October 7, 2024 • 53 mins
With double-digit vacancies that are the worst on record in many markets, commercial real estate investors are faced with the challenge of navigating negative absorption in the office sector. While the Mountain West region has acted as a buffer, avoiding some of the harsher realities facing first-tier markets, we remain in the thick of what real estate mogul Brandon Fugal dubs a "character-building cycle." In this episode, we sit down with the Chairman of Colliers International to explore the myriad of factors driving change in the sector—from technological advancements to broader economic shifts. Hear why Fugal believes the public is still in the dark about the true impact of remote work, how he aligns with Elon Musk’s controversial return-to-office mandates, and and which investors he predicts will see the greatest returns over the next five to ten years.
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Episode Transcript
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Speaker 1 (00:05):
Welcome to Peaks and Portfolios presented by Peck
Companies, your go-to podcastfor all things commercial real
estate investment.
I'm Rachel oh, and togetherwe're diving into current events
, trends, issues andopportunities impacting the CRE
investment space, fromdissecting the latest market
moves to sharing insights ontoday's commercial real estate
(00:26):
landscape.
It's time to maximizeportfolios here in the peaks of
the Mountain West and beyond.
Okay, everybody, welcome back.
We are here again from thepeaks of the Mountain West.
I'm actually thrilled to havetoday with us a true Utah local,
born and raised and perhaps oneof the most successful our
(00:47):
state has turned out in recentyears.
He's a real estate icon, aphilanthropist, a technology
enthusiast and apparently aparanormal activity aficionado.
I hope I said that right, butBrandon Fugel is joining us here
in studio.
Welcome, Brandon.
Speaker 2 (01:03):
Hey, it's a pleasure to be with you.
I've been excited for thisconversation, big fan of your
podcast and of everything thatPeg is doing to transform our
communities and our skylines.
I mean you really buildcommunity and are a key part of
what is happening not just inUtah but the entire region.
I mean you've branched out allover the entire Western region
(01:27):
now with everything fromhospitality to office, to retail
, to residential communities.
Speaker 1 (01:34):
Yeah, no, thank you.
We're in 27 states, which Idon't think, cameron.
You knew Cameron back in theearly days.
I don't think he ever thoughtthat he would have that national
reach.
So thank you.
You're so kind it's nice forsomeone to actually know who Peg
is versus me, kind of likegiving the background.
So I appreciate that that'sawesome.
Speaker 2 (01:52):
Peg is a force, it's a development force, a community
building influence that isfairly unmatched is fairly
unmatched.
It is rare these days that youfind a truly diversified
approach to communitydevelopment, a company that
actually is equally focused onall product types, the full
(02:16):
range of office, retail,hospitality, entertainment and
residential.
I mean hospitalityentertainment and residential, I
mean PEG is the ultimate livework play development company.
Speaker 1 (02:29):
Awesome.
Well, make sure you get yourcommission check after that,
yeah no, it's true, I've workedwith Cameron since the beginning
.
Speaker 2 (02:35):
We've worked on a lot of projects and it has been a
thrill to see everything thatyou've done to transform
communities and, like you said,now you're in 27 states.
But just looking at the Utahskyline, alone from the southern
end of Utah to the northern end, to downtown Salt Lake, across
(02:56):
from the Delta Center.
You've had a key role in reallychanging the skyline and
elevating community.
And anyways, I don't mean to gooff on a tangent but it's been
fun to be a part of that and towatch.
Speaker 1 (03:11):
Well, I appreciate that and thank you so much.
You know you're kind to talkabout PEG and its kind of
outreach For those listenerswe've.
You know our demographics showthat we're not just local, we've
may have a little bit of anational outreach.
So I do want to kind of youknow, paint for our listeners
who you are.
It's for those of you who arelocal and then for those who
(03:36):
aren't, it's impossible to hopin a car and be driving anywhere
in the state without seeingyour name plastered on almost
every building.
I have seen your name over theyears before I joined PEG and
you know almost every commercialreal estate building.
There's your name, along withmaybe one of your partners.
Speaker 2 (03:54):
Only the good ones, only the good ones Okay.
Only the most upscale,significant properties.
Okay.
Speaker 1 (04:01):
And you know you are one of the biggest, if not the
biggest name in commercial realestate.
So I mean kudos to you forhumble beginnings.
I've done a little bit ofstalking, and so I've heard that
you were born and raised inPleasant Grove.
Speaker 2 (04:16):
That's where I live, still to this day.
Speaker 1 (04:17):
fifth generation that's amazing, amazing, and so
a little bit about Brandon.
Brandon is the chairman ofCollier's International Utah and
in 2022, he was named the CCIMUtah Office Broker of the Year,
which actually you've beenrecognized for pretty much the
majority of the past decade, sothat's not a new accolade,
that's something that's beengoing on for years.
Your list of commercial realestate transactions is extensive
(04:42):
, like it covers.
It represents millions andmillions and millions of square
feet.
Speaker 2 (04:47):
Over 20 million square feet of Class A office.
There you go, I've been very,very fortunate and I had to
account for this the other dayfor an interview but I've closed
over 3,500 transactionspersonally.
Yeah, that's crazy.
And even though Class A officehas been a focus, I've had the
(05:09):
privilege of representing someretail industrial hospitality in
RC Willey, which is a BerkshireHathaway company and arguably
one of the most high-profileretailers in Utah, but have
worked on a lot of product typesand, as you mentioned, the name
(05:33):
recognition or at least myidentity being out there.
It's funny.
I tell people, regardless ofwhether the economy is doing
well or not, we know the signcompany is staying busy and
we're making them plenty ofmoney, but it's a constantly
changing landscape.
Speaker 1 (05:52):
It is.
It is, in fact, we're going todive into that a little bit
today.
So you know, as I mentioned,you've been involved in, I guess
, 3,500 plus commercial realestate transactions.
I should note that this verybuilding that we're in today is
one of yours as well, so our petcompany's headquarters is here
(06:13):
in downtown Provo, utah.
Speaker 2 (06:14):
Yeah, Freedom Commons which is the most significant
redevelopment project here inProvo.
It was the first high-rise,class A office project built in
over 12 years in the downtownarea and is part of a mixed-use
dynamic center of gravity thathas walking distance to the
(06:34):
convention center.
I mean you have the new HyattHotel right next door, adjacent,
and we have retail and serviceamenities on site which every
office user is looking for.
And we've been lucky.
We have a couple of prominenttenants here that just recently
moved in from.
Merrill Lynch Bank of America to.
Serenity Health which is one ofthe fastest growing healthcare
(06:58):
companies that focuses on mentalhealth and their headquarters
comprises the entire top floorof this stunning building that
was masterminded by your team atPEG.
Speaker 1 (07:10):
No, it has definitely been a game changer for us and
it's also helped us in ourrecruiting efforts and, as we've
been entertaining nationallarge real estate investment
firms, it's been great.
So we are super fortunate and Iwanted to segue a bit, because
you've involved in so manytransactions and over 20 million
(07:33):
square feet in office.
I mean, office is a buzzwordtoday in commercial real estate.
So according to the recent dataand you may have better data
office occupancy in at least 10of the largest US cities was
under 50% of pre-pandemic rates.
So the new normal seems tohover around 55 to 60% office
occupancy.
Again, this is just the thingsI pulled.
(07:54):
Hybrid work is impacting officeworkers coming into the office
regularly.
You have employers that can'tmake them come in anymore
because of it.
You know we still have a tightlabor market.
Interest rates have risensharply over the last 18 months.
This drop in occupancy, alongwith these higher interest rates
, have had office buildingvaluations go down dramatically.
Speaker 2 (08:16):
It's been challenging , to say the least.
It's been super challenging.
Some markets apocalyptic.
Speaker 1 (08:21):
Yes, some markets apocalyptic, yes, and so what I
wanted to know from your vantagepoint and I know the Mountain
West is always a little bitdifferent than the rest of the
US and the world but tell me howyou see office today and where
you see its future, because Ithink that is a I mean, that is
a question.
Speaker 2 (08:42):
Those are chilling statistics that you just
presented.
Yeah, I mean that is a question.
Those are chilling statisticsthat you just presented and it
really it underscores howchallenging the current
environment is with office.
There has been a secular shiftin office utilization and the
way that we work since thepandemic, and the shift to
(09:03):
hybrid and remote working for alot of businesses has had a
direct impact, as well as justother economic shifts such as
interest rates.
Venture capital, m&a activityis not moving at the same
velocity.
And that has been key to thegrowth in the Intermountain West
(09:25):
.
We refer to our market often asSilicon Slopes because we are a
very tech-centric market thatis driven in large part by these
growth companies in that sector.
Well, it's more difficult thanever to raise money for new
(09:45):
ventures and to fuel that growthand innovation and we're in the
bit of a buffer.
We've seen this play out overdecades where Utah and the
(10:14):
Intermountain West, to a largedegree, has been fortunate to
avoid some of the morepronounced difficulties that you
see in the first-tier markets.
Los Angeles you take downtownLos Angeles, san Francisco,
chicago, new York, houston someof those markets have not only a
(10:38):
more significant base to workfrom, but when it comes to
vacancy and the impacts of thisshift in office trends, it's
more impactful in those markets.
Now we're not immune.
We're dealing along the WasatchFront with double-digit vacancy
(11:04):
, which is the worst on record.
I mean we're also dealing withwhat we call negative absorption
Companies giving back morespace and very little expansion
and growth to absorb thatvacancy.
Our lease rates, thankfully, arestaying fairly constant though,
thankfully, are staying fairlyconstant though, and I'll tell
(11:28):
you that's one of the brightspots and positive indicators
that I think we can look at inUtah and the Intermountain West
as leading the rest of thecountry and preserving values,
even though people have to bemore creative than ever relative
to free rent, enhancedimprovements and other
(11:49):
concessions and have to look atoffice space differently as far
as amenities and amenitizationof these buildings.
You look at PEG's headquartershere at Freedom Commons.
This building, this complex, isunique in that you have on-site
restaurants.
You have an on-site fitnessfacility that is free.
(12:10):
People can throw away their gymmemberships if they office here
at Freedom Commons.
You have shower, lockerfacilities, fitness and services
here on site, as well asstructured parking, which comes
in handy when you have100-degree weather like we are
experiencing.
Or sub-zero weather, or zero inthe midst of the winter, and we
(12:33):
deal with really extreme climateconditions here, between the
summer and the middle of thewinter, and I think this
location is a good example ofwhat companies are gravitating
toward.
