Podcast

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Welcome to CEC Explains, your deep dive into fascinating subjects from the worlds of engineering and the environment, brought to you by Civil & Environmental Consultants. And now, from our CEC studios around the nation, this is CEC Explains.

Mary:
Today’s program is called “Kicking the Tires: The Things You Need to Know Before Purchasing and Developing Real Estate.” Hi, my name is Mary Guinee, and I’m Strategic Development Officer with Civil & Environmental Consultants. And my guest today is Tony Rosenberger, President and Chief Operating Officer of Chapman Properties, a real estate development company located in Southwestern Pennsylvania.

Tony is a graduate of Penn State University, and he has over 35 years’ experience in commercial property development and construction in Southwestern Pennsylvania. At Chapman, Tony oversees the development and leasing of over 1 million square feet, primarily of industrial buildings at the same time while maintaining over 90% occupancy and all of the company’s projects.

Tony, welcome.

Tony:
Thanks for having me, Mary. I appreciate it.

All of our histories are always so interesting, but mine comes a little further from, uh, from what everybody else’s is. I grew up in the little town of Ambridge, and my parents were self-employed there, so I had the opportunity to go private school and in my transportation to and from that school for the four years, I drove by a steel mill that was operating called empire Scott. I knew very little about steel — our parents sort of kept us out of that because they didn’t want us to be steel workers. I’m first-generation American. And, uh, their sense was, if you’re in America, you’re going to school, and you’re going to make something of yourself.

So I drive by the steel mill every day and they would pour iron ore am buyer’s company made malleable iron, which is basically steel that was soft. And the way they’d soften it was with chromium and lead, so the environmental issues that happened in this facility, I had very little knowledge of until much later in life. So, move time forward, I go through school, I come back, I started a construction business, uh, in the town of Ambridge and my focus was industrial. So again, moving time forward, I started the business, my wife and I had a 50-acre farm outside of Ambridge, and we started the business there. It grows and I had to get out because I’m on an agricultural piece of property. So, we were not zoned for a business for a contracting business so forced to move forward on a piece of property that I thought might be interesting. And I’m driving by the steel mill every day, going to this property that we’re going to buy and we’re going to move the business there. So one day, for whatever reason, I get the, uh, the bug to say, I’m going to call the “for sale” sign. I made the offer on the property and I had an amount of money that wasn’t sufficient to buy to my name and the net of it was they accepted the offer and gave me a year to close.

So I ended up with 88 acres and 790,000 square foot of old steel mill that has grown over seven years’ worth. And the end of it is it’s got a scrapyard that was there that I did not know that was full of lead increment. So we closed on the property and we move our business there. We renovate the buildings. We begin to feel buildings and life is going to normal. And my first environmental review of this came two years into the building, which would have been 1979. And the environmental reviews at that point were, we didn’t know about the phase ones, phase twos didn’t know anything about it and…

Mary:
That was the dawn of that.

Tony:
It really was the dawn of it. And I’m looking for an environmental engineer. This is again, 1979. And those words weren’t yet strict. So I find a guy that sort of understands what I want to do and the downtown firm. And he was an older gentleman that was probably a better educator than anything else. And he basically came in sort of samples and said, the first thing we’re going to look for is heavy metals. And I thought that was a van. I didn’t know that heavy metals was something. So, uh, the end result of it is I found out the hard way, why environmentals are so important in industrial development.

And in that particular site, uh, we encapsulated the heavy metals with three foot of soil and it was usable ground, as long as it wasn’t residential. Uh, since we’ve sold that property ‘79, ‘89, ‘87, we bought the Arco steel company right next door to it, which didn’t have the environmental issues, which is today another industrial park.

So I, my, my history has always been in heavy industry. I’ve always liked that look of big old honking buildings. And that was just what I enjoy. And I’ve been fortunate to be able to practice it my entire life.

Mary:
And then also learn on the job about things like, you know, evaluating real estate before you buy it. You had to go through some tough situations and then got out of it. Fortunately…

Tony:
Education always costs money.

Mary:
It does cost money and, uh, and that going forward now there’s a lot of tools that you can use to help look at real estate more quickly than you ever did before. And now there’s reasons to do it that you can prevent from buying something that, you know, you don’t want to take on the risk, but we’re going to talk more about that.

