Icons Panel: 2025 Forecast & Lessons for Young Professionals (#124)

[00:00:00] Speaker A: Foreign. [00:00:08] Speaker B: Hi, I'm John Coe and welcome to icons of D.C. area real estate, a one on one interview show highlighting the backgrounds and career trajectory of leading luminaries in the Washington D.C. area Real estate market. The purpose of the show is to highlight their backgrounds and their experiences and some interesting stories about their current business as well as their past, and to cite some things that you might take away both from educational standpoint as well as lessons learned in the industry and some amusing and sometimes interesting background stories. So I'm hoping you will enjoy the show. Before I introduce my guest, I'd like to share that both this podcast and and the community I started in 2021 called the Iconic Journey in CRE, is now part of a new nonprofit organization with that same name. The new company will offer opportunities for sponsorship to grow the community both in membership and in programs. It also allows you as listeners to show your appreciation for this podcast, which has delivered episodes twice monthly since August 2019 with a charitable contribution. Transitioning the community and podcast into the nonprofit organization is underway. The Community, which is open to commercial real estate professionals between the ages of 25 and 40 years old, is currently up to 65 members and growing. If you would like to learn more about either joining the community or contributing to the podcast, please reach out directly to me at Johno Enterprises C O E E N T E R P R a s e s.com separately, my private company Coenterprises now we'll focus only on advisory work for early stage real estate firms and career counseling. If you have interest in learning more about its services, please review my [email protected] thank you for listening. [00:02:24] Speaker C: Hi, this is John Ko and welcome to another episode of Icons of DC Area Real Estate. This is a special episode where I've brought together a panel of five prior icons for a live session at the law firm of Seifarth Shaw in downtown Washington with 30 roughly members of the iconic Journey in Cre in a very intimate private session to talk about the 2025 market coming forward down to in the Washington D.C. area, as well as advice for young people. The five panelists are Bob Murphy of MRP Realty, Lacey Rice of fcp, Toby Buzzuto of Basuto Group, Vicki Davis of Urban Atlantic, and Henry Fonville of the Rapoport Company. My two member speakers who spoke right up front are Kevin Dean of Rockbridge Investments and Colin Thomas of Thomas Development, both of whom have been members of the community for three years plus and have been very active in interacting with other members and growing their businesses and having significant success and the community being a big part of that success. So really the purpose of this was to introduce members to the opportunities that the icons discuss as well as to be able to network and meet each other. And of course, my mission is to grow this community to a reasonable number, probably not too large, but large enough so that people have a wide variety of connections that they can make and learn how to adapt to this very fast moving industry that we're in commercial real estate today. So without further ado, please enjoy this wide ranging panel discussion led off again by Kevin Dean and Colin Thomas. And then each of the panelists talk first about the market projections as well as we go in, then into the advice for leaders. Without further ado, here is the panel. Good morning everybody. [00:04:53] Speaker D: Thank you for joining. [00:04:55] Speaker C: Thank you for joining today. [00:04:57] Speaker D: Welcome on this crisp and chilly morning. It's heartwarming to see you guys here. I really appreciate it. Thank you for braving the cold and joining us today. [00:05:09] Speaker B: So today what we're going to do. [00:05:11] Speaker D: Is we're going to start with two member brief discussions about their experiences with the iconic journey in cra and then after that we'll start our panel discussion after that. So Kevin Dean, you want to step to the mic and then Colin, you can come after that. [00:05:26] Speaker E: That. [00:05:27] Speaker D: Thank you, Kevin. [00:05:31] Speaker F: Morning everybody. How we doing? So for those of you I've not met, my name is Kevin Dean, Rockbridge Investment Group. Been a part of the community, I think, since the very beginning. I may have joined a month or two late, but just wanted to briefly share kind of what the community has done for me and sort of what I've taken away from it. Going back to 2021, I was actually working at Fannie Mae and was just jumping from Fannie Mae to go full time in the business that I had started back in 2018. It was kind of a pivotal time for me where I knew enough to be dangerous but not really enough to be very smart. So getting into this group, I was surrounded by a bunch of peers who were doing projects way bigger than me. You know, like Chad, for example, is always working on these, you know, $100 million deals with mill Creek and other guys where, you know, it's just I'm trying to get these ten $15 million deals done and I'm talking to somebody in the room who's, you know, working on an extremely difficult challenge that I didn't even know really existed. And then on the flip side, you know, we've got individuals such as you on the panel here that have got way more experience than us and you know, the community allowed us to really get on site and actually walk the real estate with people who are in the business every day, who have, you know, made the mistakes, who have learned from them. And I would say the one thing that I've really taken away from being a part of this community is kind of seeing what's possible and kind of getting out of the box of, you know, doing a deal like this is impossible or building a business like this is impossible and just seeing, you know, the icons in the D.C. area. You know, going from, you know, in many cases, very small kind of startup real estate company to, you know, name brand real estate company in the area. So it's just been extremely fulfilling not only to build relationships with people in the room here, but also just to learn from individuals such as you all up here on the panel and just really kind of jump the learning curve many years just from being around you guys. So thank you and John, thanks for having us here today. [00:07:34] Speaker G: First, I want to thank John. He's done a lot of work to put all of this together. He's brought all these great panelists here, a lot of people whose names you know, but now you can actually have an opportunity to meet them. That's one thing that his community provides, I think, is access. But