More than ever before, there isa flight to quality and there's
(12:53):
a flight to fully amenitizedspace that enhances employee
recruitment and retention In amarket with still record low
unemployment in many marketsacross the country, and Utah has
continued to show robustemployment.
The ability to leverage yourspace, your workspace,
(13:15):
environment, in order to createa better quality of life
experience is a keydifferentiator for recruitment
and retention, and thoseprojects that prioritize that
are going to prevail and leadout of this office downturn.
It's not a matter of if it'swhen Every cycle comes to an end
(13:38):
, but we're in a particularlychallenging cycle.
But I'm really optimistic,especially as I look to the next
three to five years.
As the market ultimatelycorrects, we are going to see, I
think, a renewed focus on theimportance of our workspaces and
collaboration.
(13:59):
The United States is still aknowledge worker economy to a
large degree.
I wish we were more diverse, Iwish we wouldn't have offshored
a lot of our manufacturing, butit is what it is.
And we're still a leader on theglobal stage as far as
(14:21):
innovating and developingintellectual property, and it
flows through every sector ofthe economy, and our workspace
is more important than ever inrallying people and bringing
people together and inspiringthem.
I think having inspirationaland aspirational workspace is a
(14:46):
key ingredient to success.
It's not just about creatingculture, the right culture or
accountability.
It's about inspiring people todo their best to present their
best work product and to beproud of either the company, the
venture they're with or whatthey're producing and I think
(15:11):
it's a key part of that anddeveloping the workspaces and
the hospitality and amenityspaces that complement that.
I mean you look at Peg Peg is aleader.
I mean you have so manydifferent advantages when it
comes to delivering true mixeduse and quality of life benefits
(15:31):
for employers and for thosewhether they're traveling or
looking to elevate their way oflife in the community.
Speaker 1 (15:41):
Yeah, you know you bring up a really good point
because, again, as we've beenexpanding, we have been also
expanding our titles of you know, employees that we're bringing
on.
They're more investment-focusedor they have, for example,
acquisitions is something thatwe didn't do as much.
We started morphing into thatduring the pandemic because of
the distressed hotels situationand you know there's a lot of
(16:04):
conversions going on which I dowant to go back to that a little
bit.
But to your point, you knowgone are the days of sort of a
you know being okay with youknow a, class B, class C type
you know office and then I thinkalso my understanding to ESG
requirements also push everyoneinto the better buildings.
But, it's hard to be competitiveif you can't offer a nice space
(16:28):
that they can be creative inand innovative and sharp and
whatnot.
Speaker 2 (16:33):
It's all about recruitment and retention and
that goes straight to thequality of the environment
(17:09):
no-transcript and being equal tothe task of delivering
solutions and product thatspeaks to those priorities is
going to be it's going to be keyto either success or failure.
Yeah.
Those who evolve, who iterateand push the envelope, are going
(17:33):
to prevail long-term anddeliver real value to their
investors, to their teams theiremployees and also to the
communities that they serve, butit's not for the faint of heart
.
I will say real estatedevelopment and investing.
Speaker 1 (17:50):
No, it's not.
It's a long game too, and Ithink this generation, or just
the current populace, hasn'tbeen through enough cycles to
understand that it is a longgame.
So this is a blip in time, butit's not the definitive, nor
will it be, because we will beoutlived by the stories that are
coming.
(18:11):
Okay, so let's talk a little bitabout.
You know, you said flight toquality Even early on.
You were kind of joking but youwere like you know only the
best buildings.
But I think that's really keybecause Class A highly
amenitized, and then, as Imentioned, I know and I only
know this because we've beenhaving some ESG conversations
and I know that's a priority andso there is a clear bifurcation
(18:34):
in this sort of like eventualreturn to office story.
Right, because now you've gotclass C, class D buildings that
are suffering.
I mean, they're completelybeing impacted.
Speaker 2 (18:42):
No one wants to be in those buildings.
You can't recruit or retaintalent in that kind of
environment.
Speaker 1 (18:48):
And you've got cities that have huge, older office
towers right.
Speaker 2 (18:52):
Yeah, they're functionally obsolete.
Speaker 1 (18:54):
Right.
And so where do you see thisplaying out in terms of locally
and also nationwide?
Because again we've got largeoffice buildings all across the
nations.
They're vacant, well largelyvacant.
Keys are being turned back in,banks are not.
You know they're going.
Speaker 2 (19:16):
I mean, the owners are just like we're done.
Speaker 4 (19:17):
We're not going to refi, they're just giving the
keys back.
Speaker 2 (19:18):
We are seeing a wave of defaults and challenges and
this we're not through it.
I mean we're in the middle ofit.
Right now we're in the eye ofthe storm.
But if you look at thosemarkets, you look at the first
tier markets that have thehighest vacancies, and if you
focus on those properties thatare the iconic, highest quality,
(19:41):
best amenitized properties,you'd be surprised to find that
they all have single digitvacancy or no vacancy in some
cases, class A developments areoutperforming across the board
and it's not only becausethere's a flight to quality.
(20:04):
But you look at thisreprioritization If you're
running a business, if you're anentrepreneur, your greatest
cost, your greatest expenses,your people, absolutely of the
equation is secondary torecruitment and retention and
(20:26):
being able to inspire and to beable to scale if you're a
growing company and again dialin the right type of environment
for success, Right, and so eventhose markets that are most
impacted, that are apocalypticright now, that have see-through
buildings and more challengesthan ever, you see a flight to
(20:49):
quality, propping up some of themost iconic properties that
will actually not only weatherthe storm but over the course of
the next three to five years,as markets stabilize are going
to see, I think, some of thegreatest increases in value.
I look at the building thatwe're sitting in here, and even
(21:10):
though we're in the middle of achallenging time we're
navigating a market with verylittle activity and growth.
Three to five years from nowthis is going to be in the
rearview mirror and I'll tellyou the cost of developing this
building today versus two years.
Three years ago is arguably, ifnot double, it's significantly
(21:37):
higher.
Who can tread water and learnto thrive and get creative
through this period of time aregoing to see the greatest return
on investments in the next fiveplus years.
You have to play, as you saidearlier, the long game.
(21:59):
This is not commercial realestate.
I know.
It is not for the faint ofheart.
It is not for the faint ofheart and it is not a short-term
gratification play.
It is really the type ofbusiness that involves a patient
, methodical approach.
Speaker 1 (22:18):
Yeah, no, I appreciate that and you know we
are seeing that as we, you know,we've been historically
development focused.
Yeah.
And we certainly will be, butwith costs as they are and
interest rate there as they are,and you know everyone's looking
for untrended deal on costs atlike 7% plus, and I mean it's
(22:38):
just tough.
It's just tough at where rentsare too Right.
You can't underwrite and therents just aren't trending like
they were.
They had a Right you can'tunderwrite and the rents just
aren't trending like they were.
They had a huge rise during thepandemic and now they've kind
of leveled off.
So you know we were alreadysegwaying into acquisitions,
we're starting to do moreacquisitions and I want to talk
to you about that because nowthe story is blood right.
(23:02):
True, distressed assetsInvestors are circling the tank.
They want blood, they want theykeep hearing about refi not
occurring.
People, like you know, this isall across all asset classes,
right, hospitality, multifamily,obviously, office.
I mean, that's a given, butjust curious, as you know.
(23:24):
So where do you see the blood?
And tell me a little bit aboutthe Mountain West versus the
rest of the country, because Ikeep hearing that we're immune
by any stretch.
But the level of likedelinquencies or bankruptcy or
not bankruptcy, sorry yeah.
Speaker 2 (23:39):
I mean defaults.
Speaker 1 (23:41):
Defaults is far less in our region than and I could
be wrong, but they're justsaying it's like you can't find
blood in the same way, maybe atrickle, I don't know.
Speaker 2 (23:52):
No, the level of distress currently is
significantly less than you seein other markets across the
country, no different than whatwe saw and observed during the
financial crisis.
Speaker 1 (24:05):
Right, the last cycles.
I was here during that and itwasn't that it didn't happen,
but I had friends, obviously,like in Arizona and Florida, and
you would have thought that theworld had ended.
Speaker 2 (24:15):
But I was like oh, boop, boop and assets traded at
a fraction of their cost andvalue, really because there was
great distress at the time.
Yeah, I think it's probablyUtah.
Moving forward is bestcharacterized as a market for
(24:35):
opportunity, and even youropportunistic distressed buyers
are able to identify opportunity, to create equity, to create
more positive outcomes.
Through some of the currentchallenges.
(24:56):
We do not see, as you'dmentioned earlier, the same
percentage of bank-ownedproperties or distressed assets
that are in default.
That is attributed to theconservative nature of this
market, and it's not just Utah.
You see it in Idaho, you see itin many parts of Colorado,
where there's a conservativemulti-generational ownership and
(25:18):
development approach that hasstood the test of time and
served many of these companieswell, some of the partners that.
PEG has have theirmulti-generational development
companies that strategicallyhave been able to position to
(25:42):
not only weather the storms butcome out of the storms stronger
than ever and more resilient.
But it takes a more, I think, amore measured approach.
You can't be over leveraged ina market like today, and that's
what you see here in theIntermountain region is probably
less leverage than you seetraditionally utilized in first,
(26:04):
first-tier markets and thelevel of risk we don't
participate in the upside whenmarkets are hot.
The bad news for Utah is wehave never seen the increase,
the exponential increase invalues that some markets in
California, new York, texas andother major markets end up
(26:30):
benefiting from.
The flip side is, in a marketlike today, that presents some
challenges.
You are more buffered.
You don't see the level ofdistress, you do not experience
the mass corrections.
That isn't to say that thereisn't challenge.
(26:51):
No, it's yeah we're not immune.
No and it takes a creativeapproach and that involves
working with lenders that arewilling to extend, that are
willing to work with the clientin a partnership capacity.
I mean looking at that from arelationship standpoint when
you're in the middle of adistress situation where the
(27:14):
asset isn't performing, whereyou've hit a pothole in the road
to a degree or a speed bump buta very significant speed bump
the way that everyone around thetable reacts, from lenders to
underwriters, your investors,those who have a place on the
capital stack, and their abilityto personally guarantee and
(27:38):
provide assurances all of thathas to be taken into
consideration and is essentialto success.
But I do think second tiermarkets and tertiary markets
have a tendency to weather thesestorms much better and come
roaring out of them with, Ithink, greater stability than
(28:00):
you see in some of thefirst-tier markets.
