Latest / The Land Development Podcast with Ryan Glick / Industry News: Trump Comments Stir Debate, AI Homes Raise Questions, and Builders Keep Consolidating - TLP163

Transcript

Industry News: Trump Comments Stir Debate, AI Homes Raise Questions, and Builders Keep Consolidating - TLP163 · The Land Development Podcast with Ryan Glick

• 0:00
  SPEAKER_04: The way that this used to go is that there were many local builders in your name in your area, and you could go to one, and he was gonna build, you know, maybe two, three, four, maybe at most, he was building a couple dozen homes a year if he was a big guy.
• 0:12
  SPEAKER_04: And you would go to him and he would build your house, and it was that was a scenario that was normal.
• 0:16
  SPEAKER_04: And that just doesn't work anymore because of the nature of scale and how much more competitive these uh larger builders can be.
• 0:25
  SPEAKER_04: Now you can go and talk about, well, you know, people don't appreciate quality and all this stuff, and that's all true.
• 0:30
  SPEAKER_04: And that's the same the same exact thing happened in the autobus.
• 0:33
  SPEAKER_04: Are the qu are the cars that we build today better quality than those bespoke, beautiful, custom, one-off coach-built cars of the of the early 1900s?
• 0:42
  SPEAKER_04: Of course not.
• 0:43
  SPEAKER_04: But that's just the nature of what happened.
• 0:45
  SPEAKER_04: So I fear that there could be a similar situation here.
• 1:12
  SPEAKER_03: How's it going, Charles?
• 1:14
  SPEAKER_03: Hey.
• 1:15
  SPEAKER_03: Well, another show and uh more controversial topics that we're gonna get into today.
• 1:21
  SPEAKER_03: There's just a lot going on around the world and in our industry.
• 1:25
  SPEAKER_03: And so, you know, today we've got actually four topics we're gonna get into.
• 1:30
  SPEAKER_03: Uh, we're gonna start out with revisiting multifamily.
• 1:33
  SPEAKER_03: We haven't talked about multifamily much lately, but we're gonna get into some of the latest multifamily numbers.
• 1:38
  SPEAKER_03: Uh, then we're going to talk about a lot of the news that's been out recently around dreamfinders attempting to buy beezer homes.
• 1:47
  SPEAKER_03: And then we're going to go into something that I think we've both have seen lately, and it's also been very controversial about the idea of putting mini data centers in people's homes.
• 2:00
  SPEAKER_03: And then we're going to close out with uh some Trump controversy, uh, where he made some comments about not thinking about Americans' financial situations in Iran negotiations, because this has a big impact on consumer sentiment and it has an impact on just the overall financial situation that people are in.
• 2:18
  SPEAKER_03: So it'll be an interesting topic for us to dig into as we close out here today.
• 2:23
  SPEAKER_03: But uh we've got a good one today.
• 2:25
  SPEAKER_03: So let's go ahead and get into the first article.
• 2:30
  SPEAKER_03: This one comes to us from Commercial Observer.
• 2:33
  SPEAKER_03: Headline reads U.S.
• 2:34
  SPEAKER_03: multifamily construction starts drop to lowest level since 2011.
• 2:41
  SPEAKER_03: From this article, multifamily starts drop to about 55,000 units in the first quarter, the lowest quarterly volume since 2011.
• 2:49
  SPEAKER_03: That is roughly a 73% drop from the 2022 peak.
• 2:53
  SPEAKER_03: The pipeline of units under construction sits at 579,000, down about 50% from where it was in early 2023.
• 3:02
  SPEAKER_03: New York City leads the country with 43,000 multifamily units under construction.
• 3:07
  SPEAKER_03: Dallas Fort Worth is second at 31,000 units.
• 3:10
  SPEAKER_03: In Miami and Charlotte, more than 6% of all housing stock is under construction right now.
• 3:16
  SPEAKER_03: Higher financing costs and softening rent growth are squeezing project feasibility per co star.
• 3:22
  SPEAKER_03: The flip side, if renter demand holds, this drought in completions tightens supply and pushes rents back up over the next 18 to 24 months.
• 3:31
  SPEAKER_03: So uh what are your thoughts on this, Charles?
• 3:34
  SPEAKER_04: Well, I I I may sound like a broken record here, but this is a very great example of saying, hey, U.S.
• 3:41
  SPEAKER_04: housing or US apartment starts are down.
• 3:45
  SPEAKER_04: But again, we don't have we don't have this US housing market as such.
• 3:50
  SPEAKER_04: We have all of these different metros that are experiencing completely different uh outcomes.
• 3:56
  SPEAKER_04: So if we go over this in a little more grand detail, we're gonna see that there are some markets that are across the Sunbelt and let's call it the Mountain West specifically, that are drowning in supply, right?
• 4:07
  SPEAKER_04: They've got more supply, rents are plummeting.
• 4:10
  SPEAKER_04: If you underwrote, you know, the five or six or eight percent rent growth that was happening, if that's what you at the time you constructed a few years ago, if that's what you underwrote, uh you're in in deep trouble right now.
• 4:23
  SPEAKER_04: So you look at I think the numbers here that I pulled up, the amongst the 50 largest metros, right?
• 4:28
  SPEAKER_04: So Sarasota vacancies at like 17-18%.
• 4:33
  SPEAKER_04: San Antonio, Austin, all said this is 13 and a half percent.