access, not just panelists like this, really, as Kevin mentioned, access to all of your peers. Because John, a lot of you are hand recruited by John, a lot of you are exemplary in some form, which is why you're here. And so you can really reach out to any individual here and really gain a lot of insight. You can solve problems. If you need recommendations on contractors, you need to meet someone in the capital markets. You can get those things done through an exercise with your peers. And I think it's a close knit group. And he does a great job of bringing specific people together who are like minded and it really is. I can give a couple concrete examples. I had one friend who John introduced me to who's a member of this group. He's not here today. His name's Jacob Hamilton. He has a residential development company, but he found an apartment building listed on the single family MRIs and we ended up closing on this apartment building. It was a fantastic deal. But he called me because we were in this group together and we had chatted a bunch and he was interested in doing apartments. So and I made him a partner in the deal and that worked out great. You know, I can call Kevin if I need some fundraising advice. He's been banging the phones for years so I get to hear learn of problems before they arise for me. KEVIN But I really do think it's a great group. Thank you all for being a part of it. It's been helpful for me and always feel free to reach out. And also, big thank you to John for putting it all together. [00:09:23] Speaker H: Thank. [00:09:28] Speaker D: All right, so we're here to now have a little panel to conversation. We're going to have two topics today. We're going to talk about first is kind of a forecast of the 2025 real estate market here in the Washington, D.C. area. I'm going to ask five questions of the panelists here in general to start with. And then the second part of it is going to be advice for young people, for young professionals. And I'm going to ask each panelist to take a topic and kind of lead a conversation there, looking for interaction. [00:09:58] Speaker C: From all of you to respond, any. [00:10:00] Speaker D: Questions you have along the way, etc. [00:10:03] Speaker C: So there it is. So I'm going to sit down and. [00:10:05] Speaker D: Join the panel here. I'll just go ahead and say the first question is a second. [00:10:14] Speaker C: What trends of development do you anticipate will dominate the D.C. area in the real estate market in 2025? [00:10:21] Speaker D: So I'm going to leave that, I'm. [00:10:22] Speaker C: Going to open that up for discussion. [00:10:23] Speaker D: And panelists respond. [00:10:27] Speaker I: Good order, I guess. [00:10:28] Speaker H: I mean for me there's, you know, probably the biggest thing you screaming in your face is distressed office. And I don't mean keeping his office, but what do you do with these buildings you're going to tear down and what happens there? And you know, some cases, version some cases, you know, you renovate it and you keep it as an office. In some cases, you know, straight up tear down. So there's a lot of it out there. And that's probably we have more than, you know, it's a we have a large office market relative to the rest of the supply, you know, if you look at our product type. So I think this market, probably more than a lot of other markets around the country, has to process that. [00:11:03] Speaker A: Yeah, I, I think for us, the headwinds of demographics and employment are big drivers because we invest in apartments and we look across the country for the most prosperous markets over the next five to seven years. And D.C. has had its challenges with regulation in Montgomery County, Prince George's county and the District that have made it more difficult to be an institutional apartment owner. There's a lot of fluster going on about downsizing the federal Government, it's difficult to determine at this point if that's going to be good or bad for jobs and economics here. [00:11:44] Speaker D: So. [00:11:44] Speaker A: So we're keeping an eye on that. The back office dynamic here has been I think, the worst worst in the US and the US is behind everybody else and going back to office. So that may get a lot better if these guys really do carry a baseball bat and force people to go back to work. And those people don't say with you, I went into retirement. So they'll be interesting to watch that. The city seems to be on the right track, thanks to people like Bob. Law and Order and all those things that are important for commerce seem to be moving the right direction. How quickly and how far they'll go or things that we're watching. That really drives a ton of aversion to institutional investors. I think one thing that's interesting that's happened during our period, our careers is it's a lot easier to move from market to market today than it was 30 years ago because there's so much good information available just like that. So being an insider is not significant a barrier entry in my opinion. And similarly, institutional capital can move very quickly as well. So if the district has a topa tax that nobody else has and really impacts growth, money just goes like that to some other city. And conversely, it can come back very quickly too. So it'd be interesting to see how that works. [00:13:01] Speaker H: Or you can't pay or if people did not pay their rent or self certify their income. [00:13:05] Speaker A: Same thing, bad policy. Yeah, yeah. And the other thing that's interesting in this cycle, I think is people are a lot more, much more inclined to give the keys back to banks and other institutions. In our day, they go through long workouts. Your reputation is everything. You didn't do that. So money, everything moves a lot faster today. And good decision or bad decision can really change that, particularly at the governmental level. So those are some. [00:13:31] Speaker I: Good morning. My, my answer is more multifamily centric. That's what I do. And in the multifamily sector, there have not been a lot of transactions, a lot of trades of building, selling. Because of obvious reasons, if you sell now, you're selling it, at least in theory, at some sort of discount to what may, maybe only what you think you should have gotten. Maybe there. This is the new pricing, but the cost of capital is so expensive that it's encumbering the price of the assets. So what I think is going to happen both in a macro US Sense and micro in DC is that you're going to see a lot of dispositions or acquisitions put another way in DC of multifamily and I'm using DC as in the broader msa. But an interesting dynamic is exactly the one Lacey said, which is capital confused flow wherever it wants to go and capital will flow to a place with the least amount of friction both on new developments