But, as I mentioned earlier,the flip side is in the
first-tier markets, with greatrisk comes great reward, and
some of the returns that arebanked in those markets are
astounding.
Speaker 1 (28:18):
Yeah, yeah, no, I was .
We were just in New York.
Have you been lately?
Oh yeah.
Speaker 2 (28:23):
Okay, yeah, go to New York at least a couple of times
a year.
I used to have an office in.
Speaker 1 (28:27):
Manhattan York at least a couple of times a year.
Speaker 2 (28:28):
I used to have an office in Manhattan.
I used to have the gosh it wasthe 20th floor of building 1407
Broadway.
Speaker 1 (28:40):
when I owned Coldwell Banker Commercial Advisors, I
had 30 offices in 11 states,from coast to coast and.
Speaker 2 (28:43):
New York was a very significant dot on the map as
you can, imagine.
Having an office in Manhattanwas a significant part of
growing a national platform, andso I was fortunate to become
familiar with that market, and Ilived.
To tell the tale, it was notpretty.
(29:05):
I lost a lot of blood in thatmarket.
Again, you talk about riskreward.
The first two markets are notfor the faint of heart.
But what was your experience inNew York?
Did you see?
What did you observe?
Speaker 1 (29:19):
So you know, I've been in LA a little bit and I've
been in San Francisco a littlebit and I've been in New York,
and there are three verydifferent markets.
Speaker 2 (29:27):
They feel different, don't they?
Speaker 1 (29:29):
So different and I know so.
In New York we were in the JPMorgan buildings, we had some
meetings there and they'rebuilding a beautiful new
building and I mean it isspectacular and the buzz and
energy at JP Morgan and whatJamie and Diamond, I mean it is
phenomenal.
And then you've got that newone, vanderbilt building.
(29:50):
That one I think it's full, Imean so the activity and the
buzz is insane.
Speaker 2 (29:55):
Well, the Class.
A iconic locations, as I wasmentioning earlier, are
prevailing because people aregravitating toward quality and
experience.
Speaker 1 (30:05):
They're willing to pay for it.
And it costs, I mean the rates,oh yeah, and I can only imagine
what's going on with both laborand just everything, the time
that they've been building, youknow, and it's been going on
forever, obviously years andyears and years, but it is so.
I I only mention that because,um, you know, as we're talking,
(30:26):
the flip side, uh, so financial,uh, real estate and financial
firms, they go to the officeright, cameron and myself, uh,
logan kinghorn is another um onthe capital markets.
We were here every day duringthe pandemic.
We never stayed at home.
I mean, I got covid once, so Istayed at home, but, um, and
obviously there are people withchildren, they had to and things
like that.
(30:46):
But you know, we just we camein every day, but tech doesn't
go in the same rate, right?
So you look at San Francisco,very tech heavy, sure, not the
same.
Speaker 2 (30:56):
Well, a lot of their job functions can be handled.
Speaker 1 (31:00):
Right.
Speaker 2 (31:00):
Thanks to technology, thanks to connectivity the
ability and you look at theprevalence of Zoom calls,
microsoft team calls.
Well, now it's a part of ourday-to-day existence.
I mean this morning before 10o'clock.
I had like three different.
Zoom or Microsoft team calls.
Well, that's great on one hand,yeah.
(31:21):
On the other hand, I don't knowthat you can necessarily build
meaningful relationships orresolve concerns on a Brady
Bunch screen.
That's two-dimensional.
Speaker 1 (31:31):
No, not the same and that's so.
Speaker 2 (31:32):
I actually think it's an extremely powerful tool and
provides a level of flexibilityand, I think, allows us to be
more dynamic in our lives, inour workspace.
But the flip side is it doesn'treplace the I think the
(31:56):
essential role that a workplacefills in, helping people come
together and develop theinterpersonal relationships and
the trust and the energetic, Ithink, relationships that drive
business and innovation, eventhose technology companies that
(32:19):
have gone largely remote orhybrid.
Speaker 1 (32:22):
Well, they're making them come back, right.
Speaker 2 (32:25):
And there's a tug of war between the C-suite and the
employee base in a lot of cases.
But I think there is a balancethat can be struck.
And.
I think being more sensitivecan really be beneficial.
It can differentiate you as acompany providing some degree of
(32:47):
flexibility, sure, candifferentiate you as a company
providing some degree offlexibility, sure, but I
probably.
I know I'm going to get shotfor saying this because I'm
going to mention someone who'svery polarizing, but Elon Musk.
I actually agree with hisapproach.
He sent out a mandate to hisemployees that, coming out of
the pandemic that everyone needsto be in the office 40 hours a
(33:09):
week you know, coming out of thepandemic that everyone needs to
be in the office 40 hours aweek, I don't know, and he's I'm
paraphrasing, but he said Idon't care which 40 hours, but
you need to be putting in atleast 40 hours in the workplace,
unless you have some specialcircumstance or your job
function allows you to be justas effective working remotely.
(33:31):
I find with myself and I'm adriven, ruthless son of a bitch
I mean I go a million miles aday.
Speaker 1 (33:37):
Like.
Speaker 2 (33:38):
I do not take my foot off the gas and I have to be
honest with you.
I mean as driven and focused asI am, and ruthless, If I'm at
home trying to navigate in themorning, like this morning,
multiple Zoom calls early andtrying to get projects out, and
(34:00):
the doorbell's ringing, thedog's barking, you've got the
Amazon.
I swear, I think my ex, I thinkmy whole, you would not believe
my, my whole external kind offamily dynamic everyone's
getting packages delivered,whether it be, um, you know,
you've got DoorDash bringingsomething for someone and then,
(34:22):
you've got all of these otherexternal forces that are coming
into play and I have to behonest, I'm not very effective
when I'm running togo grab the door and I'm trying
to dodge through this and mywife is saying, hey, could you
run this to the dry cleaner forme or whatever, because I'm
(34:43):
accessible?
Yeah, it's just not productiveand I think we have to be honest
with ourselves.
I mean, I think there's a lotof dishonesty.
I think there's a lot of how doI say this?
Delicately and politically, ina politically correct way, but I
think that there, claire iskind.
I don't think that people havebeen honest or realistic in a
(35:25):
lot of cases relative to thechallenges and whether I heard
all day, every day for a periodof time, the term supply chain
within the context of oh sorry,we can't get you your package,
sorry, we can't, you can't buy anew fridge.
Speaker 1 (35:41):
Sorry, you can't get this.
It's stuck on a boat somewhereor something, or what.
Speaker 2 (35:46):
Yeah, or it's just taking twice as long to get
anything, to even get basic workproduct done, and people called
it supply chain.
Speaker 1 (35:54):
Oh, I see You're saying you don't think it's bull
.
Speaker 2 (35:56):
Okay, and I'm sorry about the language.
I know this is Utah County, butif we're being really honest,
if we're being candid.
It's not true.
I mean supply chain.
In many cases was code, forpeople aren't working as
productively.
We're not seeing the same levelof production or productivity.
(36:19):
And people weren't honest aboutthe fact that it was because
people were giving a free pass.
People are getting paid a fullwage for part-time work and I
don't think that that's smart.
I think there is a reckoning.
Ultimately and we're seeing italready take place in certain
(36:42):
sectors I do think that abalance, a creative balance, can
be struck.
A balance, a creative balance,can be struck.
Speaker 1 (36:52):
And.
Speaker 2 (36:53):
I think the one thing the pandemic did, what it
taught me, was that the absoluteneed to be sensitive and
provide more flexibleenvironment where people don't
feel pressured to come in, ifthey have an illness in their
family, if they're a caregiver.
They're trying to balance allsorts of priorities, yet they
still can contribute and stillproduce and still be an
(37:15):
incredible member of the team,Having the platform, being able
to leverage technology toprovide that continuity and that
ability to contribute but stillcreate experiences where people
have a place to land, where youhave collaboration and you come
(37:35):
together and you have yourculture and you have
accountability.
I think is important and I thinkit's going to take us years to
figure that out.
People will be, sociologistswill be writing textbooks on
this for decades to come.
So it's a challenging topic.
(37:57):
There are no easy answers.
It isn't black and white.
There are lots of shades ofgray and there are legitimate
circumstances that call forflexibility.
Legitimate circumstances thatcall for flexibility.
I mean you look at call centers.
There are no call centers.
There was a period of time inthe 80s, 90s where call centers
(38:25):
you know, inbound, outbound thatwas driving the office market.
I mean, some of the largestoffice requirements, the largest
occupiers of office parks werecall centers.
Well, most of those functionsbecause of technology.
Speaker 1 (38:33):
You can just do it from home, yeah.
Speaker 2 (38:35):
And people are able to actually fulfill those job
functions in a lot of cases veryefficiently.
Speaker 1 (38:41):
Yeah, and we also don't necessarily have as many
call folks as you no Meaning, Ican't tell you how many times
it's like I can't even callsomeone, right, I have to like
text them, or I have to send aninquiry via email or, like you
know me, like meaning humans orwe've, we've lost that they well
, yeah, customer service iscustomer service better now than
(39:02):
it was 10 years ago absolutelynot so helpful.
Speaker 2 (39:05):
I can't get a hold of a soul, yeah because a lot of
these functions customer service, the personal touch is and I
think we've got to get back tothat.
Speaker 1 (39:18):
Well you know what?
I think it's in the US that itis particularly gone, because I
was just.
I traveled last year and I wentto Japan and they still care
about you, they still care aboutme and they're still there.
Speaker 2 (39:31):
And.
Speaker 1 (39:31):
I don't know anything about kind of how their call
centers work, but this is so notwhat I thought I was talking
about.
Speaker 2 (39:38):
Sorry, we're going off on tangents.
But the point being is thatoffice yeah office is important,
so we kind of run this topicaground.
I mean again, I'll becriticized by some for some of
the more candid comments I'vemade, but I do acknowledge that
there is a place.
I do acknowledge that in orderto succeed in today's economy
(40:01):
and environment, you have to bequick, nimble and flexible.
Flexible.
Flexibility and being sensitiveto people's personal situations
I think it can make you.
It's a make or break.
It will either make yourculture and your company more
successful than the competitoror it could cripple you if
(40:23):
you're not executing with theright type of balance.
Speaker 1 (40:27):
So ask me anything, as we're on kind of the home
stretch here.
So let's then, let's back up alittle bit.