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Mary:
So, you know, moving fast forward from ’78, ‘79 to today, 2021, over the last 10, say 10 or 15 years, what have you changed when it comes to looking at real estate and determining what kind of site constraints there are and what kind of, how do you kick the tires as a, as a developer before you buy a piece of property?

Tony:
Well, we currently maintain about 3 million square foot of space. Our Leetsdale facility is still our heaviest industrial. And when we began the process, in a buyer’s company of kicking those tires is when we, this is long before I became a partner in Chapman Properties, I was a standalone contractor. And I was brought in to do a determination of whether this had value or not. And my experience in three previous mills gave me that.

So Joe Mulach of Mulach Steel, my partner, Steve Thomas’ father-in-law had called and said, Hey, T, I got a place for you to go look at in Leetsdale. You know where that is? I said, Joe, I live in Ambridge, I mean, it’s down the street, he said it’s called Bethlehem Steel. It’s like, wow, I played in there, Joe. I rode bicycles through it. No problem. So he said I’m shipping you a key. You go down and take a look at this thing and think what you, what you want to think, but I liked what you did in your park. And I like the fact that you seem to have a sense of what goes on here, but I’d like you and me to talk before we go any further with this piece of property.

The net of the whole thing was Joe bought the property. His son-in-law moved back in California, who was Steve Thomas, and Steve and I partnered up 14 years ago and became, what we are today, which is an industrial developer in Pittsburgh.

So, circling back to your question of how do you do that? I learned a lot through that 20-year period of what not to do and what to do. And the most important part of it was what’s the feasibility of this from a marketing standpoint, from a financial standpoint. And the reality of it is how much effort do you want to put into this property to make it a valuable piece that will return your investment? So that’s sort of the scenario that we look at today, on all buildings not only in heavy industry.

Mary:
So, you almost work backwards, you figure out what use you want to have it for, then work backwards to see if it’s worth taking the risk. Do you, is something like development costs something you factor in early or, and time, because it seems like developers that we work with, like yourselves and others really look at time that we need to be in construction in 18 months. And you work backwards from there. Is that how you set the tone for the project, is based on when you need to finish and work backwards?

Tony:
It typically is driven by the tenants that you have and the amenities that you want.

Coming from the heavy industry side, typically you’ve got a tenant that really doesn’t have a lot of choices anymore in where they’re going to go. If they’re going to be in manufacturing, uh, and it’s heavy manufacturing, you truly need to look at the, the facility from the aspect of how feasible is it for that tenant? Is it 42 foot high? Does it have 35 grains? Can I get rail surface? Do I have access to the river? All of those things all come into it. And then you back into the fact that how does the building look from an environmental, from a feasibility, from an expansion, all of those things, because when most of the older properties were built, they weren’t built to handle 75 foot tractor trailers. They weren’t built to handle 350 pound rail cars.

So even though the infrastructure may be there, it may not have the needed water flow, uh, the, the amount of pressure that you need for a sprinkler system. So I think it is driven by so many things, but I look at it now I have 40 years of doing this, and I say, most of it is gut. You walk in and you get a feel for I like it or I don’t, and I think that a tenant, when they walk in, they say the same thing.

Mary:
So you got to take the perspective of looking at it from your tenant’s perspective. I, and go in and use your gut to determine whether this could work or not. And then, then, but you must rely on data and studies, cause that’s why, that’s why you work with us, right? We’re doing the engineering evaluations, the due diligence for you, the environmental liability review. And then you take those reports that we prepare, and then you factor in our minutes. So you’re using 75% gut and 25% studies from…

Tony:
I think, 75% back isn’t financially feasible, you know, is the environmental something that you can overcome or are you going to have residual long down the road? Is something going to come back to bite you because your gut says, wait a minute, they manufactured widgets here. And all of those widgets have potassium chloride. I wonder if potassium chloride melts away. You know, those are the things that you sort of where that’s where your gut takes you. And then, you know, those sleepless nights over, will it finance, you know, can we fill the rest of the vacancy? All of those things are all parts that follow suit, but I have never looked at a property to date. And we still buy them that, you know, you’re, you’re just in the process of a couple of them now. I have never looked at a property and never looked back and said, my gut was wrong. And I’m not saying that it’s a hundred percent right. But there are properties that I’ve looked at, walked in and said, nope- see ya. It’s a bargain, it’s not a bargain my gut says we know something’s wrong.

