is it, is that loosening up or where are we at?
• 12:36
  I think it's, I think we're on the verge of that.
• 12:37
  We were successful last year.
• 12:38
  We were really successful two years prior when equity shut down.
• 12:41
  You know, equity is, they have hot cycles and cold cycles.
• 12:43
  There's a season to everything.
• 12:44
  You know, back in the day we used to do everything with MetLife and then we did
• 12:47
  everything with Crow and LaSalle and, and you know, the thing about us is we.
• 12:51
  We can go to multiple equity partners.
• 12:52
  Sure.
• 12:53
  And we've been very successful.
• 12:54
  I I, at one point I had 11 equity partners in the Seattle office.
• 12:57
  That's 11 malice to feed and 11 to keep happy.
• 12:59
  Yeah.
• 13:00
  Which is kind of fun.
• 13:01
  But we did a good job of it.
• 13:02
  But that's how we have gotten so busy is we're able to take different
• 13:05
  equity partners and put them.
• 13:07
  You know, nearly competing against each other.
• 13:09
  But it's kind of our ability to be flexible.
• 13:11
  I believe equity is turning on.
• 13:13
  Again, I say that carefully because we've been very fortunate doing that.
• 13:17
  Others have not, and it may be 'cause of our reputation, it may be 'cause of who we
• 13:20
  are, but, but, uh, maybe our underwriting.
• 13:22
  I think when equity slowed down, people failed to see where yields
• 13:26
  needed to go in order to get a deal done and get ugly fast.
• 13:29
  And so we went out and, you know, retraded our positions and redesigned things
• 13:33
  and got really aggressive and hustled.
• 13:35
  You know when people were still underwriting to a six, six and a
• 13:37
  quarter yield on costs, we jumped all the way to seven, seven and
• 13:40
  a quarter, seven and a half.
• 13:41
  And some equity partners chase yield, some chase chased, I rrr multiples.
• 13:45
  Just depends on what flavor it's, but lately those chasing yield, um, have
• 13:49
  been doing deals, at least with us.
• 13:50
  And how do you feel about what Seattle's gone through in the last few years?
• 13:54
  And I say Seattle, but the Pacific Northwest?
• 13:57
  You know, throughout all of our careers, if you say West Coast,
• 14:00
  all the markets, Seattle's usually.
• 14:02
  You know, one, two, or three of the hottest markets.
• 14:04
  Yeah.
• 14:04
  Now it's kind of the bucket behind the boat, right?
• 14:06
  Mm-hmm.
• 14:07
  What do you see changing that?
• 14:08
  Do you feel like we we're starting to change that and what caused it and,
• 14:12
  and how do you feel about the future?
• 14:13
  I think it's an interesting question.
• 14:15
  Seattle's always been a very strong market.
• 14:16
  Mm-hmm.
• 14:17
  You know, barriers to entry, hard to get up here, hard entitlements.
• 14:19
  The land is not all lands created equal.
• 14:22
  Uh, you know, I love all the out-of-towners coming and doing
• 14:24
  development for two or three years and taking their ball and going home.
• 14:26
  It's comical how often it happens.
• 14:28
  So it is a challenging place to do business.
• 14:31
  And, and it's well known in our company that.
• 14:33
  You know, we've got a good foothold up here.
• 14:35
  We've got the right consultants, we've got the right team in place and others don't.
• 14:38
  But Seattle has been a lagging behind lately and uh, right now the tenant
• 14:43
  activity is really challenging.
• 14:45
  I think it has to do with, you know, west coast and east Coast right now there's
• 14:48
  kind of a wave going from the east coast to the west coast, meaning East Coast is
• 14:51
  popular right now and that way it's kind of trending back towards the West coast.
• 14:54
  And unfortunately it probably has a lot to do with our trades.
• 14:57
  Our market is so, you know, Boeing is huge.
• 15:00
  You know, Amazon's huge.
• 15:01
  But the regional markets, those markets that are growing just because of
• 15:04
  consumer spending being up and just that organic growth that a market does in,
• 15:09
  in Salt Lake, Nevada, Boise, you know, all those, uh, Portland for instance.
• 15:13
  Portland's hot right now.
• 15:14
  At least we think it's hot.
• 15:15
  Why is it hot?
• 15:16
  There's one port user in Portland, even though it's named Portland,
• 15:19
  but there's one user, there's one port client in Portland.
• 15:22
  Never thought of that.
• 15:22
  Maybe there's more than that, but, but I think it is in it's cars.
• 15:25
  It's not even containers.
• 15:26
  Yeah.