and on acquisition. So if you we may sell a building or we're contemplating selling a building and in D.C. but well, whoever buys it has to suffer through this protracted OPA process before things settle out. And during that time anything can happen. Just macro variables can come in versus another place where you buy and the next morning you own it. So if you're a capital provider why waste your your time? So that will be interesting to see what cap rates end up being in BC MSA relative to other regions. On a positive note, some of us read an article yesterday that there were some good sales or at least a very good multifamily sale in Clarendon and that that was a nice green shoot of so I think money will go to Northern Virginia versus dc. More more of a micro comment. But anyway interesting year and until the market establishes what the heck cap rates even are, I don't think development starts happen till much further because how do you price risk if you don't know what an exit happens? And right now few trades don't make. [00:15:47] Speaker H: Up operate and bond. [00:15:49] Speaker D: So we'll see. [00:15:50] Speaker J: Yeah good morning. About this issue. I want to start my response similar to some of the others and say I think it starts with demographics. Baby boomers. Right. And probably all your parents are and millennials out there. And I think that people in my age bracket are retiring, some of them typically between 65 and 80 people are retiring so a little bit later than it used to be. So I think we're seeing that I'm the last year of the baby boom, biggest year. And I think that people have been talking about the Silver Tsunami for decades now. But I think it's, it's here. And so we have people who are trapped in enormous homes out in the at very low interest rates or paid off or whatever and trying to figure out what to do next. So I think that's, that's something and that might include migration southward by the way, or to warmer clime. I have kids who are probably a tiny bit younger than you, late 20s, early 30s and and they have more weddings this year amongst their friends than ever before. I think they're clocking in at seven or eight weddings, which they're all the best men. And like, oh, my God. And they're all destination weddings. [00:17:14] Speaker E: Who knew? [00:17:15] Speaker J: So I'd like to see a show of hands and see if that's true for you guys and your cohort. Who's got weddings this year. [00:17:22] Speaker D: Yeah. [00:17:22] Speaker J: Who's got more than three? All Kidubs? I would like to ask you how many of you guys are either married or in relationships? Aha. How many of you guys have babies or babies on the way? I feel a little. What is this? [00:17:45] Speaker H: Sure, that's an answer. [00:17:46] Speaker J: Don't ask. [00:17:47] Speaker E: It's too early. [00:17:49] Speaker I: Way too early Today. [00:17:52] Speaker J: How many of you own your own home? Well, I think there are people who are following you to own your own home. So I think home ownership. How many own your own home in D.C. in the city? How many own outside the city? So I think less people are buying in the city. I think you're going for a larger home in the burbs. And my guess is that that's a trend that will continue. Thanks for playing with me. [00:18:20] Speaker E: Yeah, that's good. [00:18:20] Speaker A: Good. [00:18:22] Speaker E: Got everybody excited. So at Rapaport, we do retail investment, you know, tenant landlord advisory. So we have kind of a unique lens that I do business with. Everybody at the table. On the suburban side, suburban shop are super strong. You know, all the people that have left town not working. Mom. Are increasing the sales. And suburban shops, that being said, there's no supply, no new shops here being built. And occupancies get super high. And rents are going to get. Are getting high. So much so that you're going to price some people off. So suburban shops, there's going to be great. On the urban side, either in a residential building or an office building in Washington D.C. we're seeing consolidation. Some people are getting stronger than the nodes like 7th and 10th or, you know what, wherever there's a lot of traffic. Used to be that we'd put retail in the first floor, every building downtown, it'd be something. And now people, you just can't do that. There's not enough demand. Especially when you don't know if there's going to be, you know, how many days a week you can actually support a loan. So we're going to see those nodes getting stronger. You know, I'd love to see the H Street redevelopment happen, that be a retail corridor. So there's going to be a ton of opportunities for all of us here in the room. The only question is, how long does it take for these buildings to Change uses, go to residential, go to trophy office. Probably saw the BXP buying Metro center yesterday. You know, for the last, I think two, three years people were trying to reuse the existing building to convert that residential and nobody can make a pencil. Now BXP is going to come in and demo it. It's pretty dramatic. That means somebody lost a lot of money. Well, Heinz lost a lot of money then the lender lost a lot of money. Now Heinz has got to build a really expensive building. So in my mind we're going to be very busy, all of us in this room over the next and 20 years remaking D.C. [00:20:27] Speaker D: Yeah, I mean there's supply in the bank. Why wouldn't developers look at the sites? [00:20:36] Speaker E: You know, the construction cost, John, are just so out of whack right now. And the, and then interest rates, you know, nobody's going to invest for quarter half with return and the rates are already so high. So we have a piece of property, you know, right beside All Foods Development in Virginia that we're actively negotiating on. But you know, just a little neighborhood center. We're gonna have to get $60 rent and you know, $60 rents, lease up takes a long time. You know, you're not going to open it 100 lease. So if you have a 50% lease up, you know you're going to drag out your irr is going to go. I hate to see where it's going to go. So the other thing just that you ask that question is we need to update our retail shopping centers in the center. You know, a lot of the centers look the same way they did 40 years ago and there is a ton of improvements in the retail facades and interiors need to happen. One more piece of information is a bunch of centers are selling. As Debbie was saying, where are the prices going? You've got interest rates at five and a half, six percent. Who could afford to buy a Wegmans anchored shopping center $100 million, you know, selling for 6 cap. What we've seen recently, things that we're actively bidding on for our advisory, investment advisory clients. It's just somebody will come in and just take