• 4:37
  SPEAKER_04: These are big numbers.
• 4:38
  SPEAKER_04: This is problematic for sure.
• 4:40
  SPEAKER_04: But then we've also got some markets like New York's doing pretty well.
• 4:44
  SPEAKER_04: We've got a bunch across the Northeast that were that weren't getting a lot of this big push in supply, and so rents are still holding strong, and so the deals still work.
• 4:53
  SPEAKER_04: But if you're trying to underwrite a deal in one of these oversupplied markets right now, I don't know how a lender would agree to do that deal, right?
• 5:00
  SPEAKER_04: Because they don't they don't even know where the rent the the rent uh damage is gonna end.
• 5:05
  SPEAKER_04: So very challenging.
• 5:07
  SPEAKER_04: Now like most things, time it's time to solve this.
• 5:11
  SPEAKER_04: So if we look at what this does for us over the next few years, certainly there's a lot fewer starts today than there have been at almost any point since 2010.
• 5:20
  SPEAKER_04: We're gonna try to summarize across the nation.
• 5:24
  SPEAKER_04: In those markets, we're gonna see the the ones that are most affected, we're gonna see, you know, let's call it 2027, we start to see a little bit, 2028, 29, we start to really see some drop-off in supply because in some of these markets, it it's not gonna get any easier to underwrite deals or get them built over the next couple of years.
• 5:42
  SPEAKER_04: So inevitably, we're gonna continue to see those starts stay pretty slow.
• 5:46
  SPEAKER_04: So if you can find ways to get deals done, if you can find ways, let's say, for example, if you can find find the right sites, have those in your pocket, maybe you have a longer-term contract, you can get those zoned, you can get those ready.
• 5:58
  SPEAKER_04: Maybe you don't have a buyer today, but in many of these metros, there will be a buyer that that can make that deal make sense at some point in the in the not too distant future.
• 6:07
  SPEAKER_04: So I would say study what is what are the what are the starts, what are the what's the rent growth, what's the vacancy in the metros that you're working in, and find the ones that great, we have AI for this, right?
• 6:19
  SPEAKER_04: Plug this into the one that you like and have it tell you where those gaps in supply are going to start to show up.
• 6:25
  SPEAKER_04: That's where you can spend your time doing your entitlements and doing your other elements and getting the right parcels in place.
• 6:30
  SPEAKER_04: It's because at some point it's gonna be much better than it is today, I think almost uh almost certainly.
• 6:35
  SPEAKER_03: Yeah, well, that's a good point because we always talk about on the show just the and everybody knows the time frame it takes to get things, you know, rezoned and entitled and everything.
• 6:44
  SPEAKER_03: And if we're talking that in 2028, 2029 timeframe, you know, rents may start to go up or get to a better spot, then yeah, starting starting now.
• 6:53
  SPEAKER_03: If this is your asset class that you work in, then it feels like starting now would make sense to be going and looking for some of those projects that would make more sense in two to three years.
• 7:03
  SPEAKER_04: Yeah, absolutely.
• 7:04
  SPEAKER_04: And we're we're seeing that across across DFW, Austin, Houston, other markets that we're working in.
• 7:10
  SPEAKER_04: There still is demand, although it may not be today that they're trying to build.
• 7:14
  SPEAKER_04: They know that this is fine.
• 7:15
  SPEAKER_04: So all the all the major groups, they're still putting dollars to work.
• 7:19
  SPEAKER_04: Although they may be structuring deals a little bit differently.
• 7:21
  SPEAKER_04: They may try to keep uh cash now and they try to structure a deal.
• 7:25
  SPEAKER_04: You know, they're they're not going and buying speculative dirt uh to try to make something happen.
• 7:29
  SPEAKER_04: They're gonna wait until entitlements are done and make sure that everything is lined up and a project's completely shovel ready before they close.
• 7:34
  SPEAKER_04: So those elements are definitely, definitely happening.
• 7:36
  SPEAKER_04: So it's becoming uh a little bit more of a buyer's market than it has been, uh, which is great from uh from a land standpoint, gives us more opportunity, but you've got to structure a deal in a way that it makes sense and uh you know longer longer terms, try to make it more uh more conducive to getting something done in a year or two.
• 7:52
  SPEAKER_03: All right, well, let's go ahead and move on to the next segment, which is from the comments.
• 7:56
  SPEAKER_03: Uh, I hadn't looked at TikTok in a while, and so I came across a comment on there that uh made me laugh, so I wanted to share it with all of you.
• 8:03
  SPEAKER_03: So this comes from definitely 100% sure this is a real human.
• 8:07
  SPEAKER_03: I have no idea, but their username is user49427-6406141.
• 8:14
  SPEAKER_03: And their comment is this isn't interesting content to get people interested in your podcast.
• 8:20
  SPEAKER_03: It's generic advice that works for literally any industry.
• 8:24
  SPEAKER_03: So I appreciated the comment.
• 8:27
  SPEAKER_03: Um, by them commenting, it brought more eyeballs to the video.
• 8:30
  SPEAKER_03: So that was uh that was nice to get a little uh engagement on it and everything.
• 8:35
  SPEAKER_04: We love the haters.
• 8:37
  SPEAKER_03: Yeah.
• 8:37
  SPEAKER_03: Hey, but in fairness to them, I mean, some of the some of the clips that I pull are somewhat generic advice, but we've had a lot of people on who are leaders in some pretty big companies, and leadership topics are important, and yeah, they do cross over from industry to industry.