• 15:26
  Um, but why has Portland got a 6.8% vacancy or, or so in Seattle?
• 15:31
  Worse.
• 15:32
  Yeah.
• 15:32
  Why do I, they always get the auto stuff part, you know,
• 15:34
  they get a lot of that stuff.
• 15:35
  Well, I think about Subarus there, right?
• 15:37
  Yeah.
• 15:37
  They, and who, I mean, they have some.
• 15:39
  Big companies that are there.
• 15:40
  Yeah.
• 15:40
  Subaru Mitsubishi's down there.
• 15:42
  Yeah.
• 15:42
  Um, yeah, our buddies do all the import, their auto warehousing,
• 15:46
  and it's one of their main, main.
• 15:47
  It's funny you mentioned that, like one of my three PL clients mm-hmm.
• 15:50
  Called me yesterday and was like, I have a a hundred to 150
• 15:52
  requirement down in Portland.
• 15:54
  Mm-hmm.
• 15:54
  So I connected 'em with our guys down there.
• 15:55
  But yeah, right now it's where a lot of the deals we're doing are being done,
• 15:59
  meaning leases being signed, et cetera.
• 16:01
  I, I will say we all went home for Thanksgiving and in all
• 16:05
  commercial real estate and all my years of commercial real estate.
• 16:07
  You know, it's like, oh boy, here we go.
• 16:09
  We're not gonna, I'm not gonna do a darn thing until the middle of January.
• 16:11
  We came back from Thanksgiving break and the light switch
• 16:14
  turned on Even in Seattle.
• 16:15
  Yeah.
• 16:15
  Not saying we're signing leases or signing Lois.
• 16:17
  Yeah.
• 16:17
  But we're doing tours.
• 16:19
  Yep.
• 16:19
  We're talking deals started popping up again.
• 16:21
  And I think another thing that just changed recently that I noticed
• 16:24
  is you're starting to see on the tenants in the market list three pls.
• 16:27
  Yes.
• 16:27
  We need those three pls for sure.
• 16:29
  Yeah.
• 16:29
  To start one up the square footage.
• 16:31
  Yeah.
• 16:31
  That's of our sub leases too.
• 16:33
  Yeah.
• 16:34
  Yeah, please.
• 16:34
  Yeah, please.
• 16:35
  Yeah, please take this stuff off the market.
• 16:37
  Yeah.
• 16:37
  So, um, I can stop competing against it.
• 16:39
  That's right.
• 16:39
  That's a good, really good point.
• 16:41
  I mean, they drive such a big part of our market and it generates other
• 16:44
  deals, those three PL companies.
• 16:45
  Right?
• 16:46
  Yeah.
• 16:46
  I mean, it's always a good thing when you see four or five, three
• 16:49
  PL companies competing for a deal.
• 16:50
  You're like, all right, somebody's getting this and it's gonna land.
• 16:53
  Right?
• 16:53
  Yeah.
• 16:53
  One of these buildings is gonna go and you gotta start,
• 16:55
  you know, deals going bunches.
• 16:57
  You gotta stir the pot a little bit.
• 16:58
  Yes.
• 16:58
  You know, for instance, if something happens on the east side, you know,
• 17:01
  one, maybe an aerospace user takes down 150,000 square feet, that's gonna
• 17:05
  set a dominoes off on the east side.
• 17:07
  And I think we're gonna see that here in the next quarter.
• 17:08
  At least that's what the rumor is.
• 17:10
  There's gonna be some, some stuff on the east side that's gonna
• 17:12
  start going, that'll be great.
• 17:13
  But that tenant then causes that tenant to move that tenant and then
• 17:16
  they'll start stirring the pot.
• 17:17
  Yeah.
• 17:18
  But right now it's just the pot's just kind of sitting there.
• 17:20
  For sure.
• 17:20
  Yeah.
• 17:21
  So you've done a lot of projects over.
• 17:23
  Yeah, your career, a lot of projects, lot, a lot of square footage.
• 17:25
  You have one or two that just like stand out to you as like,
• 17:29
  like maybe a favorite development.
• 17:31
  Odd, you know, we built the 300,000 square foot, uh, three 25,000 square
• 17:34
  foot FAA office building in Ctech.
• 17:36
  Oh, you guys nailed that.
• 17:37
  That's right.
• 17:38
  Absolute luck.
• 17:40
  But yeah.
• 17:40
  Yeah, we, we did a good job on that.
• 17:42
  And we do suburban office, but not steel frame.
• 17:44
  Suburban office.
• 17:45
  We did a really good job there with the GSA.
• 17:47
  That was a fun project.