Mary:
Right? Something’s wrong. Your spidey senses kick in, right? And I’ve worked with you when your spidey senses kick in, and I enjoy that process because you usually don’t get that kind of exchange with your developer clients. It’s a fun experience working with you on that. Especially the kind of problem solving that we do together, and it’s fun.

Tony:
CEC , you’ve been a part of our world for the last 25 years. And I go back to my CEC drawings all the time that obviously new people, new employees, we’re going to bring new people into the organization. And they too are going to bring people with them. There’s never been a conference room that I sat at with any part of our development team and ever came up with a problem in the fact that I could pick up the phone, call from Steve Donaldson and all the way through our new guys that are coming in through the top of the barrel and not be able to at least get an answer, or I don’t know, but I’ll get back to you and have somebody get back to me. We look at CEC as the most value for the dollar and the dollar is never the lowest. And that’s how we see it.

Mary:
I’m glad you see value in that because that’s what we strive to, to achieve. And we teach our people about that. We have a vested interest in the success of our clients and the projects. And you have a vital role in the play, and you’ve got to do it, or maybe this firm isn’t for you just the way it works for us,

Tony:
The tremendous amount of diversity in your staff. So, when you do have a water problem, wait, no, let me get you a job. Then he knows where we have to go. And that sort of the thing that we played, that’s another gut- you really have to feel like you’re content with the answers that you’re getting. Not only are they good answers, but they’re practical in the realm of what you’re working with. And that’s another important part of it. And this current phase of where we’re going is not so much heavy industry anymore. It’s medium industry, and that’s a different ballgame and it’s been very helpful. Then your input to it has been great because it’s more of the asbestos things. It’s more oils. It’s more things that are a little different than when we were back in heavy metals.

Mary:
Right, we knew dirty was dirty. And these circumstances are, you don’t know one way or the other, it’s kind of gray. And you have to measure risk for those great properties to make sure that they could fit into what you want to do here. I do understand what you’re saying. And then, you know, Jonathan, Jonathan does the weapons work and stream restorations and relocations and permitting. And those are oftentimes could be a sticky wicket and certainly could limit the usability of a particular property. Cut your property use in half. And without looking at those kinds of situations early in the process, you don’t really understand the value of the real estate, let alone how much developable land you’re going to be buying.

Tony:
Well, it is never, it’s never a joy in talking to John. I love him. He’s a great guy.

Mary:
He knows his stuff and he knows it well.

Tony:
The unfortunate part is it always brings with it a fee or cost or time setback. And none of those things do developers like it. And I’m sure none of us like — boy, that Rosenberger he is really a difficult guy.

Mary:
No!

Tony:
I am not is just the reality of what we do. Nobody wants to lay it’s expensive and it gets more expensive.

Mary:
But I think what you were able to characterize, there’s three things he could tell you, what is there a big problem? It is how much it would cost to fix it. And how long it would take. So the fact that he could give you the whole story, I think is a, is an attribute to him in his skill sets and the team that he has working on your projects.

Um, you know, so we talked about the kind of gut reaction to looking at property and making a thumbs up, and then you bring in the experts and you rely on the data to make some, some good choices. Are there any projects that you worked on that you’re willing to share that you came up with something unforeseen or you didn’t think it was going to be as big of a concern as it was? Uh, do you have an example or two?

Tony:
There was, uh, there are two different worlds in development, business concern. And so I think until an even post placement, there’s always concern because you don’t know. The unknown when you’re buying 150 acres of land that has had a multiple things that I’ve bought it and you orange, you’ve done all of the environmental things that are necessary, water flow, test monitoring wells, all of those things. It only adds to the concern that the next thing that we find, maybe something that is going to be very expensive. So in the industrial development world that we, Chapman, live in is not like most real estate development world. When you build a shopping center, unless you’ve torn something done. You’re taking a flat piece of grass that was grown over 50 years ago, and you’re turning it into a shopping center.

So your concern goes away. As soon as they find stable soils, right? That’s good. We move on. Our world completely different from that particularly in heavy industry.

So going back to an example, a long before Chapman properties, the AM buyers, heavy metals was a surprise. And it was, a surprise at a time when money was very difficult to get if you didn’t at that point, an environmental certificate. And you didn’t know, at that time, what the banks were looking for in an environmental certificate. So most of the time it was, did you have an environmental review? Yes. It was a check mark.

Mary:
That’s all you had to do.