• 8:52
  SPEAKER_03: Absolutely.
• 8:53
  SPEAKER_03: And that would not be surprising to anybody.
• 8:55
  SPEAKER_03: Yep, exactly.
• 8:57
  SPEAKER_03: All right, well, with that said, let's go ahead and move on to our second article today.
• 9:00
  SPEAKER_03: This one comes to us from Rezi Club.
• 9:02
  SPEAKER_03: Headline reads DreamFinders make third bid to buy Beezer and become America's sixth largest home builder.
• 9:08
  SPEAKER_03: Beezer already rejected it.
• 9:10
  SPEAKER_03: So from this article, Dreamfinder is going public, or DreamFinders is going public with a$25.75 per share all cash bid for Beezer homes after two private offers got turned down.
• 9:23
  SPEAKER_03: The deal values Beezer at roughly$704 million and prices it at about 40% premium to its May 5 close of$18.35.
• 9:35
  SPEAKER_03: This is the third try.
• 9:37
  SPEAKER_03: The first bid in February was$28.50.
• 9:40
  SPEAKER_03: The second in March was$29.
• 9:43
  SPEAKER_03: The current offer is the lowest of the three.
• 9:45
  SPEAKER_03: Beeser's board has said no every time and points to a book value of$41.83 per share.
• 9:53
  SPEAKER_03: Combined the two would close around 13,000 homes a year, making them the seventh largest U.S.
• 9:59
  SPEAKER_03: builder.
• 10:00
  SPEAKER_03: That's a little different than what the title said.
• 10:01
  SPEAKER_03: So we'll say sixth or seventh largest U.S.
• 10:04
  SPEAKER_03: builder.
• 10:04
  SPEAKER_03: DreamFinders is strongest across the Southeast and Texas.
• 10:08
  SPEAKER_03: Visa adds California, Nevada, and Arizona to the footprint.
• 10:12
  SPEAKER_03: And then lastly, here, if this deal gets done, expect more public builders to start hunting smaller rivals to survive the margin squeeze.
• 10:20
  SPEAKER_03: So I think everybody's been keeping an eye on this and seeing what's going to happen.
• 10:24
  SPEAKER_03: Um, what are your thoughts when you see this, Charles?
• 10:26
  SPEAKER_03: And do you think there's uh the possibility?
• 10:28
  SPEAKER_03: Seems like there could be a possibility of a somewhat hostile takeover by going directly to the shareholders with offers that they may want versus what the board's agreeing to or not agreeing to.
• 10:38
  SPEAKER_04: Yeah, well, we can look at previous industries that have had this exact same scenario.
• 10:43
  SPEAKER_04: So let's say, let's go to early 1900s.
• 10:46
  SPEAKER_04: There were somewhere in the neighborhood of 300 automobile manufacturers.
• 10:52
  SPEAKER_04: And at some point, maybe there was the by estimates, there might have been maybe two or three times more than that at various points.
• 10:59
  SPEAKER_04: Okay, so what happened?
• 11:01
  SPEAKER_04: Right, in order to make money, they all were in a race to zero effectively, and they pushed each other out and bought each other up, and the only way to make money eventually was to have so much scale that you had some pricing power in the marketplace.
• 11:16
  SPEAKER_04: And you had so many efficiencies because of scale that the that you could keep the small guy at bay or kill him completely.
• 11:24
  SPEAKER_04: Doesn't that sound like what we're doing here in home building?
• 11:27
  SPEAKER_04: Sounds like exactly the same scenario.
• 11:29
  SPEAKER_04: So I I hate that that is the case, but it does seem to point to the fact that consolidation is the name of the game.
• 11:35
  SPEAKER_04: We see the uh you you definitely have some foreign money that's trying to get into U.S.
• 11:38
  SPEAKER_04: home building, uh, but consolidation has been happening in this space for a long time, and the it's a have and have not scenario.
• 11:45
  SPEAKER_04: The the bigger builders keep getting bigger, and the small local builder that you know the way that this used to go is that there were many local builders in your name in your area, and you could go to one, and he was going to build, you know, maybe two, three, four, maybe at most he was building a couple dozen homes a year if he was a big guy.
• 12:03
  SPEAKER_04: And you would go to him and he would build your house, and it was that was a scenario that was normal.
• 12:08
  SPEAKER_04: And that just doesn't work anymore because of the nature of scale and how much more competitive these uh larger builders can be.
• 12:16
  SPEAKER_04: Now you can go and talk about, well, you know, people don't appreciate quality and all this stuff, and that's all true.
• 12:21
  SPEAKER_04: And that same exact thing happened in the autobus.
• 12:24
  SPEAKER_04: Are the are the cars that we build today better quality than those bespoke, beautiful, custom, one-off coach-built cars of the of the early 1900s?
• 12:33
  SPEAKER_04: Of course not.
• 12:35
  SPEAKER_04: But that's just the nature of what happened.
• 12:37
  SPEAKER_04: So I fear that there could be a similar situation here.
• 12:40
  SPEAKER_03: And it feels like it's happening in a lot of industries connected to land development.
• 12:46
  SPEAKER_03: I mean, this is happening with engineering firms.
• 12:48
  SPEAKER_03: It's happening with a lot of the different companies that are associated with building and development, where a lot of the smaller companies are getting bought up.