• 17:48
  I like all the Des Moines projects in the Seattle Gateway Project.
• 17:51
  You know, those were all ground leases from the port of Seattle.
• 17:53
  Yeah.
• 17:53
  We've got a good partnership with them.
• 17:54
  We've been able to monetize them.
• 17:56
  I think Seattle, Des Moines Creek, phase one is on its fourth trade now.
• 17:59
  Wow.
• 18:00
  Yeah.
• 18:00
  Uh, you think about that being a, um, a stamp of approval for ground
• 18:04
  leases that's traded four times.
• 18:05
  Yeah.
• 18:06
  Um, had good, had good numbers each time too.
• 18:08
  Yeah.
• 18:08
  You know.
• 18:09
  Fred.
• 18:10
  It's funny how that changed because I remember the first ground lease sale
• 18:12
  came out and people were like, no.
• 18:14
  Yeah.
• 18:15
  Basis points.
• 18:16
  It's, it's, you know, it's absolute, uh, you know, worth less.
• 18:19
  Yeah.
• 18:19
  Uh, and that thing I, I would challenge a couple times that try
• 18:22
  to probably traded that market.
• 18:24
  Yeah, yeah.
• 18:24
  You know, there thereabouts.
• 18:25
  Yeah.
• 18:25
  There's a very minuscule Yeah.
• 18:27
  Discount, if any.
• 18:28
  That's right.
• 18:30
  Especially there.
• 18:30
  Um, yeah, the Fred three ten's a great project.
• 18:32
  Yeah.
• 18:32
  They were buying that unentitled showing up to, you know, Fred
• 18:36
  three 10 and Pacific Gateway.
• 18:37
  Two of the Boeing deals we did were two life bucket list projects.
• 18:41
  Um, iconic properties.
• 18:43
  We're still working through Fred three 10, but, um, those
• 18:45
  are, that was a good project.
• 18:46
  Yeah, it was good.
• 18:46
  The gateway, the pack gateway was coming.
• 18:48
  Yeah.
• 18:48
  We did a deal with you guys there.
• 18:50
  One, one of our tenants.
• 18:51
  Final question for you.
• 18:52
  You had a, obviously a big retirement.
• 18:54
  Yeah, A few months ago.
• 18:55
  Probably one of the arguably top.
• 18:57
  Two, three most iconic guys in our industry.
• 19:00
  Legend.
• 19:00
  How does that change Mark B Bead?
• 19:03
  Yeah.
• 19:03
  Yeah.
• 19:03
  Mark Bead.
• 19:04
  How does that change your organization and your, your day to day?
• 19:07
  Yeah.
• 19:08
  Pan Andoni was built, 2003 is is when the office opened with Bart.
• 19:12
  He left from Opus and went over.
• 19:13
  He, he's been an icon.
• 19:14
  He is been a mentor to nearly every industrial broker from
• 19:17
  young to old in the industry.
• 19:19
  His knowledge is.
• 19:20
  Is vast.
• 19:20
  So you want to say that?
• 19:22
  No, I've learned everything from him and I'm gonna, you know,
• 19:25
  be exactly him moving forward.
• 19:26
  But there's a void in the office.
• 19:28
  He's definitely his leadership, his his knowledge.
• 19:31
  You know, his ability to just cut through all the BS and just, you know,
• 19:34
  get to the three, three important facts, you know, that that is a challenge.
• 19:37
  You know, sadly, most of the people, 90% of the market has to
• 19:41
  go through all the other facts in order to get to the final three.
• 19:43
  But he could just get to the final three.
• 19:45
  Like, you know, it, it, you know, it's rent, it's, you know, construction
• 19:47
  pricing and, and just deliver the thing, get the thing leased, you know,
• 19:51
  drove 'em nuts when we were trying to, you know, push market rents.
• 19:53
  And, uh, and he was right.
• 19:55
  We pushed market rents and cap rates went from a 2 9 5 cap all
• 19:58
  the way up to a four, one cap.
• 19:59
  Yeah.
• 19:59
  And he's like, huh, yeah.
• 20:02
  We absolutely lost millions by that.
• 20:04
  Sure.
• 20:04
  And so his mantra, you know, sticks with us.
• 20:06
  And every time someone wants to delay or outthink a a deal, you
• 20:10
  know, let's think about that.
• 20:11
  There's nothing to think about.
• 20:12
  Get the thing leased and move on.
• 20:14
  Yes, yes.
• 20:14
  We're merchant developers.
• 20:15
  You know, we've got cash flow and fiduciary duty to our clients.
• 20:18
  Get the thing leased.