Speaker 2 (40:32):
Hopefully we still have some listeners with us.
I haven't bored to death withart.
Speaker 1 (40:37):
No, no, no, I think we're good.
Let's shift a little bit, then,to technology.
I'm just curious from where yousit and you have a really
unique point of view because ofthe new companies that come in
seeking whatever it is thatthey're looking for.
What are your thoughts ontechnology and its impact on
commercial real estate?
Speaker 2 (40:57):
Boy.
I think it's allowing us totransact more efficiently, more
effectively than ever beforeSocial media, believe it or not
than ever before Social media,believe it or not.
Linkedin, instagram, x,formerly Twitter, have proven,
(41:22):
at least within my businesspractice over the course of the
last year as effective resourcesto identify and procure deal
flow.
Clients.
People are looking at gettingtheir information through these
platforms more than ever beforein business.
It's gone from being a gimmickor again social media just a
(41:43):
part of your social life to knowit's now a key part of your
business strategy, I mean youcan't be in business without
having a social media or digitalmarketing strategy.
In my view, it used to be backin the 90s.
I remember in the late 90s ascompanies were establishing
(42:03):
their presence online and theinternet was on the rise and the
internet was on the rise.
The companies, that were reallythe best positioned to take
advantage of e-commerce andbuild the infrastructure and
presence are now the biggestcompanies on the planet.
I mean Amazon good example, Imean.
(42:25):
Ancestry.
Even you look at Ancestrycomhere in our own backyard with
its headquarters.
One of the great, great onlineweb platforms.
Speaker 1 (42:36):
So fascinating too, right, just what it's able to do
.
Speaker 2 (42:39):
So I think that today , in the same way that in the
late 90s and early 2000s, if youwanted to succeed in business,
you really had to establish ane-commerce and an Internet
strategy, an online presence, anidentity, Today you've got to
have a LinkedIn profile.
(42:59):
I mean it's your resume, it isyour calling card.
People don't carry businesscards.
Speaker 1 (43:05):
No, they really don't .
Speaker 2 (43:07):
If you want to know what someone's work history is
or how to get ahold of someone,you're pulling up their social
media.
You're pulling up their theirresume, if you will, if you will
, on on LinkedIn, or you'relooking at their feed, yeah, and
, and people are getting theirinformation through these, these
mediums.
It's interesting to see.
Uh, I look at People werelaughing about Elon Musk paying
(43:33):
$44 billion, as I recall, forTwitter and saying what an
insane.
Speaker 1 (43:40):
He did try to back out.
For the record it's all part ofthe negotiation.
Speaker 2 (43:44):
Sure Posturing.
But yeah, I think it willultimately be seen as one of the
most brilliant moves in socialmedia and in business.
Yeah, because now I mean that'swhere people are getting their
news.
Yeah.
Speaker 1 (44:02):
No.
Speaker 2 (44:04):
It's an unfiltered, fully democratized platform
platform, and I think, in aworld right now where you have
so many voices and there's somuch noise, being able to
separate the signal from thenoise is going to be a key
(44:26):
advantage in the future, a keydifferentiator for technology
companies, and I thinkcommercial real estate to answer
your question is going tobenefit from technology more
than ever before.
One thing about commercial realestate, though, is it is not
(45:07):
commoditized easily.
The amount of creativity andthe complexity of the
transactions and the negotiationof transactions, regardless of
product type whether it beretail, office, industrial,
hospitality, you name it In anygiven week, I'm looking at 100
different types of contractswith different provisions.
Speaker 1 (45:18):
Sure, constant negotiation, and there is no
one-size-fits-all.
Speaker 2 (45:22):
There is not a standardized form that the
entire industry utilizes.
A good share of my time isspent with legal counsel for the
companies that I represent, thedevelopers.
So as much as technology, Ithink, empowers us and gives us
the ability to reach our targetaudience and to disseminate
(45:44):
information and to transact withless friction.
With less friction, it's notgoing to replace the
person-to-person the need to beable to engage one-on-one or
within groups to be able toreach consensus and to finalize
deal.
(46:04):
So it's the good news is,commercial real estate is here
to stay.
Speaker 1 (46:08):
Oh, yeah, absolutely.
You know what I love about itis you can touch it.
You can Touch it, feel it.
It's here to stay.
Oh yeah, absolutely.
You know what I love about itis you can touch it.
Speaker 2 (46:14):
You can Touch it feel it.
Speaker 1 (46:14):
It's beautiful, it's something you can be proud of.
You can see every day.
Speaker 2 (46:18):
Yeah, yeah I love it and they're not making any more
land.
You look at the Wasatch.
Front and one thing that setsUtah, apart from the rest of the
country, or at least most othermarkets, since we have a
relative scarcity being created.
We have a very linear, verynarrow development corridor with
the majority of the population,where you have the mountains on
(46:40):
one side, on the east, and youhave on the west.
You have mountains as well andyou have lakes and you have
really a transportation corridorwith very few development
opportunities left.
It wasn't so long ago that wehad a lot of green space.
There were a lot of open fields.
There's a lot of agriculturalproperty dotting our landscape
(47:03):
up and down the I-15 corridor,along our freeways that no
longer exists.
Speaker 1 (47:08):
I remember when the prison was like in Timbuktu.
Speaker 2 (47:11):
Yeah Well, it was in the middle of nowhere.
Speaker 1 (47:14):
And now it is gone and it's the center of gravity.
I know the point.
The most strategic infillproject in the United States is
arguably here in Utah in Draper,utah, right there in the middle
of the two counties.
Speaker 2 (47:27):
It is the 700-acre master plan site that used to
house the prison, which has beenrelocated west of the airport
and you have an opportunity tocreate an entirely new community
and center of gravity for notjust Utah but for the
Intermountain West.
It's an exciting time.
Speaker 1 (47:48):
Oh exciting.
Speaker 2 (47:49):
We really are witnessing a renaissance, even
though we have challenges withfinancing, with fundraising, in
a lot of cases we haveincredible opportunity and we
have a young population that hasaccess to universities, to
(48:12):
institutions here within closeproximity.
You have public-privatepartnerships.
Speaker 1 (48:17):
Your alma mater being the largest one, by the way,
utah.
Speaker 2 (48:20):
Valley University.
I got to put a plug in Largestinstitution in the state 44,000
students is going to go north of60,000 students eventually here
Impressive by the way.
Yeah, it is a dynamic universityand you couple with UVU's
mission.
You look at BYU that has moreof a global mission with 33,000
(48:43):
some odd students.
You have the University of Utah, utah State.
The amount of technologytransfer that comes out of these
institutions, of technologytransfer that comes out of these
institutions, and I mean it wasfunny over the last decade we
heard several times that therewas a disproportionate number of
contestants on Shark Tank youngentrepreneurs that were coming
(49:04):
out of UVU or Utah County.
Speaker 1 (49:06):
I did not know that True story.
Speaker 2 (49:08):
Nice.
In fact, it was stated that theproducers were wondering what
is in the water here in Utah?
What is going?
On, because they were gettingsuch a flood of applicants and
good ones that were coming outof.
Silicon Slopes out of UVU andthe.
Wasatch Front.
So exciting times.
(49:28):
Love this community, Love theopportunity to see a tangible
manifestation of my labors onthe landscape.
Yeah, A lot of people ask me.
You're probably aware I startedmy career as a teenager.
Speaker 1 (49:42):
I was 18.
I heard that.
Speaker 2 (49:44):
One week out of high school, jumped into commercial
real estate, and people oftenask well, what would drive a
teenager to jump into commercialbrokerage with a focus on
office parks and corporate users?
And I'll tell you it's quitesimple.
It was the only career paththat would not only afford me
the opportunity to work with thecaptains of industry, the
(50:05):
entrepreneurs, the people whoare literally changing and
running our world, but it isalso one of the few career paths
where you can see a tangiblemanifestation of your labors, to
be able to see dotting theskylines, the communities that I
serve, the results of bringingpeople together to create some
(50:28):
of the most innovative,inspirational, some of the most
innovative inspirational evenaspirational work-live
entertainment spaces that reallyare central to our lives is a
great privilege, and workingwith developers like Peg who
make it happen, I mean, I'm onlyas good as my clients and I'm
(50:50):
also perpetually unemployed.
I'm only as good as my clientsand I'm also perpetually
unemployed.
I'm only as good as my nextdeal.
No one cares about how manydeals are closed last year.
Speaker 1 (50:58):
They want to know what you're doing this year.
What are we?
Speaker 2 (51:00):
doing today, to execute, to produce results, and
being able to constantlysharpen the saw, to innovate, to
figure out new ways of beingable to drive business.
It's critical to success.
Yeah, it's critical, yeah Tosuccess.
Speaker 1 (51:15):
Yeah, no, I appreciate that.
I think this is a perfect wayto end today's episode.
You know, we again it's Peaksand Portfolios, because we're
here in the mountain, you knowthe Mountain West Peaks and we
have portfolios that we'rerunning and growing.
And I appreciate your kindwords, but truly it's with folks
(51:35):
like yourselves that PEG isable to grow our footprint, not
only locally as well asnationally.
Speaker 2 (51:43):
So we so appreciate Our fates are intertwined.
Speaker 1 (51:45):
They are.
They are.
So, anyway, I just want tothank you for joining us.
You know, utah is my newadopted home.
I'm originally I don't know ifyou know this from Seattle
Washington born and raised, butthis has become my new home and
I've loved it.
Speaker 2 (51:59):
Welcome to Utah.
We're lucky to have you.
Speaker 1 (52:01):
Oh well, Hopefully you can put the word out and
help.
No, you know the podcast hasbeen great.
So again, there's a lot ofinterest in our region for all
the things that you've mentionedtoday.
Speaker 2 (52:11):
Quality of life chief among them.
I mean where in the country canyou fly into a new?
(52:33):
International airport and,within minutes, be at the
footsteps, right at the foot ofresort destinations that are
world-class.
We have the largest ski resortdestination in North America,
within what?
Speaker 1 (52:38):
35, 40 minutes of the Salt Lake International Airport
and home of the 2034 WinterOlympics.
Isn't that exciting?
Isn't that amazing?
Speaker 2 (52:45):
History is being made once again and we all have the
great privilege of watching thisunfold and, hopefully,
participate.
You look at the public-privatepartnerships and the leadership
and, frankly, the quality ofthis community.
I love this place.
I love Utah.
The Wasatch Front is where it'sat.
We are looking forward to someof our best days.