Tony:
That was what it was in the first rounds of this stuff. In about 1986, I think Mellon was the one that sold the J&L property in Aliquippa, you know, and had to take it back because what was under it was such a problem. I don’t remember the details and it’s not important at this point, but it was mid-eighties that they started to really focus on what was here before, go back to the Sanborn maps, find out where, how, what, when, why, what could have happened here before. So now you’re playing, uh, the part of the role of, geez, I gotta be curator—

Mary:
Detective.

Tony:
Yeah! I gotta be all those things.

Mary:
That’s the fun part of job, to be honest, for me.

Tony:
It’s a fun part of your job. And you enjoy it. And you make it much easier for clients because of that. When you go into an environmental study, you’re obviously anticipatory of bad things. And again, 40 years of this, I looked at the worst before I looked at the best. In our office, it’s like, Oh, you’re a Rosenberger-ing that. I’ve become a verb. But then the reality of it is like all of us, including Steve, including even Nate, all those guys are on board with you. So now, you know, you’re doing one in Cranberry that you just don’t know. And you’re looking at a phase one that the bank did 15 years ago that — wait a minute,

Mary:
And it was a drive by. And now we have a standard we have to follow. So it’s not like you can just use your gut judgment. You still do. But you got to follow this process, and it’s much more prescriptive.

Tony:
You were in the businesses only, you know, we used to think that the actual cost of a new building was the highest cost and stuff. It’s no, the environmental, it’s all the trip line it’s used in Westport. You’re familiar with that. So it’s a completely different sort of environmental.

Mary:
It is. It’s all it’s, well, the whole list of things to do is hit, be quite fast. And one thing I think we, I think we do a good job of is trying to, you know, as a team, when you said we have a mixed discipline team, it’s true. Jonathan’s weapons on environmental. We got other people with G-Tech survey, uh, cultural resources. And we all look at the project at the same time, in the very beginning and we’d get historic mapping, we get data sets, we get historic information. And we look at that. We do this for every proposal, let alone giving you advice. We’ll look at that together and categorize or rather prioritize which issues seem to be the biggest risk. And then we’ll recommend what to do in a ranking. And that’s what we do for all your projects.

Tony:
I think that’s the central part of where the future is going. And this thing is that you have stripped your purchase all the way down through, and the risk management, when you get to the end of the script is what you were, were all working on. And it doesn’t matter whether it’s a, a building that manufactured lead widgets a hundred years ago. It’s brand new land. There’s every aspect of it because you just know,

Mary:
You don’t know. And so, like an example, we can talk more about this, the cultural resources that you had to come up against. And that’s something that caught you a little bit by surprise. Do you get frustrated with some of the process that goes along with it? Because some of it say, say it’s cultural resources, say it’s a, it’s a, it’s an outside source that is measuring the significance of what they find. Do you get frustrated that you, that process is all subjective to that individual’s opinions? And rather than…

Tony:
Answering, I’ll get to answer that with an ex-employee asked since ex retired employee of CEC, George Haberman is in the engineering business, right? That’s where he did it. Residentially did all these things. And I love him like a brother, cause he’s an interesting guy. A lot of history is through, through it engineer. The first time that he sat in our office, cause he works for us part-time since his retirement. The first time he sat in our office and I’m obviously noisy, uh, I’m not restrictive of a lot of the things that I should be restrictive of…

Mary:
Even harder. Cause there’s no easy sites left, right? The easy ones are off the table. Uh there’s restrictions, restrictions on developing Greenfield or it’s too distant from where your tenant wants to be. You gotta be where the people are.

Tony:
Water flow, all the things, the rivers, which is dealing with that’s chair. So, you know, back out let’s, let’s talk a little bit about going back out into the, uh, the areas where you’re mining worldwide and today to develop a square foot of real estate is cubic yards of dirt. Do that. It doesn’t take too long. If you’re going to go the a hundred thousand square feet to say just for the building that I get to live 100,000 yards of dirt that probably caused the problem in the Erie.

So we live in Pittsburgh in a geography that is fraught with almost impossible design. Why did it take us so long to get a Amazon facility here? And they were trying to shuttle them in from Cleveland. They were trying to bring them in from Erie. They tried everything to avoid building here. It’s because our land costs from the perspective of moving yardage to its ability to hold buildings of that size are difficult. And once they did that and once they realized in, in Seattle the net of it was, it doesn’t matter where we go in Western PA, we’re going to end up in this situation. So it’s not just Pittsburgh or Allegheny County, it’s all aspects that you give to the rock ages and Roddy. And they want you to know that you’re in sand and gravel equations develop,

Mary:
You’re a developer – how do you know that? You know, you do your homework.