• 12:54
  SPEAKER_03: Plus, I mean, one of the things too is you have a lot of people who have had these companies for quite a bit of uh for many years, and they're starting to age out.
• 13:04
  SPEAKER_03: Like they're they're wanting to sell their sell their companies.
• 13:06
  SPEAKER_03: So it's not always even just a situation of a big guy coming in and buying them.
• 13:10
  SPEAKER_03: A lot of these companies right now in these different industries are actively seeking buyers to buy their home or to buy their businesses just because they're ready for retirement and they don't necessarily have a family member to step in and take it over.
• 13:22
  SPEAKER_04: It does appear to be the way of the world at this particular juncture in time.
• 13:26
  SPEAKER_03: Yeah.
• 13:27
  SPEAKER_03: And uh, real quick on the the slide here, I just wanted to pull this up because it gives more of a visual of what uh I had read through there a moment ago related to where Visa Homes and Dreamfinders uh homes are operating.
• 13:40
  SPEAKER_03: So this one kind of shows the two different um pictures of the country and uh color-coded for where they're operating today.
• 13:48
  SPEAKER_03: So it kind of shows you when they come together that the different areas that they'll be uh be operating in and the growth that they'll have.
• 13:55
  SPEAKER_03: This episode of the Land Development Podcast is brought to you by our friends at First Continental.
• 14:00
  SPEAKER_03: For more than 30 years, First Continental is focused on one thing, lot development.
• 14:05
  SPEAKER_03: Based in Houston and established in 1994, First Continental specializes in non-recourse lot acquisition and development financing.
• 14:13
  SPEAKER_03: Their experienced team of management and loan servicing professionals has financed more than 1,350 residential communities and over 110,000 lots across the South, Southeast, and Mountain West.
• 14:25
  SPEAKER_03: For builders and developers, First Continental is more than a lender.
• 14:29
  SPEAKER_03: They're a steady partner, known for consistent support, trusted guidance, and deep industry know-how.
• 14:35
  SPEAKER_03: With a singular focus and proven record supporting more than 200 of America's best builders and developers, they know how to help projects move from plan to reality.
• 14:44
  SPEAKER_03: To learn more about First Continental and how they can support your next community, visit FirstContinental.com.
• 14:51
  SPEAKER_03: All right, let's get back to the show.
• 14:53
  SPEAKER_03: All right, well, let's go ahead and move on to article number three, which comes to us from CNBC TV, their YouTube channel.
• 14:59
  SPEAKER_03: Uh the headline for this reads homes could become many data centers to power AI growth.
• 15:05
  SPEAKER_03: So this one, as I said, is a video.
• 15:08
  SPEAKER_03: So we're going to watch this short video and then we will discuss.
• 15:11
  SPEAKER_01: Welcome back.
• 15:12
  SPEAKER_01: Let's get a market flash on Meta.
• 15:13
  SPEAKER_01: Bloomberg reporting that it's working with JP Morgan and Morgan Stanley on a financing package for a data center in El Paso, Texas, to the tune of$13 billion, mostly in debt.
• 15:23
  SPEAKER_01: Amid continued demand for data centers, there has been increasing pushback from local communities about these facilities.
• 15:30
  SPEAKER_01: But one company is offering a potential solution, and Diana Ollick has the story in this week's property play.
• 15:36
  SPEAKER_01: Hi, Diana.
• 15:38
  SPEAKER_00: Hey Morgan, yeah, it's an unlikely partnership.
• 15:41
  SPEAKER_00: Span, which is a startup that makes smart electrical home panels, is teaming up with NVIDIA and Pultigroup, a major US home builder.
• 15:49
  SPEAKER_00: Span is now making small fractional data centers, they call them nodes, that can be put on the side of residential homes.
• 15:57
  SPEAKER_00: So the idea is to take advantage of unused electrical capacity on local grids, which the span smart panels find.
• 16:04
  SPEAKER_00: Now, a network of these nodes talking to each other across the country is the equivalent of a mid-sized traditional data center.
• 16:12
  SPEAKER_00: So these could actually negate the need to build as many of those huge data centers.
• 16:16
  SPEAKER_00: Hyperscalers and AI cloud providers just tap into the node network like a regular data center.
• 16:23
  SPEAKER_00: Now, Spam collaborated with NVIDIA using its technology in the system.
• 16:27
  SPEAKER_00: Spam claims it can install 8,000 of these units about six times faster and at five times lower cost than the construction of a typical centralized 100 megawatt data center of the same size.
• 16:40
  SPEAKER_00: Now, Poulty Homes is in on the early testing phase looking at the capabilities and economics of these nodes, which have already been deployed in a handful of communities.
• 16:50
  SPEAKER_00: Okay, so why would a homeowner want this?
• 16:53
  SPEAKER_00: Well, because they would just have to pay one flat fee for electricity and Wi-Fi, which Spam said would be roughly about$150 total.
• 17:03
  SPEAKER_00: So a lot less than probably your usual bill.
• 17:06
  SPEAKER_03: Well, I've spent some time reading comments related to this idea and just seeing what consumer sentiment is, and it has not been positive.
• 17:15
  SPEAKER_03: I think right now we have a pretty big uproar of consumers about data centers in general.
• 17:20
  SPEAKER_03: Um, it's becoming a hot topic.
• 17:22
  SPEAKER_03: I mean, we talked before we press record here today.