it. You know, they've got 1031 money. It's a REIT. It's a high net worth individual who believes in the future. They've got no cost of capital. They're buying all cash and they just go, okay, we'll take it and we can't compete with that. We don't want to compete. I don't think anybody at the table competitive for that so you almost have two different spectrums going on at the same time. But the center I'm talking about was sold by JLL Stonehenge down in Richmond. It wasn't even Metro dc I'm on a Richmond, so it's amazing what so. [00:22:41] Speaker D: When rents get to 60 bucks a foot, you start to see the dollar. [00:22:46] Speaker E: I, you know John, I don't think given the value of our land and interest rates and those in those rents, the risk is still too high. So in answer your question, I'm not going out. And look, one last piece about retail, sorry dominate here for men. The last 15 years everybody's been talking about big box and Internet and how retail is going to get killed. We haven't built any new big boxes. Those big box rents went from roughly $15 a split triple net down to around 10. And even at the 10, the landlord had to do all the work for like any TJX concept. So the net effect of rent was probably $2. You had to do it because you had to go tenancy and they forced you in the build decision. Well those rents now because of no new boxes finally going some over $20 a foot. So that's a huge move. If there's any place where there's like you know, happiness in the retail industry. [00:23:47] Speaker D: It'S with the big Luke Bob, you. [00:23:50] Speaker E: Just bought. [00:23:55] Speaker D: That investment. [00:23:56] Speaker H: I mean I think Lacy kind of alluded to it. You know, as we all know during COVID things got pretty rough here and there were some bad decisions, a lot of self inflicted wounds, district government, frankly on policy. And so you know, the area, even though it's, you know, there's really no low income housing at all around Gallery Place you have to go above Convention center on the other side of 395, you know. And so the problem is that there's 25,000 workers, 3,000 residents, 3,500 residents. Just you know, kind of no one's going to work, so no one's there. And there's all kinds of metro and there's and it just was pretty vacant. So the, the crime did all petty crime primarily really picked up that area. And now if you're going to a game last year, you know, you know, a concert, you know, people were nervous, you know about walking down semester between each and that corner was pretty rough. But I, I knew just, I mean I've done a lot of deals in this area. I mean I was part of the process post know the last, you know, post mid-90s on about I did like maybe five or six buildings that area and bought land and stuff. So, you know, I know what it costs to build. I know, I know the whole history of land and my takeaway with gallery place. And I did not know they were staying. I thought they were going. In fact, I was trying to help them stay but you know, through some lobbying efforts. But I thought it was a done deal. But I did know that if you gave me 2 acres of land at 6 at 7th and H, you gave me $40 million and you said build 700 parking space and I couldn't do it. So you know, I've kind of bought a parking garage with an 8 yield and then we got lucky. But fundamentally though, I knew my market, I knew my area, I knew what it cost to build. You know, I know that the White House seven bucks that way. Capital seven bucks that way. Mall's four bucks that way. I just knew you weren't gonna go wrong. And we got lucky. Sometimes that happens. I think it was rates. For me, it's always driving. Rates drive everything. The reason no one's building any multifamily right now, there's issues with the District of Maryland, but in Virginia, for example, they're starting to go now because rates have not come in enough and people feel good enough. I think about it that you can maybe start a couple but we're still not where we need to be. Rates need to come in another 50 plus basis points. [00:26:06] Speaker A: Or revenue is going to grow enough to justify the cost gets pretty high. Right now I think that's the underlying theme that I trying to impress one of my folks is construction. We've with the construction costs over the last 40 years, when they make these quantum moves up, they don't come back down. [00:26:28] Speaker E: They sort of, they level and there's. [00:26:31] Speaker A: A decent amount of margin in construction costs. So what you're seeing now, the handful of starts that we're starting to see across the country is contractors are operating effectively a 0% margin so that they can keep their subs employed and keep their people in business because they know in 12 to 24 months it's going to change and they want to be on the front end. So I think across all sectors, retail is another great example. I think offices, agreements, you'll see there's going to be real inflation adjusted. Real that is going to justify an environment that I think is not going to have 2% inflation. It's something above that not going to have interest rates are that much lower than they are today. But we were all around making money when rates were 7, 8, 9, 10%. One point I'd like to make to you, all of you who are much younger than you are is look at all these fears as opportunities, not as reasons not to do it, but reasons to do it. Because everybody else, particularly us old folks, chicken, you've got your little nest egg now. You're 40 or 50 and don't want to blow it. So I'm not going to go start speculating on class a Apartments in D.C. when I don't know where it took us. [00:27:52] Speaker H: That's true that you go from wealth creation. [00:27:55] Speaker A: Yeah. But, but it's for folks like you to say, you know, this Topa thing is unsustainable, they're going to get rid of it. I'm going to make the bet. I can buy these class a properties at 60 basis points, better yield than any other market in the country because as soon as they get rid of Topa the differential is going to collapse and I'm going to be a hero and I'm in 20 years be sitting on a panel idea. [00:28:21] Speaker H: We top it has to change because you know, listen, how I look at it is you want more affordable housing, right? How do you get more affordable housing? You don't get it by having rent control. You don't get it by having topa. You don't get it by having E wrap. You don't get it by like people self certified income. You get by, you know, go to my, if you go to arlington county it's 2%, 2 or 3% vacancy. Right. Or you know, delinquency here we were getting, we were getting 20, 30%. So look, but the point being that you make all those policy decisions and you get less housing, not more housing and you're screwing over your, your community. [00:28:55] Speaker A: No, no, it doesn't work at all. And I think the city's starting to see that. We all remember when in the 70s. [00:29:05] Speaker E: And 80s this neighborhood really grows and. [00:29:10] Speaker A: That seems like a long, long time ago. I mean your career, that's a 20 year period is the period you want to bet on. [00:29:17] Speaker H: Yeah. [00:29:18] Speaker A: And if you would have made a bet on D.C. in 1985. [00:29:22] Speaker H: Yeah. [00:29:23] Speaker A: You would have killed it. Right. [00:29:25] Speaker H: I mean guys like if you look at this area, I mean you know the Verizon center back there, MCI center, delivered in like 19 late 97. But then again we built Market Square on 7th and 8th, right. Or 7th Pennsylvania, you go two blocks north of there, you know, you weren't parking your car there and coming back and finding it, man, it was really rough. I remember when Jamal was doing, you know, across from what's now gallery place, you know, his road sons. It was all burned out back in like 97, 98. Driving past it, like, wow, this guy's pretty bold. And then four, five years later, I'm building an office building with to a law firm right behind it. So the things change pretty quickly. Once a good policy, I think. Lacey comments one good once good policy happens. Everybody knows that DC is the capital most powerful country in the world, militarily and economically, right? So it's, it has a purpose. It's just bad policy. I mean, for example, Henry could talk to food deserts. You want to get rid of food deserts. Everybody in Ward 7, word 8 eats, right? They go to other wards to buy because, you know, there's no housing there. What? There's no retailer. Why isn't a retailer there? Because they get robbed blind. So they take care of the 5%, 2, 5, 3, you know, whatever it is, percent that steal and they screw over the 95%. Easy to fix. Just, you know, you, it's good for everybody. Like, you need to have. People need boundaries. Like, don't go in there and steal. Sorry. Pet peeves. [00:30:39] Speaker D: Henry's companies made investments. [00:30:41] Speaker H: Yeah, huge talk about those investments. [00:30:46] Speaker E: Well, does not give me pleasure to talk about that, but it is, it is a hot topic. So I've been in D.C. over 40 years. When I lived in Foggy Bottom, my grocery store was a Safeway, about 15,000 square feet over water. It was pathetic. And we've been hearing about that. All our careers and investments have been made. There've been an amazing amount of grocery stores that have opened in Washington D.C. and unfortunately, as Bob said, there's some bad actors who go in with a grocery cart and just load it up with laundry detergent because it's easily sellable on the market. They just roll out with, you know, 20 bottles of laundry detergent down the street and they can. It's, you know, it's easy to sell. And some of the grocery stores are doing 40, $50 million in volume, which is an amazing volume in a suburban grocery store. Some of these grocery stores are doing that volume and losing money. So without going through the names of the individual stores, I can tell you there's a lot of people looking at closing their stores based upon the profitability. So it is really sad that Rapaport and a lot of other good investors have built grocery stores, taken care of what they used to call the food desert. And a lot of them are on the Bubble. And to add to that, in the food desert are the restaurants, you know, east of the river. River. There are only a couple, like two, I think. Sit down. Full service restaurants. That's a shame. We've been killing ourselves to try to do another six or seven. We have a lot of QSRs east of the river, but trying to do full service restaurants and it's really hard. And that's even with the food access grant from the district. The food access grant, the way it's written is if you get a million dollars, you get, you know, a third of it up front, a third of it when you open. Third a year after you're open. The reason why they've done that is because they don't want people just to open up and close. The reality is most people pay finance that third. That means you'd have to go to a bank to get that final third once you open to, you know, to stay in an opening for a while. So the way they wrote it has made it so difficult. You can't use it. I'm sure you guys have already seen what's going on with the tax. They're trying to get people doing the conversions. Same thing. There's so many restrictions based on that tax for 10 years that you get residential. Sure. Tubby's looking at it, Vicki's looking at it going rather than. I get that help from you. If I'm going to have to do this over here. [00:33:45] Speaker D: Speaking of urban talk, a little bit about. [00:33:53] Speaker J: So I have a very wise partner. You know, the pendulum swing. Just wait a minute. Back in the other direction. And during COVID we had a pretty terrible. And what happened is that I'm just going to generalize and say the city swung pretty liberal and there was no eviction court and there was no law enforcement. Those are extremes. There was some. And what it did is it changed values a bit. And so what's being experienced in Southeast is being experienced throughout the city. People know they're not going to be prosecuted and then they're going to do stuff. I've heard of things personally from the security guards at the stores, at Whole Food, because we have a band of gypsies who comes to shop with us and we're not allowed to touch them. They go in, they fill the part and they leave. Snatch and Grab at Starbucks, if you're waiting in line and your drink comes on the counter, someone's going to take. Do you think that any of that is reported? No. Why? It's like wife beating. Nobody wants to fess up to it. Right. It's a, it's a shame, it's embarrassment, it's bad for business and nobody says anything. So you're hearing it amongst us here. It's the pills of life beating. Right. We don't talk about those things. And so that's, that's how I see it. So things have to change. I have the phone numbers of a number of police concerns commanders in the city and I use them and I, I try to do that so that people have attention. I've also been sharing this information with council members and I talk to them about the same way I talked to you about it. Like it's life feeding guys. Nobody wants to talk about it but you know, it's there. But we as developers are always vastly unpopular. You didn't know that. And, and because nobody likes change positive negatives. Nobody likes it. And so I don't believe the topo will change. To be honest, I don't. And for affordable housing production, the city produces more affordable housing than any other jurisdiction in the United States per capita than any other jurisdiction. Allocates more money to it than any other jurisdiction. Please