Tony:
[laughing] You know where I started out.

Mary:
Yes, I do.

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Mary:
So that made me think of a question. So we’re talking about site constraints that you can’t avoid because that’s the geology or that’s the sleep, the slope, or that’s the natural resource that’s there. What do you think about, say Southwestern Pennsylvania’s climate with municipalities and approvals regulatory agencies and community groups, and those are the things that keep being added on and added on? Do you think that that’s for the better outcome, these things have happened over time or is it making it more difficult or somewhere in between?

Tony:
I mean, I think that it’s necessary that we protect our environment and my kids heard me say that. They’d probably say, thank God that your, uh, but the reality of it is I was a guy that would go in and kind of build a building that was pretty happy with that for a long while. The older I get, the more I realize the replanting of all those trees takes a long time. A lot that’s for sure.

Is it harder? Yes. Is it, is it in a methodology that works? No. And there are so many contradictions within the systems of permitting. And I have been on the NAIOP board of the advocacy committee for a long time. And I’ve truly enjoyed the process of learning a little bit more about how the process works and how can we get permanently to a very simple, layer that doesn’t have to be all agencies. And then when we were going through the energy sector growth 10 years ago, there was a tremendous amount of modification department. So there was really a simpler, streamline or method. Since that energy sector has since gone soft. What they’ve done is to create rules and regulations, you know, is the water going to be Army Corps? Is it going to be conservation district? Is this going to be this? Or is that going to be that? There’s a trade-off.

Can we bank that, can we pay for that? Can we go through quicker? Which that’s another one of my little hot buttons. But the net of it is, it is more expensive today to prep land than it’s ever been in a time that the cost of the land is more expensive than it’s ever been, in an arena that nobody wants heavy industrial zoning, at a time when most young people don’t realize that without that, you can’t get your package today at four o’clock. So we’re in a learning curve again, and it’s generational. I was in learning curve when I was young with the environmentals coming onboard with heavy industry. I think the next generation of kids coming up, we’re going to be in a learning curve that says that, if we want what we want and we are not willing to live with it, you better go out into the Plains because it’s the only place it’s going to happen. If you want to live in the heavily populated east part of this country, there’s going to be a 2 million-square-foot building somewhere within your daily activity, whether you like it or not. And that’s just a part of our function.

Mary:
It is. But at the same time, it could be built responsibly. It could follow, you know, LEED development criteria. It could be most highly efficient so it generates less carbon in the air because of this efficiency. There’s all kinds of ways to satisfy that kind of thing.

Tony:
Just think one thought. And this is a real simple example of it, where the strip mines were in Western Pennsylvania and the airport, which is still on a strip line. We’re fraught with just unearthing of soil and the oozing of sulfur and all the things that were the result of a strip mine. We go in and we take that plant. We plant thousands of trees. We environmentally clean up whatever is there. We isolate ponds so that we have wetlands in between the ponds that can clean that water so that when we’re done, and we have an example in Westpoint, that is probably the best example of natural wetland that I’ve ever seen that takes heavy sulfur water. And when it comes to the third pond, it’s clean water. I look at the earth and say, the earth is an amazing, amazing place. It’s very self-healing. So we’re cleaning up the issues of our forefathers, unfortunately, and it’s expensive to do stuff.

And it requires a lot of junk and barrels to do that. So we completely understand that, but you know, your net gain on this thing is going to be, when you look out the window of that new Amazon facility in Westport, you look out the window at 3,000 trees, you look out the window at something that was a strip mine 80 years ago and was horrid when we bought it. So I’m very proud of the fact that we live within the lines, come up with a finished product that is really admirable to society and people getting their packages in twelve hours.

Mary:
See, that’s a perfect story. We shouldn’t learn more about—

Tony:
It’s just hard to do Mary.

Mary:
It is hard to do.

Tony:
And it’s expensive and people don’t want to hear the expense of being in Pittsburgh.

Mary:
And that’s where it takes a vision, you know, which you clearly have. And the Pittsburgh area is most definitely has benefited from that. And I, as a resident of this community, I’m grateful for you being able to do that. I think that’s a fabulous story and I want to do something with what you just told us.