• 17:25
  SPEAKER_03: I mean, we had uh Tucker Carlson and Kevin O'Leary having a debate on Tucker's show about the big data center that O'Leary's involved in out in Utah.
• 17:34
  SPEAKER_03: And there's been a lot of pushback on that.
• 17:37
  SPEAKER_03: So I like the so for me personally, I like people getting innovative and trying to think of different ideas.
• 17:44
  SPEAKER_03: But when I think about this, I feel like the the servers are gonna basically not be able to handle more modern models just within a year or two.
• 17:55
  SPEAKER_03: And so I wonder if you're talking about putting 8,000 of these in and then continuing to add them, what does the process look like to continually replace the hardware inside of them so that they can continue to run the newer models that are more resource intensive and everything?
• 18:08
  SPEAKER_03: And of course, a lot of the comments from consumers are that, you know, they're thinking about, you know, are there is there additional EMF, you know, emissions that are happening from these?
• 18:20
  SPEAKER_03: Like what could it do to their family if these things are running so close to them, you know, right there?
• 18:24
  SPEAKER_03: And I would assume there's still the need for water, which tends to be the biggest argument that people have about data centers is that, you know, they're tapping into the water supply of that particular community, but maybe these don't have as much requirement on that.
• 18:36
  SPEAKER_03: So I'm not personally a big fan of these, but I I like thinking outside the box and trying to think of other solutions versus putting massive data centers in all these different places.
• 18:46
  SPEAKER_03: What are your initial thoughts on this, or what do you think about this idea in general?
• 18:49
  SPEAKER_04: Well, the the big scale of data centers at the moment is running into this massive brick wall of opposition.
• 18:56
  SPEAKER_04: And a lot of states are saying, no, we don't want it here.
• 18:58
  SPEAKER_04: Even in Texas, we had a county last week, uh, this week or last week, that said, hey, we don't want those here, we're gonna have a moratorium.
• 19:05
  SPEAKER_04: Now there's some there's some uh question if they even have the ability to do that.
• 19:09
  SPEAKER_04: And so we're gonna have now the state of Texas probably fighting against a county in Texas about whether data centers can and can't be built.
• 19:15
  SPEAKER_04: So this is a very contentious topic.
• 19:18
  SPEAKER_04: And like a lot of things, we see this in the development space all the time, there's a lot of misinformation.
• 19:24
  SPEAKER_04: And things are being sold as horrible, awful, crime's gonna go up because of data centers, like you know, all these things that's not supported, right?
• 19:32
  SPEAKER_04: There's no there's no factual basis here.
• 19:34
  SPEAKER_04: Doesn't mean that data centers don't need to be designed in a more thoughtful manner, but but again, we've got this giant brick wall of opposition.
• 19:40
  SPEAKER_04: So the theory here is that maybe this would be something that people would be able to oppose less.
• 19:46
  SPEAKER_04: I don't know that that's actually the case.
• 19:48
  SPEAKER_04: So let's look at the the good and bad over these real quick.
• 19:50
  SPEAKER_04: So the the theory here that the big selling point is that we've got a revenue scenario potentially for homeowners, right?
• 19:56
  SPEAKER_04: Because they've got this unused compute that is sitting there, they can use it for their use, but then also has the ability to pool with other resources and get things done, they can get dollars uh sent back to them.
• 20:08
  SPEAKER_04: Okay, so that's an interesting idea.
• 20:10
  SPEAKER_04: And we've got this faster AI inference locally.
• 20:16
  SPEAKER_04: But mine runs pretty fast anyway.
• 20:17
  SPEAKER_04: I don't have any LLMs I'm using where I feel like it's just too slow, I can't accommodate it.
• 20:22
  SPEAKER_04: So this the speed thing, I wonder.
• 20:24
  SPEAKER_04: Maybe of course we also we didn't really complain when we had a you know a computer back in 1996 that was you know on dial-up internet.
• 20:32
  SPEAKER_04: We didn't complain and think that it was horrific then because we just didn't know.
• 20:35
  SPEAKER_04: So maybe that's our perspective and our perception that the speed that we have now is is good enough.
• 20:41
  SPEAKER_04: Maybe speed is an issue there.
• 20:43
  SPEAKER_04: The big one though that I think in some markets is undersold is the waste heat reuse.
• 20:47
  SPEAKER_04: You know, you live in a cold climate, Ryan.
• 20:49
  SPEAKER_04: This might be a scenario where it's driving dollars back to you from a an AI compute standpoint, but also you've got a bunch of waste heat that you're using uh in your home in the cold months.
• 21:01
  SPEAKER_04: In Texas, not as big a deal, but in cold climates, I think it could be pretty interesting.
• 21:05
  SPEAKER_04: Now the problems though, the the problem, the list of problems is a lot bigger than the list of the benefits.
• 21:10
  SPEAKER_04: And I think that's where this really starts to run into issues because we just don't know how this is gonna how this is gonna happen.
• 21:16
  SPEAKER_04: It's not like you just got one on your house.
• 21:18
  SPEAKER_04: You and everybody in your subdivision potentially has one on their house.
• 21:22
  SPEAKER_04: And so now you look at the total draw of the subdivision, now scales by multiples, by two or three times what it would have been.
• 21:29
  SPEAKER_04: Well now the now the infrastructure and the ground can't handle it.