(53:08):
Yeah, I would agree.
In the immediate future if wecan just work together to
navigate some of these peaks andvalleys in our economy.
Speaker 1 (53:17):
So thank you for having me on.
Speaker 2 (53:19):
What a privilege.
Speaker 1 (53:20):
And thank you to all our listeners.
So, from the peaks of theMountain West presented by Pet
Companies, and until next time.
Welcome to Peaks and Portfolios presented by Peck
Companies, your go-to podcastfor all things commercial real
estate investment.
I'm Rachel oh, and togetherwe're diving into current events
, trends, issues andopportunities impacting the CRE
investment space, fromdissecting the latest market
moves to sharing insights ontoday's commercial real estate
(00:26):
landscape.
It's time to maximizeportfolios here in the peaks of
the Mountain West and beyond.
Okay, everybody, welcome back.
We are here again from thepeaks of the Mountain West.
I'm actually thrilled to havetoday with us a true Utah local,
born and raised and perhaps oneof the most successful our
(00:47):
state has turned out in recentyears.
He's a real estate icon, aphilanthropist, a technology
enthusiast and apparently aparanormal activity aficionado.
I hope I said that right, butBrandon Fugel is joining us here
in studio.
Welcome, Brandon.
Speaker 2 (01:03):
Hey, it's a pleasure to be with you.
I've been excited for thisconversation, big fan of your
podcast and of everything thatPeg is doing to transform our
communities and our skylines.
I mean you really buildcommunity and are a key part of
what is happening not just inUtah but the entire region.
I mean you've branched out allover the entire Western region
(01:27):
now with everything fromhospitality to office, to retail
, to residential communities.
Speaker 1 (01:34):
Yeah, no, thank you.
We're in 27 states, which Idon't think, cameron.
You knew Cameron back in theearly days.
I don't think he ever thoughtthat he would have that national
reach.
So thank you.
You're so kind it's nice forsomeone to actually know who Peg
is versus me, kind of likegiving the background.
So I appreciate that that'sawesome.
Speaker 2 (01:52):
Peg is a force, it's a development force, a community
building influence that isfairly unmatched is fairly
unmatched.
It is rare these days that youfind a truly diversified
approach to communitydevelopment, a company that
actually is equally focused onall product types, the full
(02:16):
range of office, retail,hospitality, entertainment and
residential.
I mean hospitalityentertainment and residential, I
mean PEG is the ultimate livework play development company.
Speaker 1 (02:29):
Awesome.
Well, make sure you get yourcommission check after that,
yeah no, it's true, I've workedwith Cameron since the beginning
.
Speaker 2 (02:35):
We've worked on a lot of projects and it has been a
thrill to see everything thatyou've done to transform
communities and, like you said,now you're in 27 states.
But just looking at the Utahskyline, alone from the southern
end of Utah to the northern end, to downtown Salt Lake, across
(02:56):
from the Delta Center.
You've had a key role in reallychanging the skyline and
elevating community.
And anyways, I don't mean to gooff on a tangent but it's been
fun to be a part of that and towatch.
Speaker 1 (03:11):
Well, I appreciate that and thank you so much.
You know you're kind to talkabout PEG and its kind of
outreach For those listenerswe've.
You know our demographics showthat we're not just local, we've
may have a little bit of anational outreach.
So I do want to kind of youknow, paint for our listeners
who you are.
It's for those of you who arelocal and then for those who
(03:36):
aren't, it's impossible to hopin a car and be driving anywhere
in the state without seeingyour name plastered on almost
every building.
I have seen your name over theyears before I joined PEG and
you know almost every commercialreal estate building.
There's your name, along withmaybe one of your partners.
Speaker 2 (03:54):
Only the good ones, only the good ones Okay.
Only the most upscale,significant properties.
Okay.
Speaker 1 (04:01):
And you know you are one of the biggest, if not the
biggest name in commercial realestate.
So I mean kudos to you forhumble beginnings.
I've done a little bit ofstalking, and so I've heard that
you were born and raised inPleasant Grove.
Speaker 2 (04:16):
That's where I live, still to this day.
Speaker 1 (04:17):
fifth generation that's amazing, amazing, and so
a little bit about Brandon.
Brandon is the chairman ofCollier's International Utah and
in 2022, he was named the CCIMUtah Office Broker of the Year,
which actually you've beenrecognized for pretty much the
majority of the past decade, sothat's not a new accolade,
that's something that's beengoing on for years.
Your list of commercial realestate transactions is extensive
(04:42):
, like it covers.
It represents millions andmillions and millions of square
feet.
Speaker 2 (04:47):
Over 20 million square feet of Class A office.
There you go, I've been very,very fortunate and I had to
account for this the other dayfor an interview but I've closed
over 3,500 transactionspersonally.
Yeah, that's crazy.
And even though Class A officehas been a focus, I've had the
(05:09):
privilege of representing someretail industrial hospitality in
RC Willey, which is a BerkshireHathaway company and arguably
one of the most high-profileretailers in Utah, but have
worked on a lot of product typesand, as you mentioned, the name
(05:33):
recognition or at least myidentity being out there.
It's funny.
I tell people, regardless ofwhether the economy is doing
well or not, we know the signcompany is staying busy and
we're making them plenty ofmoney, but it's a constantly
changing landscape.
Speaker 1 (05:52):
It is.
It is, in fact, we're going todive into that a little bit
today.
So you know, as I mentioned,you've been involved in, I guess
, 3,500 plus commercial realestate transactions.
I should note that this verybuilding that we're in today is
one of yours as well, so our petcompany's headquarters is here
(06:13):
in downtown Provo, utah.
Speaker 2 (06:14):
Yeah, Freedom Commons which is the most significant
redevelopment project here inProvo.
It was the first high-rise,class A office project built in
over 12 years in the downtownarea and is part of a mixed-use
dynamic center of gravity thathas walking distance to the
(06:34):
convention center.
I mean you have the new HyattHotel right next door, adjacent,
and we have retail and serviceamenities on site which every
office user is looking for.
And we've been lucky.
We have a couple of prominenttenants here that just recently
moved in from.
Merrill Lynch Bank of America to.
Serenity Health which is one ofthe fastest growing healthcare
(06:58):
companies that focuses on mentalhealth and their headquarters
comprises the entire top floorof this stunning building that
was masterminded by your team atPEG.
Speaker 1 (07:10):
No, it has definitely been a game changer for us and
it's also helped us in ourrecruiting efforts and, as we've
been entertaining nationallarge real estate investment
firms, it's been great.
So we are super fortunate and Iwanted to segue a bit, because
you've involved in so manytransactions and over 20 million
(07:33):
square feet in office.
I mean, office is a buzzwordtoday in commercial real estate.
So according to the recent dataand you may have better data
office occupancy in at least 10of the largest US cities was
under 50% of pre-pandemic rates.
So the new normal seems tohover around 55 to 60% office
occupancy.
Again, this is just the thingsI pulled.
(07:54):
Hybrid work is impacting officeworkers coming into the office
regularly.
You have employers that can'tmake them come in anymore
because of it.
You know we still have a tightlabor market.
Interest rates have risensharply over the last 18 months.
This drop in occupancy, alongwith these higher interest rates
, have had office buildingvaluations go down dramatically.
Speaker 2 (08:16):
It's been challenging , to say the least.
It's been super challenging.
Some markets apocalyptic.
Speaker 1 (08:21):
Yes, some markets apocalyptic, yes, and so what I
wanted to know from your vantagepoint and I know the Mountain
West is always a little bitdifferent than the rest of the
US and the world but tell me howyou see office today and where
you see its future, because Ithink that is a I mean, that is
a question.
Speaker 2 (08:42):
Those are chilling statistics that you just
presented.
Yeah, I mean that is a question.
Those are chilling statisticsthat you just presented and it
really it underscores howchallenging the current
environment is with office.
There has been a secular shiftin office utilization and the
way that we work since thepandemic, and the shift to
(09:03):
hybrid and remote working for alot of businesses has had a
direct impact, as well as justother economic shifts such as
interest rates.
Venture capital, m&a activityis not moving at the same
velocity.
And that has been key to thegrowth in the Intermountain West
(09:25):
.
We refer to our market often asSilicon Slopes because we are a
very tech-centric market thatis driven in large part by these
growth companies in that sector.
Well, it's more difficult thanever to raise money for new
(09:45):
ventures and to fuel that growthand innovation and we're in the
bit of a buffer.
We've seen this play out overdecades where Utah and the
(10:14):
Intermountain West, to a largedegree, has been fortunate to
avoid some of the morepronounced difficulties that you
see in the first-tier markets.
Los Angeles you take downtownLos Angeles, san Francisco,
chicago, new York, houston someof those markets have not only a
(10:38):
more significant base to workfrom, but when it comes to
vacancy and the impacts of thisshift in office trends, it's
more impactful in those markets.
Now we're not immune.
We're dealing along the WasatchFront with double-digit vacancy
(11:04):
, which is the worst on record.
I mean we're also dealing withwhat we call negative absorption
Companies giving back morespace and very little expansion
and growth to absorb thatvacancy.
Our lease rates, thankfully, arestaying fairly constant though,
thankfully, are staying fairlyconstant though, and I'll tell
(11:28):
you that's one of the brightspots and positive indicators
that I think we can look at inUtah and the Intermountain West
as leading the rest of thecountry and preserving values,
even though people have to bemore creative than ever relative
to free rent, enhancedimprovements and other
(11:49):
concessions and have to look atoffice space differently as far
as amenities and amenitizationof these buildings.
You look at PEG's headquartershere at Freedom Commons.
This building, this complex, isunique in that you have on-site
restaurants.
You have an on-site fitnessfacility that is free.
(12:10):
People can throw away their gymmemberships if they office here
at Freedom Commons.
You have shower, lockerfacilities, fitness and services
here on site, as well asstructured parking, which comes
in handy when you have100-degree weather like we are
experiencing.
Or sub-zero weather, or zero inthe midst of the winter, and we
(12:33):
deal with really extreme climateconditions here, between the
summer and the middle of thewinter, and I think this
location is a good example ofwhat companies are gravitating
toward.
More than ever before, there isa flight to quality and there's
(12:53):
a flight to fully amenitizedspace that enhances employee
recruitment and retention In amarket with still record low
unemployment in many marketsacross the country, and Utah has
continued to show robustemployment.