understand that the city. Right. So we have to adjust our lens a bit. If you look at the msa, the city has more low income people than any other part of this jurisdiction. Followed closely by Prince. So I just want to try to that level. But it's still off topic the question which was what are the challenges? Right. So how many of you were practicing in 2008? Haha. Okay. So and construction prices were really high in 2008, right? Like high. And what happened the next two years? [00:36:54] Speaker I: Yeah, I think it dropped 20%. [00:36:57] Speaker J: 20%? [00:36:57] Speaker A: Yeah. [00:36:58] Speaker I: Something manly. Yeah. [00:37:00] Speaker J: So I think we're still in 2008 for this cycle and the prices haven't dropped. I just got back wood frame construction price. Not from that was. That was $290,000 a unit in hard cost. I was like oh my God. Well, big X on that. So biggest cost items, land interest, carry and construction. Right. Those things have. Those are your three top risks right there. And how that resets. There's always tools to do that. And jurisdictions like if I think about the 1990s for D.C. when we developed our first public housing in Ward 8, a lot of people wouldn't want to go there. And nobody could get anything permitted in the city. So we were in 97. So I had a development ambassador assigned to me. It's like a chaperone at a party. He took us by the hand through all the Agencies to get our stuff done because it was a broken system. And I only raise that because there are ways that the jurisdiction, whatever the jurisdiction wants to have happen, they have ways, limited in some ways, to impact that. Right. And to do it. So for me, it was an ambassador in 1998. It could be stimulus that Mayor Williams put in for infrastructure construction to take away a huge barrier. Like, there are ways that people. And new development, that's needed, but some of these things, construction cost, interest rates, cost of land for office buildings, has to come together. So I think we're. I think we're still at that point. [00:38:44] Speaker I: Yeah, I'm going to balance Vicki's comments with Lacey's in that I agree with everything Vicki said, but I also agree with. With Lacy and. And I'm sure Vicki does as well, that these problems are. Are disguised as. Or they're opportunities in disguise, really. I'll use my company illustratively. In 2008, the world stopped in late September, mid September, as it were, and there was no liquidity. Right. Couldn't get a loan, you couldn't get equity, debt, anything. Yet the millennials. Was it millennials at the time? [00:39:24] Speaker H: Yeah. [00:39:25] Speaker I: Were in college and not yet having graduated. The beginning of the millennial. So you saw the second largest demographic bulge in the history of the United States in the system. Yet we couldn't build apartments in 09 because people made subprime loans having nothing to do with rental housing. Right. If you under one model. I woke up every day and I read the Wall Street Journal and it says the world's collapsing. Libor was at like 5 or 6 or something crazy. It had been at like 25 basis points, and it was at like 6%. Think about that. And all this chaos was happening, and you wanted to just cry every morning. Right. But another way to do it was we. We went around my company, we went to each institution, and we said, are you sure you don't want to lend us equity to go do these deals? Yeah, we're sure. Construction prices had come down. Millennials were loaded in the gun, ready to come out into the world. We had to find a private individual. In our case, we partnered with Penny Pritzker in Chicago and we formed a fund because she had as much money as an institution, but was private and thus more entrepreneurial. And I only use this illustratively because I look back on it on years like this year and last year, when I read the paper every day and it's miserable. And we started 11 deals, which is a lot for us in two years, not all with her by then. The equity came back quickly, by the way, and we sold them at incredibly low cap rates, like 4% or something like that. So we, we made money every, everybody made money on the transactions. So I tell you all of this in a long winded way saying yes, things are pretty crummy right now. Costs are crazy, interest rates are high, regular regulatory environment is terrible. But what do we know? We know that no new housing is being created or very, very little. So if I didn't start, I think we started one deal last year. We usually do three to four and that one is generous, like we barely started. Right. If that's true of my competitors and all these guys and others, you're looking at an opportunity that if you're able to find a way to create, to start housing tomorrow, one month, six months, eight months from now, it'll take you two years to build. You'll be delivering into an environment with zero, literally zero supply. So coming full circle. I agree with your previous point and maybe disagree, Bob. I actually think rents will go in and will go higher. Not which isn't great for the, for a resident, but because where the hell else are you going to go? [00:42:25] Speaker H: I agree with that bit more. It's crazy. [00:42:27] Speaker I: It's just crazy. So I think the next bottom line, next two years, I think you'll see mammoth rent growth. I think rates will come in a little, construction costs will come in a little, but not, not enough to save the day. I think we're saved by, by rents. But if you find a way to get in front of it, you'll be. [00:42:47] Speaker D: Able to have a question. [00:42:50] Speaker I: I'll add one comment, Chad. I think that's an opportunity and clearly one that's contrarian. So to your point, might actually be a great idea because no one else is doing it or very few. But I would argue you should similar. Similarly look at places like Walter Reed where Vicki made an incredible neighborhood and environment or city Room. You know, we, we manage those buildings and people want to live there because they're is no crime. It's not. You don't have to guess that it might get better. It is better in theory. I'm sure there's some de minimis crime, but at least people feel a little better. My only point is there is no housing being built. I keep saying no. That's quite a grandiose statement. But very little housing being built, including suburbs. So I think the opportunity is to in both places. [00:43:50] Speaker E: I agree. [00:43:50] Speaker J: I also think there's a category of housing. I agree with the principal. No other. There are going to be a whole bunch of people who can't afford them. They can't afford anything. Nothing. Which is what Bob was getting to in the beginning. And so again, that's kind of driven by government. Right. People in the government are. They're hearing all of these