• 21:33
  SPEAKER_04: So now we've got to upsize everything to get the power there.
• 21:36
  SPEAKER_04: So it starts to create this this giant domino effect of things that drive up the cost of building the home in order to get the power to run the little mini data center.
• 21:47
  SPEAKER_04: And is that worth it?
• 21:48
  SPEAKER_04: Maybe not.
• 21:49
  SPEAKER_04: Because now you've got to you you have to do a whole bunch of things to get this data center that that may, you know, in two years it may not even be usable because the technology has advanced enough and you've got to.
• 22:00
  SPEAKER_04: Now replace the thing.
• 22:01
  SPEAKER_04: So a bunch of things there.
• 22:03
  SPEAKER_04: I think in places that can't use the waste heat or or even in a in your climate, right?
• 22:08
  SPEAKER_04: It gets pretty warm there in the summer.
• 22:09
  SPEAKER_04: You don't need the waste heat.
• 22:11
  SPEAKER_04: Now how do you dissipate it?
• 22:12
  SPEAKER_04: What do you do with it?
• 22:13
  SPEAKER_04: What happens?
• 22:14
  SPEAKER_04: Uh so and then of course noise, right?
• 22:16
  SPEAKER_04: I I don't know if that's a I don't know if that's a scenario that is something they can overcome.
• 22:21
  SPEAKER_04: Noise is there.
• 22:22
  SPEAKER_04: And then let's not mention the security, right?
• 22:26
  SPEAKER_04: Who has access to this thing is mounted to my house?
• 22:28
  SPEAKER_04: And is that a good thing?
• 22:29
  SPEAKER_04: Is that a bad thing?
• 22:30
  SPEAKER_04: Is that safe?
• 22:30
  SPEAKER_04: Is it not safe?
• 22:31
  SPEAKER_04: I I'm using it, but then other people are also using it, and that seems like that could be a problem.
• 22:36
  SPEAKER_04: So yeah, bunch of unknowns here.
• 22:38
  SPEAKER_04: I think it's an interesting concept, but seems like there could be another uh another brick wall that they're gonna run into with opposition.
• 22:46
  SPEAKER_03: Yeah, and I I think adding on to this one other thing too is uh you know other ideas that I've been seeing out there, because there are a ton of different ideas coming up of how to solve the problems with data centers and having them kind of located all around the country.
• 22:58
  SPEAKER_03: Of course, we have um, you know, we have some uh companies looking at putting them underwater, like in the in the ocean, basically.
• 23:06
  SPEAKER_03: There's some companies looking at that and what that could do.
• 23:09
  SPEAKER_03: That obviously brings up a whole new question of what type of impact it could have have to, you know, marine uh wildlife and everything there.
• 23:17
  SPEAKER_03: And then you've got uh the conversation about, well, what about low orbit satellites?
• 23:22
  SPEAKER_03: You know, we've got people talking about doing that, you know, and and so there's a lot of conversations about different things or different ways to you know implement data centers.
• 23:31
  SPEAKER_03: And so it's gonna be interesting to see how this plays out.
• 23:33
  SPEAKER_03: But yeah, as of right now, the consumer sentiment on data centers is definitely very low.
• 23:38
  SPEAKER_03: And it makes you wonder too, because I I know so many people are dependent upon AI right now.
• 23:43
  SPEAKER_03: And if it was presented to people that, hey, you're, you know, without all of this, we're not gonna have additional AI, we're not gonna be able to do these additional things, you know, would people be okay with that?
• 23:55
  SPEAKER_03: Because you do see a lot of people, I don't know, AI is interesting right now because you see a lot of people almost like they're on the internet too much and they eventually just want to get out into the real world and do things.
• 24:05
  SPEAKER_03: And you're starting to see some people back away from some of having AI do everything for them.
• 24:10
  SPEAKER_03: But AI does serve some really good purposes.
• 24:12
  SPEAKER_03: So yeah, it's gonna be interesting to see how this plays out.
• 24:15
  SPEAKER_03: Well, let's uh move on to our final topic and get into something uh also controversial.
• 24:21
  SPEAKER_03: So this one comes to us from ABC News.
• 24:24
  SPEAKER_03: Headline reads Trump says, I don't think about Americans' financial situation in Iran negotiations.
• 24:32
  SPEAKER_03: So this one has been getting a lot of headlines.
• 24:34
  SPEAKER_03: You just go search for uh Trump and Americans' financial situation, and you'll see like 50 articles out there plus written about it.
• 24:41
  SPEAKER_03: So it's a it's a hot topic right now.
• 24:44
  SPEAKER_03: And uh we have a quick video here for you, just a short and it's pretty quick, and then we will talk about what this means and just give our opinions on it here.
• 25:00
  SPEAKER_02: Not even a little bit.
• 25:02
  SPEAKER_02: The only thing that matters when I'm talking about Iran, they can't have a nuclear weapon.
• 25:06
  SPEAKER_02: I don't think about American financial situation.
• 25:10
  SPEAKER_02: I don't think about anybody.
• 25:11
  SPEAKER_02: I think about one thing.
• 25:13
  SPEAKER_02: We cannot let Iran have a nuclear weapon.
• 25:16
  SPEAKER_02: That's all that's the only thing that's motivated.
• 25:21
  SPEAKER_03: I know that was kind of tough to hear.
• 25:22
  SPEAKER_03: There's a lot of uh, I think helicopter background noise uh there on that video, but hopefully that came through and you guys were able to hear it.