The ability to leverage yourspace, your workspace,
(13:15):
environment, in order to createa better quality of life
experience is a keydifferentiator for recruitment
and retention, and thoseprojects that prioritize that
are going to prevail and leadout of this office downturn.
It's not a matter of if it'swhen Every cycle comes to an end
(13:38):
, but we're in a particularlychallenging cycle.
But I'm really optimistic,especially as I look to the next
three to five years.
As the market ultimatelycorrects, we are going to see, I
think, a renewed focus on theimportance of our workspaces and
collaboration.
(13:59):
The United States is still aknowledge worker economy to a
large degree.
I wish we were more diverse, Iwish we wouldn't have offshored
a lot of our manufacturing, butit is what it is.
And we're still a leader on theglobal stage as far as
(14:21):
innovating and developingintellectual property, and it
flows through every sector ofthe economy, and our workspace
is more important than ever inrallying people and bringing
people together and inspiringthem.
I think having inspirationaland aspirational workspace is a
(14:46):
key ingredient to success.
It's not just about creatingculture, the right culture or
accountability.
It's about inspiring people todo their best to present their
best work product and to beproud of either the company, the
venture they're with or whatthey're producing and I think
(15:11):
it's a key part of that anddeveloping the workspaces and
the hospitality and amenityspaces that complement that.
I mean you look at Peg Peg is aleader.
I mean you have so manydifferent advantages when it
comes to delivering true mixeduse and quality of life benefits
(15:31):
for employers and for thosewhether they're traveling or
looking to elevate their way oflife in the community.
Speaker 1 (15:41):
Yeah, you know you bring up a really good point
because, again, as we've beenexpanding, we have been also
expanding our titles of you know, employees that we're bringing
on.
They're more investment-focusedor they have, for example,
acquisitions is something thatwe didn't do as much.
We started morphing into thatduring the pandemic because of
the distressed hotels situationand you know there's a lot of
(16:04):
conversions going on which I dowant to go back to that a little
bit.
But to your point, you knowgone are the days of sort of a
you know being okay with youknow a, class B, class C type
you know office and then I thinkalso my understanding to ESG
requirements also push everyoneinto the better buildings.
But, it's hard to be competitiveif you can't offer a nice space
(16:28):
that they can be creative inand innovative and sharp and
whatnot.
Speaker 2 (16:33):
It's all about recruitment and retention and
that goes straight to thequality of the environment
(17:09):
no-transcript and being equal tothe task of delivering
solutions and product thatspeaks to those priorities is
going to be it's going to be keyto either success or failure.
Yeah.
Those who evolve, who iterateand push the envelope, are going
(17:33):
to prevail long-term anddeliver real value to their
investors, to their teams theiremployees and also to the
communities that they serve, butit's not for the faint of heart
.
I will say real estatedevelopment and investing.
Speaker 1 (17:50):
No, it's not.
It's a long game too, and Ithink this generation, or just
the current populace, hasn'tbeen through enough cycles to
understand that it is a longgame.
So this is a blip in time, butit's not the definitive, nor
will it be, because we will beoutlived by the stories that are
coming.
(18:11):
Okay, so let's talk a little bitabout.
You know, you said flight toquality Even early on.
You were kind of joking but youwere like you know only the
best buildings.
But I think that's really keybecause Class A highly
amenitized, and then, as Imentioned, I know and I only
know this because we've beenhaving some ESG conversations
and I know that's a priority andso there is a clear bifurcation
(18:34):
in this sort of like eventualreturn to office story.
Right, because now you've gotclass C, class D buildings that
are suffering.
I mean, they're completelybeing impacted.
Speaker 2 (18:42):
No one wants to be in those buildings.
You can't recruit or retaintalent in that kind of
environment.
Speaker 1 (18:48):
And you've got cities that have huge, older office
towers right.
Speaker 2 (18:52):
Yeah, they're functionally obsolete.
Speaker 1 (18:54):
Right.
And so where do you see thisplaying out in terms of locally
and also nationwide?
Because again we've got largeoffice buildings all across the
nations.
They're vacant, well largelyvacant.
Keys are being turned back in,banks are not.
You know they're going.
Speaker 2 (19:16):
I mean, the owners are just like we're done.
Speaker 4 (19:17):
We're not going to refi, they're just giving the
keys back.
Speaker 2 (19:18):
We are seeing a wave of defaults and challenges and
this we're not through it.
I mean we're in the middle ofit.
Right now we're in the eye ofthe storm.
But if you look at thosemarkets, you look at the first
tier markets that have thehighest vacancies, and if you
focus on those properties thatare the iconic, highest quality,
(19:41):
best amenitized properties,you'd be surprised to find that
they all have single digitvacancy or no vacancy in some
cases, class A developments areoutperforming across the board
and it's not only becausethere's a flight to quality.
(20:04):
But you look at thisreprioritization If you're
running a business, if you're anentrepreneur, your greatest
cost, your greatest expenses,your people, absolutely of the
equation is secondary torecruitment and retention and
(20:26):
being able to inspire and to beable to scale if you're a
growing company and again dialin the right type of environment
for success, Right, and so eventhose markets that are most
impacted, that are apocalypticright now, that have see-through
buildings and more challengesthan ever, you see a flight to
(20:49):
quality, propping up some of themost iconic properties that
will actually not only weatherthe storm but over the course of
the next three to five years,as markets stabilize are going
to see, I think, some of thegreatest increases in value.
I look at the building thatwe're sitting in here, and even
(21:10):
though we're in the middle of achallenging time we're
navigating a market with verylittle activity and growth.
Three to five years from nowthis is going to be in the
rearview mirror and I'll tellyou the cost of developing this
building today versus two years.
Three years ago is arguably, ifnot double, it's significantly
(21:37):
higher.
Who can tread water and learnto thrive and get creative
through this period of time aregoing to see the greatest return
on investments in the next fiveplus years.
You have to play, as you saidearlier, the long game.
(21:59):
This is not commercial realestate.
I know.
It is not for the faint ofheart.
It is not for the faint ofheart and it is not a short-term
gratification play.
It is really the type ofbusiness that involves a patient
, methodical approach.
Speaker 1 (22:18):
Yeah, no, I appreciate that and you know we
are seeing that as we, you know,we've been historically
development focused.
Yeah.
And we certainly will be, butwith costs as they are and
interest rate there as they are,and you know everyone's looking
for untrended deal on costs atlike 7% plus, and I mean it's
(22:38):
just tough.
It's just tough at where rentsare too Right.
You can't underwrite and therents just aren't trending like
they were.
They had a Right you can'tunderwrite and the rents just
aren't trending like they were.
They had a huge rise during thepandemic and now they've kind
of leveled off.
So you know we were alreadysegwaying into acquisitions,
we're starting to do moreacquisitions and I want to talk
to you about that because nowthe story is blood right.
(23:02):
True, distressed assetsInvestors are circling the tank.
They want blood, they want theykeep hearing about refi not
occurring.
People, like you know, this isall across all asset classes,
right, hospitality, multifamily,obviously, office.
I mean, that's a given, butjust curious, as you know.
(23:24):
So where do you see the blood?
And tell me a little bit aboutthe Mountain West versus the
rest of the country, because Ikeep hearing that we're immune
by any stretch.
But the level of likedelinquencies or bankruptcy or
not bankruptcy, sorry yeah.
Speaker 2 (23:39):
I mean defaults.
Speaker 1 (23:41):
Defaults is far less in our region than and I could
be wrong, but they're justsaying it's like you can't find
blood in the same way, maybe atrickle, I don't know.
Speaker 2 (23:52):
No, the level of distress currently is
significantly less than you seein other markets across the
country, no different than whatwe saw and observed during the
financial crisis.
Speaker 1 (24:05):
Right, the last cycles.
I was here during that and itwasn't that it didn't happen,
but I had friends, obviously,like in Arizona and Florida, and
you would have thought that theworld had ended.
Speaker 2 (24:15):
But I was like oh, boop, boop and assets traded at
a fraction of their cost andvalue, really because there was
great distress at the time.
Yeah, I think it's probablyUtah.
Moving forward is bestcharacterized as a market for
(24:35):
opportunity, and even youropportunistic distressed buyers
are able to identify opportunity, to create equity, to create
more positive outcomes.
Through some of the currentchallenges.
(24:56):
We do not see, as you'dmentioned earlier, the same
percentage of bank-ownedproperties or distressed assets
that are in default.
That is attributed to theconservative nature of this
market, and it's not just Utah.
You see it in Idaho, you see itin many parts of Colorado,
where there's a conservativemulti-generational ownership and
(25:18):
development approach that hasstood the test of time and
served many of these companieswell, some of the partners that.
PEG has have theirmulti-generational development
companies that strategicallyhave been able to position to
(25:42):
not only weather the storms butcome out of the storms stronger
than ever and more resilient.
But it takes a more, I think, amore measured approach.
You can't be over leveraged ina market like today, and that's
what you see here in theIntermountain region is probably
less leverage than you seetraditionally utilized in first,
(26:04):
first-tier markets and thelevel of risk we don't
participate in the upside whenmarkets are hot.
The bad news for Utah is wehave never seen the increase,
the exponential increase invalues that some markets in
California, new York, texas andother major markets end up
(26:30):
benefiting from.
The flip side is, in a marketlike today, that presents some
challenges.
You are more buffered.
You don't see the level ofdistress, you do not experience
the mass corrections.
That isn't to say that thereisn't challenge.
(26:51):
No, it's yeah we're not immune.
No and it takes a creativeapproach and that involves
working with lenders that arewilling to extend, that are
willing to work with the clientin a partnership capacity.
I mean looking at that from arelationship standpoint when
you're in the middle of adistress situation where the
(27:14):
asset isn't performing, whereyou've hit a pothole in the road
to a degree or a speed bump buta very significant speed bump
the way that everyone around thetable reacts, from lenders to
underwriters, your investors,those who have a place on the
capital stack, and their abilityto personally guarantee and
(27:38):
provide assurances all of thathas to be taken into
consideration and is essentialto success.
But I do think second tiermarkets and tertiary markets
have a tendency to weather thesestorms much better and come
roaring out of them with, Ithink, greater stability than
(28:00):
you see in some of thefirst-tier markets.
But, as I mentioned earlier,the flip side is in the
first-tier markets, with greatrisk comes great reward, and
some of the returns that arebanked in those markets are
astounding.
Speaker 1 (28:18):
Yeah, yeah, no, I was .
We were just in New York.
Have you been lately?
Oh yeah.