complaints. I can't afford anything. I can't afford this, I can't afford that. So is there an opportunity to create workforce housing? What is that? Most times the departments like apartments. I'm sorry, it was a long time ago and we always used to say apartments serve people at 85% of median income. It's kind of still the same. Right, I know. [00:44:40] Speaker H: No, no, I'm good. No. [00:44:42] Speaker J: And so, and so that's your workforce housing right there. And so I think that there are opportunities to provide workforce. I'd say another thing. And that is so interesting to have a parent. And so what do you want for your lifestyle? Probably want good schools for your kids. Everybody in favor? Okay, good. Probably want them to be free or included. Okay. You probably want a safe neighborhood. You probably want housing that you can afford within your budgets, whatever the limitations are. You probably want a place to go and play with your kids and your family. [00:45:22] Speaker D: Right. [00:45:22] Speaker J: Near recreation. Right. You might want to do other fun things on the weekends, which would argue for the city because there's a lot of opportunity in the city. I think there's much more emphasis on recreation for your age range. And I don't know who here spends their fun time going shopping. Okay, one. And so, like, I don't, I don't like it. So I think you have to really look at what people want. How many of you would like to belong to a pool, if you don't already? Okay. A club of some kind, Recreational facilities of some kind. Golf or something. I don't know, tennis, whatever. Okay. So I think shockingly, even poor people want that. And so, and so we try to build our housing with those things in mind. How many of you would like to live near transit? Okay. So you can see what, what people want. And, and, and if you can find a way to do that as a formula, then I think that becomes a real compelling case. [00:46:31] Speaker D: I have a final question here for this segment. Are there specific property types of sell markets that you believe will outperform? [00:46:39] Speaker H: Lacey said it. I think Northern Virginia for multifamily, for sure. Their policies aren't screwed up. [00:46:44] Speaker E: John, can I add on to that? Fascinating to see is that like, I think Union Market is where everybody's built a building in the last five years. How has that turned out for everybody? [00:46:58] Speaker H: I was flat. [00:46:59] Speaker E: Lacey said, it's good. We were there a little earlier, you. [00:47:03] Speaker H: Know, and with the pivot, like, you know, for me, it's more like, can you. Can you sell it like. We built elevation for 290,000 a unit. Think about your hard cost coming. That was. We delivered that in 2014. Shows you how much cost. [00:47:15] Speaker E: But everybody jumped in, Bob, you know, once it did. [00:47:18] Speaker H: Yeah. [00:47:19] Speaker D: 10,000 units. [00:47:20] Speaker J: Yeah. [00:47:20] Speaker E: Just an amazing amount of units. So in the Harvard Business School case that we're doing right now, you know, it's kind of fun to look at the post warden. We're still in the middle, right. We're not done. It's amazing. All the restaurants have been added. [00:47:34] Speaker A: But I think what's most amazing is how many people went bank. [00:47:38] Speaker E: Wow. There anywhere. [00:47:41] Speaker A: Every my career, every 10 or so years, there's an economic cycle downdraft. And I can go back and name them all. And historically, there's carnage. Brokerage business. Remember the brokerage business? In 2008, a third of your friends were out of work. It was really sad because the brokerage firms were all small companies, poorly capitalized, didn't have the wherewithal. And the economic impact was worse because you had banks and other institutions that were not just not lending. They were going out of business, they were going bankrupt. The stock market and the housing market weren't the biggest point. How many people think they're in the upper 60% of the nationwide demographic? Everybody in this room. Housing prices. Majority of those people own their real estate. Majority people own up 40, 30% stocks. We are the one great. And I think my personal view is, as you look across your career, that's where the money is. Willie Moscone. You got to go where the money is. We spend a lot of our time working with the lower 40% affordable housing. I know John does the same tougher place to make money for a lot of reasons. But I think we are. And you all young professionals, we're so lucky because you're at a bottom after a summer. But it's not bottom without definition. There's good reason to think we're bottomed and everything is relatively stable. The top 60% of the economy is in really great shape where you're going to make most of your money. And they want to live in urban nodes. We grew up during a period where everybody was moving. Move into the country or move into the suburbs and these cities. It wasn't just law and Order. It was law and order. It was infrastructure, it was demand. There was 15 things that made it really difficult for people like elders tomorrow on the car to turn around DC Corrupt, completely inept that point in time. So today I think I want to live in downtown. You see, the population is growing despite the. And the same is true in suburban. People want to be near a shopping center where they can go get a cup of coffee. They don't want to live out. [00:49:58] Speaker D: I grew up in West Virginia where. [00:50:00] Speaker A: The coffee shop is downtown. Cost 50 cents to get a cup. So I would again encourage people to be optimistic, recognize noise, recognize the opportunity and the rubble. Take advantage of it. [00:50:15] Speaker H: Yeah, I'm sure. [00:50:16] Speaker D: I mean I think multifamily. [00:50:18] Speaker H: I think offices. That's why the first question was about where opportunity. For me, it's in office. I don't mean keeping with office, I just mean office for offices. Now some of it, like 11th street gets under 11th street turn into brand new beauty blocks, others of them torn down and converted. That's where the opportunity is. But I also think the multifamily piece, if you're a developer, you do things on the buy side. So the make buys at replacement box right now, that'll be good buys in five years. Depends on your source, your capital. Then, you know, I, I do think we'll see. I'm. I'm with. With to be like another. We need, we need another 50 bips. We need cost to come in another 8, 10%. And then I think he looks bonkers. So if you can get something going this year, get it going this year. [00:51:05] Speaker E: Keep right. So most of us in this room. [00:51:09] Speaker I: Don'T have the money to buy parcels. [00:51:13] Speaker D: If we're getting all started, to start those. What would