• 25:29
  SPEAKER_03: But, you know, essentially, when I saw this, and obviously I saw comments on it too, you can imagine what the everyday, you know, worker thinks about when they see this, right?
• 25:40
  SPEAKER_03: They're they may not be in agreement with what's happening with Iran, and then they hear that, you know, from Trump making this comment, it definitely doesn't hit home with people in a positive way.
• 25:51
  SPEAKER_03: And I don't know.
• 25:53
  SPEAKER_03: I wasn't I I didn't like hearing that because I feel like our nation should be what is being thought about, regardless of who the president is.
• 26:01
  SPEAKER_03: You know, they should be thinking about what is happening right now, and on the home front here in the United States, things are expensive.
• 26:07
  SPEAKER_03: I mean, people are going out there to the grocery store and spending, you know, 3x of what they used to spend.
• 26:14
  SPEAKER_03: Gas prices are way up.
• 26:16
  SPEAKER_03: Things are just expensive in general.
• 26:17
  SPEAKER_03: I was, I just saw the other day.
• 26:19
  SPEAKER_03: I mean, between gas prices and food and you know, your where you live and everything, I mean, you basically need sixty thousand dollars, sixty-five thousand dollars per year just for a handful of um just for that.
• 26:34
  SPEAKER_03: And with taxes and everything, you're talking about needing to have a six-figure salary just to get basic necessities met, which seems insane to me.
• 26:42
  SPEAKER_03: So I feel personally that this is a a tone-deaf comment.
• 26:46
  SPEAKER_03: And if that's if this is really where his his mind is at on this, um, I don't know.
• 26:52
  SPEAKER_03: I'm not I'm not a big fan of this comment here.
• 26:54
  SPEAKER_03: What what are your thoughts, Charles, on this?
• 26:56
  SPEAKER_03: Or um what are you thinking?
• 26:58
  SPEAKER_04: Well, I don't think any of us buy it.
• 27:00
  SPEAKER_04: I don't think I don't think it's reasonable to think that nuclear weapons are the only factor in his decision-making process here.
• 27:10
  SPEAKER_04: No.
• 27:11
  SPEAKER_04: However, we've got a few facts that we can look at.
• 27:14
  SPEAKER_04: You know, were they spending more time, dollars, effort on uranium enrichment?
• 27:22
  SPEAKER_04: I think that's I think that's a documented out.
• 27:25
  SPEAKER_04: It's a little different than what we saw in the Middle East before about the weapons of mass destruction scenario that may or may not have been real or justified.
• 27:32
  SPEAKER_04: That's a whole different story.
• 27:34
  SPEAKER_04: This one it does appear that at least there were some very clear facts indicating that there was more work going into developing nuclear weapons.
• 27:43
  SPEAKER_04: Now, I I don't love the fact that we seem to need to be the police for the world.
• 27:47
  SPEAKER_04: So that's a whole different element.
• 27:48
  SPEAKER_04: I'm not sure that that should be our job, but I think there's a whole lot more at play here.
• 27:54
  SPEAKER_04: If you look big picture, it is tough right now, but there is some information that seems to indicate that this conflict, regardless of how it plays out over the next um call it six months to a year, probably elevates us in comparison to many of our glober global counterparts.
• 28:13
  SPEAKER_04: We'll look at Europe specifically.
• 28:16
  SPEAKER_04: As a result of this conflict, the the Strait of Hormos is going to change dramatically with how it operates, right?
• 28:21
  SPEAKER_04: Things are gonna have to move differently.
• 28:23
  SPEAKER_04: Shipping through there is now seen as a very unstable scenario, right?
• 28:26
  SPEAKER_04: That probably doesn't go away.
• 28:29
  SPEAKER_04: Now you've got oil and gas need to move differently across the world, and maybe they move less across the world in some cases.
• 28:37
  SPEAKER_04: So that puts certain groups at a disadvantage, specifically China and Europe.
• 28:44
  SPEAKER_04: Because we have enough of that here.
• 28:46
  SPEAKER_04: So it puts us in a more advantageous position overall.
• 28:50
  SPEAKER_04: Now, right now, I don't think that's easy for the average American to see when they go to the grocery store, but I think it might play out to be a really good thing for us over time.
• 28:59
  SPEAKER_04: So I'm hoping that it doesn't go too far.
• 29:01
  SPEAKER_04: But I think at least the early numbers look like this could be a good thing for Americans' position amongst those across the globe.
• 29:09
  SPEAKER_04: We'll see how it plays out.
• 29:11
  SPEAKER_03: I mean, I agree with you that we're that I don't like us being the world police either and getting involved in all these conflicts and considering, you know, boots on the ground and and all of that.
• 29:20
  SPEAKER_03: I really would love for the United States to continue to, you know, progress and continue to uh like improve a lot of the things that aren't great in this country right now.
• 29:31
  SPEAKER_03: Um, you know, just from an infrastructure standpoint, from a homeless veteran standpoint, from there's just a lot of things that need help.
• 29:39
  SPEAKER_03: And then when you see billions of dollars being sent overseas for a war that you might not agree with, that that I don't know, that's just something with me that really it drives me crazy.
• 29:50
  SPEAKER_03: And again, for me, this is uh I don't really care about which political party is in charge.
• 29:56
  SPEAKER_03: This is just something that's been my personal beliefs for for quite a while.