Speaker 2 (28:23):
Okay, yeah, go to New York at least a couple of times
a year.
I used to have an office in.
Speaker 1 (28:27):
Manhattan York at least a couple of times a year.
Speaker 2 (28:28):
I used to have an office in Manhattan.
I used to have the gosh it wasthe 20th floor of building 1407
Broadway.
Speaker 1 (28:40):
when I owned Coldwell Banker Commercial Advisors, I
had 30 offices in 11 states,from coast to coast and.
Speaker 2 (28:43):
New York was a very significant dot on the map as
you can, imagine.
Having an office in Manhattanwas a significant part of
growing a national platform, andso I was fortunate to become
familiar with that market, and Ilived.
To tell the tale, it was notpretty.
(29:05):
I lost a lot of blood in thatmarket.
Again, you talk about riskreward.
The first two markets are notfor the faint of heart.
But what was your experience inNew York?
Did you see?
What did you observe?
Speaker 1 (29:19):
So you know, I've been in LA a little bit and I've
been in San Francisco a littlebit and I've been in New York,
and there are three verydifferent markets.
Speaker 2 (29:27):
They feel different, don't they?
Speaker 1 (29:29):
So different and I know so.
In New York we were in the JPMorgan buildings, we had some
meetings there and they'rebuilding a beautiful new
building and I mean it isspectacular and the buzz and
energy at JP Morgan and whatJamie and Diamond, I mean it is
phenomenal.
And then you've got that newone, vanderbilt building.
(29:50):
That one I think it's full, Imean so the activity and the
buzz is insane.
Speaker 2 (29:55):
Well, the Class.
A iconic locations, as I wasmentioning earlier, are
prevailing because people aregravitating toward quality and
experience.
Speaker 1 (30:05):
They're willing to pay for it.
And it costs, I mean the rates,oh yeah, and I can only imagine
what's going on with both laborand just everything, the time
that they've been building, youknow, and it's been going on
forever, obviously years andyears and years, but it is so.
I I only mention that because,um, you know, as we're talking,
(30:26):
the flip side, uh, so financial,uh, real estate and financial
firms, they go to the officeright, cameron and myself, uh,
logan kinghorn is another um onthe capital markets.
We were here every day duringthe pandemic.
We never stayed at home.
I mean, I got covid once, so Istayed at home, but, um, and
obviously there are people withchildren, they had to and things
like that.
(30:46):
But you know, we just we camein every day, but tech doesn't
go in the same rate, right?
So you look at San Francisco,very tech heavy, sure, not the
same.
Speaker 2 (30:56):
Well, a lot of their job functions can be handled.
Speaker 1 (31:00):
Right.
Speaker 2 (31:00):
Thanks to technology, thanks to connectivity the
ability and you look at theprevalence of Zoom calls,
microsoft team calls.
Well, now it's a part of ourday-to-day existence.
I mean this morning before 10o'clock.
I had like three different.
Zoom or Microsoft team calls.
Well, that's great on one hand,yeah.
(31:21):
On the other hand, I don't knowthat you can necessarily build
meaningful relationships orresolve concerns on a Brady
Bunch screen.
That's two-dimensional.
Speaker 1 (31:31):
No, not the same and that's so.
Speaker 2 (31:32):
I actually think it's an extremely powerful tool and
provides a level of flexibilityand, I think, allows us to be
more dynamic in our lives, inour workspace.
But the flip side is it doesn'treplace the I think the
(31:56):
essential role that a workplacefills in, helping people come
together and develop theinterpersonal relationships and
the trust and the energetic, Ithink, relationships that drive
business and innovation, eventhose technology companies that
(32:19):
have gone largely remote orhybrid.
Speaker 1 (32:22):
Well, they're making them come back, right.
Speaker 2 (32:25):
And there's a tug of war between the C-suite and the
employee base in a lot of cases.
But I think there is a balancethat can be struck.
And.
I think being more sensitivecan really be beneficial.
It can differentiate you as acompany providing some degree of
(32:47):
flexibility, sure, candifferentiate you as a company
providing some degree offlexibility, sure, but I
probably.
I know I'm going to get shotfor saying this because I'm
going to mention someone who'svery polarizing, but Elon Musk.
I actually agree with hisapproach.
He sent out a mandate to hisemployees that, coming out of
the pandemic that everyone needsto be in the office 40 hours a
(33:09):
week you know, coming out of thepandemic that everyone needs to
be in the office 40 hours aweek, I don't know, and he's I'm
paraphrasing, but he said Idon't care which 40 hours, but
you need to be putting in atleast 40 hours in the workplace,
unless you have some specialcircumstance or your job
function allows you to be justas effective working remotely.
(33:31):
I find with myself and I'm adriven, ruthless son of a bitch
I mean I go a million miles aday.
Speaker 1 (33:37):
Like.
Speaker 2 (33:38):
I do not take my foot off the gas and I have to be
honest with you.
I mean as driven and focused asI am, and ruthless, If I'm at
home trying to navigate in themorning, like this morning,
multiple Zoom calls early andtrying to get projects out, and
(34:00):
the doorbell's ringing, thedog's barking, you've got the
Amazon.
I swear, I think my ex, I thinkmy whole, you would not believe
my, my whole external kind offamily dynamic everyone's
getting packages delivered,whether it be, um, you know,
you've got DoorDash bringingsomething for someone and then,
(34:22):
you've got all of these otherexternal forces that are coming
into play and I have to behonest, I'm not very effective
when I'm running togo grab the door and I'm trying
to dodge through this and mywife is saying, hey, could you
run this to the dry cleaner forme or whatever, because I'm
(34:43):
accessible?
Yeah, it's just not productiveand I think we have to be honest
with ourselves.
I mean, I think there's a lotof dishonesty.
I think there's a lot of how doI say this?
Delicately and politically, ina politically correct way, but I
think that there, claire iskind.
I don't think that people havebeen honest or realistic in a
(35:25):
lot of cases relative to thechallenges and whether I heard
all day, every day for a periodof time, the term supply chain
within the context of oh sorry,we can't get you your package,
sorry, we can't, you can't buy anew fridge.
Speaker 1 (35:41):
Sorry, you can't get this.
It's stuck on a boat somewhereor something, or what.
Speaker 2 (35:46):
Yeah, or it's just taking twice as long to get
anything, to even get basic workproduct done, and people called
it supply chain.
Speaker 1 (35:54):
Oh, I see You're saying you don't think it's bull
.
Speaker 2 (35:56):
Okay, and I'm sorry about the language.
I know this is Utah County, butif we're being really honest,
if we're being candid.
It's not true.
I mean supply chain.
In many cases was code, forpeople aren't working as
productively.
We're not seeing the same levelof production or productivity.
(36:19):
And people weren't honest aboutthe fact that it was because
people were giving a free pass.
People are getting paid a fullwage for part-time work and I
don't think that that's smart.
I think there is a reckoning.
Ultimately and we're seeing italready take place in certain
(36:42):
sectors I do think that abalance, a creative balance, can
be struck.
A balance, a creative balance,can be struck.
Speaker 1 (36:52):
And.
Speaker 2 (36:53):
I think the one thing the pandemic did, what it
taught me, was that the absoluteneed to be sensitive and
provide more flexibleenvironment where people don't
feel pressured to come in, ifthey have an illness in their
family, if they're a caregiver.
They're trying to balance allsorts of priorities, yet they
still can contribute and stillproduce and still be an
(37:15):
incredible member of the team,Having the platform, being able
to leverage technology toprovide that continuity and that
ability to contribute but stillcreate experiences where people
have a place to land, where youhave collaboration and you come
(37:35):
together and you have yourculture and you have
accountability.
I think is important and I thinkit's going to take us years to
figure that out.
People will be, sociologistswill be writing textbooks on
this for decades to come.
So it's a challenging topic.
(37:57):
There are no easy answers.
It isn't black and white.
There are lots of shades ofgray and there are legitimate
circumstances that call forflexibility.
Legitimate circumstances thatcall for flexibility.
I mean you look at call centers.
There are no call centers.
There was a period of time inthe 80s, 90s where call centers
(38:25):
you know, inbound, outbound thatwas driving the office market.
I mean, some of the largestoffice requirements, the largest
occupiers of office parks werecall centers.
Well, most of those functionsbecause of technology.
Speaker 1 (38:33):
You can just do it from home, yeah.
Speaker 2 (38:35):
And people are able to actually fulfill those job
functions in a lot of cases veryefficiently.
Speaker 1 (38:41):
Yeah, and we also don't necessarily have as many
call folks as you no Meaning, Ican't tell you how many times
it's like I can't even callsomeone, right, I have to like
text them, or I have to send aninquiry via email or, like you
know me, like meaning humans orwe've, we've lost that they well
, yeah, customer service iscustomer service better now than
(39:02):
it was 10 years ago absolutelynot so helpful.
Speaker 2 (39:05):
I can't get a hold of a soul, yeah because a lot of
these functions customer service, the personal touch is and I
think we've got to get back tothat.
Speaker 1 (39:18):
Well you know what?
I think it's in the US that itis particularly gone, because I
was just.
I traveled last year and I wentto Japan and they still care
about you, they still care aboutme and they're still there.
Speaker 2 (39:31):
And.
Speaker 1 (39:31):
I don't know anything about kind of how their call
centers work, but this is so notwhat I thought I was talking
about.
Speaker 2 (39:38):
Sorry, we're going off on tangents.
But the point being is thatoffice yeah office is important,
so we kind of run this topicaground.
I mean again, I'll becriticized by some for some of
the more candid comments I'vemade, but I do acknowledge that
there is a place.
I do acknowledge that in orderto succeed in today's economy
(40:01):
and environment, you have to bequick, nimble and flexible.
Flexible.
Flexibility and being sensitiveto people's personal situations
I think it can make you.
It's a make or break.
It will either make yourculture and your company more
successful than the competitoror it could cripple you if
(40:23):
you're not executing with theright type of balance.
Speaker 1 (40:27):
So ask me anything, as we're on kind of the home
stretch here.
So let's then, let's back up alittle bit.
Speaker 2 (40:32):
Hopefully we still have some listeners with us.
I haven't bored to death withart.
Speaker 1 (40:37):
No, no, no, I think we're good.
Let's shift a little bit, then,to technology.
I'm just curious from where yousit and you have a really
unique point of view because ofthe new companies that come in
seeking whatever it is thatthey're looking for.
What are your thoughts ontechnology and its impact on
commercial real estate?