• 20:19
  Yeah.
• 20:19
  It's good for everyone.
• 20:20
  Yeah.
• 20:20
  So yeah, he's definitely missed in the office and, uh, you know, he's
• 20:23
  not a sounding board there anymore.
• 20:25
  Yeah.
• 20:25
  But, uh, yeah.
• 20:27
  Yeah.
• 20:27
  One of his favorite approaches that I've probably quoted a.
• 20:30
  Thousand times with clients is when you know, we got an empty building and maybe
• 20:33
  we've got a odd configuration or something that I always say, Hey, there's two
• 20:37
  philosophies, the mark bead bird of hand.
• 20:39
  Yep.
• 20:40
  Right.
• 20:40
  You do that deal and sometimes it's demise a little weird, but just do
• 20:43
  the deal and figure out the rest.
• 20:45
  Yep.
• 20:45
  And that that philosophy prove to be one of the more.
• 20:49
  Strategic Right.
• 20:50
  Passageway.
• 20:51
  Just get the deal done.
• 20:52
  Yeah.
• 20:52
  Figure out the balance of the bill rather than waiting for that perfect scenario.
• 20:56
  So many people try to outthink the thing.
• 20:58
  Yes.
• 20:58
  Outthink everything and predict the market and, and, and think that there's
• 21:01
  some grand scheme in the market.
• 21:02
  No.
• 21:02
  Just get the deal done.
• 21:03
  That's right.
• 21:04
  And then solve the next problem.
• 21:05
  And solve the next problem.
• 21:05
  Right.
• 21:06
  He, he, uh, he I have a good Bart story.
• 21:10
  I was like two years into the industry.
• 21:11
  Yeah.
• 21:12
  And there was a listing that had been sitting vacant for a long time that I
• 21:14
  heard he was Pan Tony was gonna make a change on, so I crafted this like.
• 21:19
  Really well thought out.
• 21:20
  Email, multiple paragraph.
• 21:22
  Boom.
• 21:23
  Send it to him, right?
• 21:24
  Yeah.
• 21:24
  About five minutes later he reads it.
• 21:26
  Maybe he didn't read the whole thing or not.
• 21:28
  He responded, you're hired.
• 21:29
  Get to work.
• 21:31
  And I didn't know if he was serious or not.
• 21:33
  And so I called Tara, who was, who was, yes, Tara Za.
• 21:35
  Yeah.
• 21:36
  And she's like, no, he, he's, he's serious.
• 21:38
  You're, you're hired.
• 21:39
  You're hired.
• 21:39
  And just like that, he gave me the list.
• 21:42
  He did not waste time making decisions.
• 21:44
  Yeah.
• 21:44
  And we can all take that, uh, that is a good mentor lesson from him.
• 21:48
  Yeah, for sure.
• 21:48
  Make a decision to move on.
• 21:50
  Yeah.
• 21:50
  Yeah.
• 21:50
  But, uh, but no, he's, he's, he's great and they wish him well.
• 21:54
  Retirement.
• 21:55
  He is earned it and he's earned it.
• 21:56
  And you'll eventually get to your day to do that too.
• 21:59
  But it's a ways out there, buddy.
• 22:00
  I've got a ways, I've got a ways to go.
• 22:01
  10, 15 more years.
• 22:03
  No.
• 22:03
  Well, well thank you, um, uh, for taking the time.
• 22:06
  Absolutely.
• 22:06
  Um, we're excited.
• 22:07
  We have a big project in Spokane mm-hmm.
• 22:09
  That we're gonna be working on with you guys.
• 22:10
  Thank you.
• 22:10
  That we we're launching.
• 22:12
  Monday.
• 22:12
  Monday.
• 22:13
  Yeah.
• 22:13
  Yep.
• 22:13
  And, uh, really excited about that project.
• 22:15
  Yeah.
• 22:15
  We're excited with, with you guys and Colliers and our partnership
• 22:18
  that we have with you guys.
• 22:18
  So appreciate all you guys are doing capital markets and
• 22:21
  you guys are, are crushing it, bringing deals left and right.
• 22:23
  So, uh, as well as leasing, I don't know how you do it all as well as podcasts.
• 22:27
  Yeah, well as well as run every day and do Ironmans making me jiujitsu.
• 22:31
  That's my new thing.
• 22:32
  Oh, got it.
• 22:34
  Yeah.
• 22:35
  No, I really appreciate it.
• 22:36
  Thanks very much.
• 22:36
  Yeah, well thanks.
• 22:36
  Great job as always.
• 22:37
  Yeah.
• 22:37
  Appreciate it.