• 30:00
  SPEAKER_03: And so, yeah, I'm just not I'm not happy where things are at.
• 30:02
  SPEAKER_03: I hope I would love to see some sort of uh resolution between, you know, between the nations that we can get behind and so this can come to an end.
• 30:12
  SPEAKER_03: I just don't have a lot of hope that that's going to happen.
• 30:14
  SPEAKER_03: And I do think the longer this goes on, and you know, if it drags on too long, it is going to have a big economic hit to the consumers of this country, who are the people who could be, you know, paying for apartments or purchasing homes and things of that nature, so it directly impacts our industry and what people are able to afford.
• 30:33
  SPEAKER_04: Yeah, I don't think there's any way that we can separate the work that we do in developing housing and developing real estate from what's going on in this conflict, right?
• 30:45
  SPEAKER_04: Inextricably we're linked because all the stuff that's happening and all the stuff that it's doing to pricing is affecting us on a day-to-day basis.
• 30:52
  SPEAKER_04: It's affecting the people that buy from us, it's affecting the way that we uh get and buy inputs for doing the projects that we do, and it affects us on a personal level.
• 31:02
  SPEAKER_04: I think it's likely that in the near term things could get worse before it gets better.
• 31:09
  SPEAKER_04: I think the long-term outlook with this conflict and the other things that are happening, I think the long-term outlook, let's say we'll call long-term midterm.
• 31:16
  SPEAKER_04: So a five to ten year outlook for the US, I think is very strong.
• 31:19
  SPEAKER_04: But the next six to twelve months, I think it could get a little bit dicey.
• 31:24
  SPEAKER_04: I think it could be less than ideal.
• 31:26
  SPEAKER_04: I think that a market correction is maybe imminent.
• 31:30
  SPEAKER_04: So you're right.
• 31:31
  SPEAKER_04: This conflict is certainly driving things in a direction in the short term, the very short term, that are not ideal.
• 31:38
  SPEAKER_04: But it's not all doom and gloom.
• 31:39
  SPEAKER_04: I think it puts us in a really good position over the next half a decade or more to still continue to be the best country in the world.
• 31:48
  SPEAKER_03: Yeah, I think one more thing I'll add, and then we can we can wrap up here.
• 31:51
  SPEAKER_03: But I another thing I've noticed too, and I think we'll probably see more of this, is that you've started to see and you have been seeing the government get more involved in private industry.
• 32:00
  SPEAKER_03: So you've seen different areas of the government investing money and putting more money into private industries that they deem to be um, you know, help with our own national security.
• 32:12
  SPEAKER_03: So whether it's uh raw material companies, you know, in the United States or just different types of companies like that.
• 32:18
  SPEAKER_03: So I would guess that we're gonna see more and more of that.
• 32:22
  SPEAKER_03: And I know a lot of people don't, I mean, me included, I I understand it, but I don't like you know the government getting involved in private companies.
• 32:29
  SPEAKER_03: But I think we're gonna see more of that happening and we'll see how that that plays out.
• 32:34
  SPEAKER_03: But yeah, there's already multiple companies that um have a pretty significant backing by the government outside of just you know putting money into SpaceX or putting money into you know some of these other companies.
• 32:46
  SPEAKER_03: It's it's more about the national security side of things.
• 32:49
  SPEAKER_03: And so maybe those are good good businesses for people to invest money into too, if the government's gonna be backing all of those.
• 32:56
  SPEAKER_04: Well, the point that you bring up is important, and just to be very brief, the world economy is changing pretty dramatically in the way that most companies, most countries to have the best chance of success are going to be need to be more self-sufficient.
• 33:10
  SPEAKER_04: Some countries aren't gonna have a very good shot at that.
• 33:12
  SPEAKER_04: Others, like us, are gonna have a much better opportunity to be self-sufficient and not have to depend on others.
• 33:18
  SPEAKER_04: So that's ultimately what we're driving towards.
• 33:21
  SPEAKER_03: Yep, exactly.
• 33:22
  SPEAKER_03: Well, with that said, I know we're over 30 minutes here, and usually we try to keep it under 30, but uh, we had some interesting things and important things to talk about.
• 33:30
  SPEAKER_03: Uh Charles, any final thoughts before we wrap up?
• 33:33
  SPEAKER_04: I I like adding some of these more interesting, say less industry-specific topics because they do affect us, and it's a good thing for us to talk about in the context of what we're doing in our industry.
• 33:44
  SPEAKER_04: So it's something that's fun for me.
• 33:45
  SPEAKER_04: I would love to hear some feedback if uh if we can get some comments on do you guys like seeing these?
• 33:51
  SPEAKER_04: I know it's for you and I, Ryan, it's enjoyable to do, but love to hear the list.
• 33:56
  SPEAKER_04: Those things that you enjoy having, those topics included.
• 33:59
  SPEAKER_03: I enjoy talking about it too, but I know again, might not be some people's cup of tea.
• 34:03
  SPEAKER_03: Uh well, with that said, guys, that is all for this episode.
• 34:06
  SPEAKER_03: We will go ahead and come to a close here.
• 34:08
  SPEAKER_03: If you're not already subscribed, please click that button.
• 34:10
  SPEAKER_03: We'd love to have you back for the next one.
• 34:12
  SPEAKER_03: Otherwise, we will talk to you all tomorrow on our next interview episode.