Tony:
You want to protect the water today. And it’s just amazing to me what natural wetlands do. And again, I was the guy that would pull those off the trees, burn the woodpile and plant corn and be pretty happy with it.

Mary:
And there’s nothing wrong with that either. That makes us stronger and a better parent and a better developer. Sure, sure. It looks like that to us. And especially your contributions to Pittsburgh. So when we were talking earlier, you said that that you didn’t have any regrets and you feel good about the purchases you’ve made. And I want to ask you, you never had buyer’s remorse on any of these projects when asked you again, cause there’s some circumstances we discovered that you go, oh, shucks. I’m not sure I enjoyed that.

Tony:
Exactly what I say, Mary, oh shucks. The nut of it is I think that that the optimism of a real estate developer is second to none. And without that optimism, you will not shoulder your way through this thing. You’ll die. Because there are so many times when you want to say, well, we’re down, we’re dead. We’re at the end of the story we can’t do anymore. And the projects dead. And then the next morning you wake up and said, wait a minute, there’s a phoenix here. And this is what it’s about. And truly, I think that if you live in our world in the real estate world and you are as optimistic as we are and you are going to live forever, like we are — the net of it is, you find a solution. I think everything that we do, it’s just a matter of what part of the shackles on the lock hit. And when they do, you know, it opens and life goes forward. That may not be the win that you think it is. Or that you hoped that it is. But if it’s win, and it’s not a loss, in our business, that really, I say very, very often — real estate business is one of those ones that you can get wealthy, very, very, very, very, very patiently, or you can go broke very quickly. So the patience is the part of it. And the optimism is what keeps me going. Why do I go in every day at 5:30? And look at the world and say, it’s a great day today. And my cup is full. And then at the end of the day I go home—

Mary:
I’m exhausted! I’m drained, my cup is empty! But I love that aspect of the job. I mean, I share some of that same optimism. I can’t say that it’s resiliency, but we all look at every project and our job is to identify problems and do it quickly.

Tony:
We can make it through.

Mary:
But it also, can we fix it? And that’s the fun of working together with your team and our team, because we have fixers amongst our group and everybody has experience, and this is experience-driven consultant.

Tony:
This is not an easy business, and yours isn’t either. Nobody wants to hear what you have to deliver. You’re like the doctor in a cancer hospital. However, you have a couple of options here. And that’s what you have to stay resilient on and you have to look at that from a very optimistic perspective. Do we have a stream in the middle of the way? How can we design around?

Mary:
Creative solutions, yeah.

Tony:
I mean, again, that’s what we have to do. And I think, you know, one of the things I always challenged George Haberman with, again for the years that we were here — George quit thinking like an engineer.

Mary:
You’ve said that to me!

Tony:
I did say that to you! He doesn’t think like— give me the end result that you want. And let me posture my brain in that direction, because that’s how we have to do it. And if you can do that faster than the developer does it, than you have value. And I say that all the time to our younger guys on our team. It just takes your brain to be mindset on I’m not going to let that stop me. I’m not going to let that stop me. And you got a Rosenberger.

Mary:
Rosenberger, the verb. I love that. I’m going to steal it. You know, I think about that too. I did a presentation last year on brownfields, and I said, you know, we know so much about land development projects that we’ve learned how to deal with brownfields along the way. And you start with where you want to be and what you want to do, and you work backwards, everything works backwards. Where do you want, what do you want to achieve? It could be done. And I genuinely believe that. And there’s been few times that it didn’t work. But money fixes everything, which you never want to resort to having that kind of solution. But usually we can figure out a way around it.

Tony:
Federal development, money fixes everything. You know, or state development, they do land development. Look at it and think it’s easy for them, call the government.

Mary:
Call the governor or Penn DOT, just plow through, not follow any of those regulations or rules the rest of the universe has.

Tony:
Turnpike Commission, same thing.

Mary:
Yes. That’s another story for another day, but it’s definitely a source of frustration when it comes to project we work on.

Tony:
Our world today is changing.

Mary:
It is.

Tony:
And again, another part of where our generation looks at things, and we’re a pretty straight line and coming from the engineering side of things, everything is a straight line. And there are no longer is a straight line.

Mary:
There is no straight lines in anything.