Speaker 2 (40:57):
Boy.
I think it's allowing us totransact more efficiently, more
effectively than ever beforeSocial media, believe it or not
than ever before Social media,believe it or not.
Linkedin, instagram, x,formerly Twitter, have proven,
(41:22):
at least within my businesspractice over the course of the
last year as effective resourcesto identify and procure deal
flow.
Clients.
People are looking at gettingtheir information through these
platforms more than ever beforein business.
It's gone from being a gimmickor again social media just a
(41:43):
part of your social life to knowit's now a key part of your
business strategy, I mean youcan't be in business without
having a social media or digitalmarketing strategy.
In my view, it used to be backin the 90s.
I remember in the late 90s ascompanies were establishing
(42:03):
their presence online and theinternet was on the rise and the
internet was on the rise.
The companies, that were reallythe best positioned to take
advantage of e-commerce andbuild the infrastructure and
presence are now the biggestcompanies on the planet.
I mean Amazon good example, Imean.
(42:25):
Ancestry.
Even you look at Ancestrycomhere in our own backyard with
its headquarters.
One of the great, great onlineweb platforms.
Speaker 1 (42:36):
So fascinating too, right, just what it's able to do
.
Speaker 2 (42:39):
So I think that today , in the same way that in the
late 90s and early 2000s, if youwanted to succeed in business,
you really had to establish ane-commerce and an Internet
strategy, an online presence, anidentity, Today you've got to
have a LinkedIn profile.
(42:59):
I mean it's your resume, it isyour calling card.
People don't carry businesscards.
Speaker 1 (43:05):
No, they really don't .
Speaker 2 (43:07):
If you want to know what someone's work history is
or how to get ahold of someone,you're pulling up their social
media.
You're pulling up their theirresume, if you will, if you will
, on on LinkedIn, or you'relooking at their feed, yeah, and
, and people are getting theirinformation through these, these
mediums.
It's interesting to see.
Uh, I look at People werelaughing about Elon Musk paying
(43:33):
$44 billion, as I recall, forTwitter and saying what an
insane.
Speaker 1 (43:40):
He did try to back out.
For the record it's all part ofthe negotiation.
Speaker 2 (43:44):
Sure Posturing.
But yeah, I think it willultimately be seen as one of the
most brilliant moves in socialmedia and in business.
Yeah, because now I mean that'swhere people are getting their
news.
Yeah.
Speaker 1 (44:02):
No.
Speaker 2 (44:04):
It's an unfiltered, fully democratized platform
platform, and I think, in aworld right now where you have
so many voices and there's somuch noise, being able to
separate the signal from thenoise is going to be a key
(44:26):
advantage in the future, a keydifferentiator for technology
companies, and I thinkcommercial real estate to answer
your question is going tobenefit from technology more
than ever before.
One thing about commercial realestate, though, is it is not
(45:07):
commoditized easily.
The amount of creativity andthe complexity of the
transactions and the negotiationof transactions, regardless of
product type whether it beretail, office, industrial,
hospitality, you name it In anygiven week, I'm looking at 100
different types of contractswith different provisions.
Speaker 1 (45:18):
Sure, constant negotiation, and there is no
one-size-fits-all.
Speaker 2 (45:22):
There is not a standardized form that the
entire industry utilizes.
A good share of my time isspent with legal counsel for the
companies that I represent, thedevelopers.
So as much as technology, Ithink, empowers us and gives us
the ability to reach our targetaudience and to disseminate
(45:44):
information and to transact withless friction.
With less friction, it's notgoing to replace the
person-to-person the need to beable to engage one-on-one or
within groups to be able toreach consensus and to finalize
deal.
(46:04):
So it's the good news is,commercial real estate is here
to stay.
Speaker 1 (46:08):
Oh, yeah, absolutely.
You know what I love about itis you can touch it.
You can Touch it, feel it.
It's here to stay.
Oh yeah, absolutely.
You know what I love about itis you can touch it.
Speaker 2 (46:14):
You can Touch it feel it.
Speaker 1 (46:14):
It's beautiful, it's something you can be proud of.
You can see every day.
Speaker 2 (46:18):
Yeah, yeah I love it and they're not making any more
land.
You look at the Wasatch.
Front and one thing that setsUtah, apart from the rest of the
country, or at least most othermarkets, since we have a
relative scarcity being created.
We have a very linear, verynarrow development corridor with
the majority of the population,where you have the mountains on
(46:40):
one side, on the east, and youhave on the west.
You have mountains as well andyou have lakes and you have
really a transportation corridorwith very few development
opportunities left.
It wasn't so long ago that wehad a lot of green space.
There were a lot of open fields.
There's a lot of agriculturalproperty dotting our landscape
(47:03):
up and down the I-15 corridor,along our freeways that no
longer exists.
Speaker 1 (47:08):
I remember when the prison was like in Timbuktu.
Speaker 2 (47:11):
Yeah Well, it was in the middle of nowhere.
Speaker 1 (47:14):
And now it is gone and it's the center of gravity.
I know the point.
The most strategic infillproject in the United States is
arguably here in Utah in Draper,utah, right there in the middle
of the two counties.
Speaker 2 (47:27):
It is the 700-acre master plan site that used to
house the prison, which has beenrelocated west of the airport
and you have an opportunity tocreate an entirely new community
and center of gravity for notjust Utah but for the
Intermountain West.
It's an exciting time.
Speaker 1 (47:48):
Oh exciting.
Speaker 2 (47:49):
We really are witnessing a renaissance, even
though we have challenges withfinancing, with fundraising, in
a lot of cases we haveincredible opportunity and we
have a young population that hasaccess to universities, to
(48:12):
institutions here within closeproximity.
You have public-privatepartnerships.
Speaker 1 (48:17):
Your alma mater being the largest one, by the way,
utah.
Speaker 2 (48:20):
Valley University.
I got to put a plug in Largestinstitution in the state 44,000
students is going to go north of60,000 students eventually here
Impressive by the way.
Yeah, it is a dynamic universityand you couple with UVU's
mission.
You look at BYU that has moreof a global mission with 33,000
(48:43):
some odd students.
You have the University of Utah, utah State.
The amount of technologytransfer that comes out of these
institutions, of technologytransfer that comes out of these
institutions, and I mean it wasfunny over the last decade we
heard several times that therewas a disproportionate number of
contestants on Shark Tank youngentrepreneurs that were coming
(49:04):
out of UVU or Utah County.
Speaker 1 (49:06):
I did not know that True story.
Speaker 2 (49:08):
Nice.
In fact, it was stated that theproducers were wondering what
is in the water here in Utah?
What is going?
On, because they were gettingsuch a flood of applicants and
good ones that were coming outof.
Silicon Slopes out of UVU andthe.
Wasatch Front.
So exciting times.
(49:28):
Love this community, Love theopportunity to see a tangible
manifestation of my labors onthe landscape.
Yeah, A lot of people ask me.
You're probably aware I startedmy career as a teenager.
Speaker 1 (49:42):
I was 18.
I heard that.
Speaker 2 (49:44):
One week out of high school, jumped into commercial
real estate, and people oftenask well, what would drive a
teenager to jump into commercialbrokerage with a focus on
office parks and corporate users?
And I'll tell you it's quitesimple.
It was the only career paththat would not only afford me
the opportunity to work with thecaptains of industry, the
(50:05):
entrepreneurs, the people whoare literally changing and
running our world, but it isalso one of the few career paths
where you can see a tangiblemanifestation of your labors, to
be able to see dotting theskylines, the communities that I
serve, the results of bringingpeople together to create some
(50:28):
of the most innovative,inspirational, some of the most
innovative inspirational evenaspirational work-live
entertainment spaces that reallyare central to our lives is a
great privilege, and workingwith developers like Peg who
make it happen, I mean, I'm onlyas good as my clients and I'm
(50:50):
also perpetually unemployed.
I'm only as good as my clientsand I'm also perpetually
unemployed.
I'm only as good as my nextdeal.
No one cares about how manydeals are closed last year.
Speaker 1 (50:58):
They want to know what you're doing this year.
What are we?
Speaker 2 (51:00):
doing today, to execute, to produce results, and
being able to constantlysharpen the saw, to innovate, to
figure out new ways of beingable to drive business.
It's critical to success.
Yeah, it's critical, yeah Tosuccess.
Speaker 1 (51:15):
Yeah, no, I appreciate that.
I think this is a perfect wayto end today's episode.
You know, we again it's Peaksand Portfolios, because we're
here in the mountain, you knowthe Mountain West Peaks and we
have portfolios that we'rerunning and growing.
And I appreciate your kindwords, but truly it's with folks
(51:35):
like yourselves that PEG isable to grow our footprint, not
only locally as well asnationally.
Speaker 2 (51:43):
So we so appreciate Our fates are intertwined.
Speaker 1 (51:45):
They are.
They are.
So, anyway, I just want tothank you for joining us.
You know, utah is my newadopted home.
I'm originally I don't know ifyou know this from Seattle
Washington born and raised, butthis has become my new home and
I've loved it.
Speaker 2 (51:59):
Welcome to Utah.
We're lucky to have you.
Speaker 1 (52:01):
Oh well, Hopefully you can put the word out and
help.
No, you know the podcast hasbeen great.
So again, there's a lot ofinterest in our region for all
the things that you've mentionedtoday.
Speaker 2 (52:11):
Quality of life chief among them.
I mean where in the country canyou fly into a new?
(52:33):
International airport and,within minutes, be at the
footsteps, right at the foot ofresort destinations that are
world-class.
We have the largest ski resortdestination in North America,
within what?
Speaker 1 (52:38):
35, 40 minutes of the Salt Lake International Airport
and home of the 2034 WinterOlympics.
Isn't that exciting?
Isn't that amazing?
Speaker 2 (52:45):
History is being made once again and we all have the
great privilege of watching thisunfold and, hopefully,
participate.
You look at the public-privatepartnerships and the leadership
and, frankly, the quality ofthis community.
I love this place.
I love Utah.
The Wasatch Front is where it'sat.
We are looking forward to someof our best days.
(53:08):
Yeah, I would agree.
In the immediate future if wecan just work together to
navigate some of these peaks andvalleys in our economy.
Speaker 1 (53:17):
So thank you for having me on.
Speaker 2 (53:19):
What a privilege.
Speaker 1 (53:20):
And thank you to all our listeners.
So, from the peaks of theMountain West presented by Pet
Companies, and until next time.
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