Tony:
It’s just changed to the point that you got to accept it all. Try to figure out how it becomes a straight line. Make it straight as you can and plow forward. And hope that the end of it is your budgets are doing what they’re supposed to do and that the market doesn’t fall apart. By the time you get this, to a developable or develop pad and put a building on it. Then we’ve got a downturn in the economy or interest rates declined to 13%. So

Mary:
Has that happened to you maybe 2009 or? You’ve been through that.

Tony:
In 40 years, I’ve been through four of them.

Mary:
Four of them.

Tony:
And I’ve had 18% lines of credit, I’ve had 14% mortgages. I’ve had every aspect of it. And now we’re in the low threes to high twos saying—

Mary:
Have you ever seen it that low?

Tony:
Never. Never. Never. Never. Never. I’ve never been under six in all of my 45 years. And I said, I’ve been as high as 18 on lines of credit, it’s just hard to believe.

Mary:
Hard to believe anybody would do anything in those circumstances.

Tony:
Well again, it was commensurate with the return. Diesel fuel was only 80 cents. You know, you’re at $3 and 90 cents for it to run that machine out there today. That that operator is making 34.90 an hour. I mean, all those things, they’re all, they’re all commensurate with today’s age. And expediency of what you do. You could never do in the time that you do what you do today. In the not too long ago, we would wait two months for an environmental report. We need environmental reports.

Mary:
Right. And that’s, what’s makes our technology is really advanced some of the work that we do and made us better and stronger, faster. It does require experience to give you their opinions, but boy, access to information has changed everything.

Tony:
It’s not simple. It’s not easy. But at least that technology has advanced to the point that we get answers, answers on a project that makes decisions much quicker. Yes, no, we’re not doing.

Mary:
And you ask us for information quicker too. Yes. Where is it tomorrow? In fact, that letter I’m working on, I think I can get you that — Are we making progress on that letter today, Mary? I can see the email coming across my desk. Well, thank you very, very, very much, Tony. I really appreciate you spending time with us and sharing your experience and knowledge with our audience. I know I learned a lot about some of the projects I’m even working on, let alone the future ones that I have to work on with you.

Tony:
I hope it gives somebody some insight into what we do and how we do it. You know, I tell young people who sit and look at this thing. Everybody thinks real estate is easy and it’s quick.

Mary:
It’s not.

Tony:
And it’s great return and all those things. It’s enjoyable, if you enjoy it.

Mary:
And you have the right team, right? That’s a little plug.

Tony:
You rewally need to have good people around you. You really need to have good sounding board. You have to have a very patient wife. And partnerships that understand that this is not going to guarantee you a return. You have potential of a return, that’s it. And that’s where we live.

Mary:
And you have to have the calling, right? You, you have to really enjoy what you’re doing or it’s no fun. And that risk-reward can really stress people out. And sometimes you can’t do it. Sometimes you can. Even on our side for the consulting services, it’s not for everybody, but if you enjoy a challenge, you like to work with the team, you like to solve complex problems. This is a place to be.

Tony:
I think that’s a lot of the real estate — solving of the problems on a day-to-day basis is exactly what we do. I’m a ready-fire-aim guy. And unfortunately, a lot of times there’s a dead soldier out there that shouldn’t have gotten shot because I didn’t think take the time to aim. However, if you’re going to run through a lot of material, you better be on that other responsible side of — not only did I ready-fire-aim, but I’ll shoulder the liability of it as we go forward. I don’t have any profit in back voting every one of these things. But again, you can spend a lot of time sifting through it. You got to get to the gold as quick as you can. And you know, how do you do it? You got to pick the good spots, get good boards, get all the things you need. And then you gotta be able to produce to get income out of it. Long, long road.

Mary:
You’re never going to know it all, you got to go with 80% and that’s where the gut part comes in.

Tony:
A lot of different aspects.

Mary:
You got 75-80 and the rest is gut.

Tony:
It’s been a pleasure working with CEC. And again, we have a multiple of engineering firms that all do a great job for us. And I think as a young person’s profession, biased obviously, I think is one of the most interesting for the future, just because it is going to evolve every day. It’s never going to be the same.

Mary:
Never boring.

Tony:
And interpretation is going to be 80% of the law and your guts the other 20.

Mary:
That’s right.

Tony:
And that’s going to be the rule. Thanks Mary. Thanks for having me.

Mary:
It was fun, Tony, thanks again. I appreciate it.

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