you get? [00:51:18] Speaker H: Just don't spend anything. Probably you do what I would do. A Collinson, he's you know, micro market, you know, neighborhoods, you know that you, you know, you see upside around, you see maybe high rise multifamily around that it's been built and you know, you're putting stuff together and preferably fields that are carrying land plays where you seal assemblage. But if the assemblage scraps out, you still have a farming asset. And right now is not a bad time because a lot of people are hands off in their districts. [00:51:48] Speaker J: I would say find a friend. And so. [00:51:55] Speaker E: Toby has Betty Biscuit's phone number. [00:51:59] Speaker H: He's got his phone right there with him. [00:52:01] Speaker E: I still need it. [00:52:03] Speaker J: With the exception of Toby, there are a lot of people here who are in the last third of their career. Right. And your parents are too, by the way. And a lot of those people have real estate and it's a tiring business. So I would find small scale and I would talk to your friends, talk to your parents, the parents of your friends. Figure it out. Talk to your investment advisor because they handle all of those people's money and start looking for stuff. And those people might want to be a partner with you but not do any of the work. They might have the asset. Those are things that you can do. People have made a lot of money doing that. It's very hard work. It's very hands on if you're starting out. The other thing is find a bigger friend where you can add value to them that somebody else can't. And that value is in knowledge. And nobody here has talked about AI, but man, oh man, is that a game changer because you can sift through so much crap to find the diamond. Right? And so I would say, my grandfather used to say the most money is made in lost times of stress like this. And so it's your carpet to your moment. And what you have to do is spend a little bit of time thinking and figuring it out where you can see a value. And if you don't have any ideas, then ask somebody who does. [00:53:34] Speaker D: Bob has to leave five minutes, so I'm going to let him kick off round two here. Our second round, which is good questions to view the audience and Islamic this first one, how would you navigate the challenges posed by the health board? [00:53:54] Speaker H: I emailed John yesterday and said I'm a really bad candidate for this question because I hate work. I. I'm a big believer in, frankly, not just because this is my personality as, you know, grew up in a big family, more of an extrovert than not. I get energized by people being around people. You know, my entire career, with my time in military, was always an open day, people talking to each other. And I, I like the camaraderie that's created by it. I like the culture that's created by it. I like the transfer of information. I like whether that be, you know, a learning moment for someone or just, hey, I know that guy too. You should be looking at this, all this stuff. You miss a lot of that. You're not together. You know, you have to schedule everything and you schedule things, spontaneity goes away. And I think that there's a lot of opportunity. Miss, do you need to be in there? Listen, I'm totally cool with flexibility. If I'M going on vacation, or if I'm. Let's say I'm not even on vacation. Let's say I want to go, you know, it's July, and I want to go to the beach for two weeks. So I'm gonna be working. [00:54:47] Speaker D: That's fine. [00:54:48] Speaker I: You. [00:54:49] Speaker H: You know, if you have daycare issues, you need to leave earlier. [00:54:51] Speaker D: That's fine. [00:54:52] Speaker H: If you don't. If you don't want to come in five days a week, four days a week, okay. But you're working the other day. But I just think being together is really important. And even though, you know, all these people say, like, oh, you're an accountant, you're doing, you know, payables, receiving whatever, you can do that from home. Sure. But let's say you're the junior accountant. You got to schedule time to find the senior accountant, ask a question. You could have leaned over and asked. So I. I think, look at where the. What street in the United States makes the most money of any street in the world? Park Avenue. What's Park Avenue doing? Everybody's working five days a week. You go real quick. But for me, like, you know, if you're an individual in the business, your personal. Personal capital is your credibility. Right. You know, and so, which means a couple things. Credibility means, first of all, you got to be good at what you do, and you got to be honest. And, you know, and you got to be, you know, you know, never hide. So for me, I'm always, you know, I put my partner and the deal first, me and my firm second, you know, you do the right thing by your partner in your firm, but by your. Your partner and the real estate, you'll make money. And, you know, and the guys have been in business a long time. You know, they could. They're big boys. They get it. They know when that happens, it's not your fault. Right. But that happens. Is that maybe your fault? And then when that happens, you just got to own up to it real quick and say, this is what's going on. This is what we. This is what our options are. This is what we're thinking of recommending. You know, just put it out there. I mean, being good at your job helps a lot. [00:56:12] Speaker D: I posted a story that Bob shared an interview with about water. Water. Wait, so. [00:56:25] Speaker H: April 18th. [00:56:26] Speaker D: So, Kobe, are there specific still areas of expertise? [00:56:33] Speaker H: Yeah. [00:56:33] Speaker I: You're doing it. [00:56:36] Speaker D: Appreciate it. [00:56:37] Speaker I: You're doing it. You're here. Others aren't. So you win this morning, and I'm only partially joking. I'll give you another Example, I live in Baltimore. [00:56:48] Speaker D: Baltimore. [00:56:49] Speaker I: I drove down here this morning. [00:56:50] Speaker D: Instead of listening to music, which I. [00:56:52] Speaker I: Love, I listen to a podcast about the economy. It's super boring at 6:00am, by the way, but I know more than whoever did not do that. [00:57:04] Speaker D: I could use all the help I could do. [00:57:07] Speaker I: I think showing up is something. For example, I see this group of people all the time. [00:57:15] Speaker D: All the time. [00:57:17] Speaker I: I mean, everywhere. So you go to an event, you go to a fundraiser, you go to the charitable thing. Lacy's very involved in charity, as an example, in the lot. And you do these things, you show up and then there's a connective tissue and you're beating. Here's an idea. Go to work, go to the office. You could just win it. I never thought I would say that, but just even going to your job during the day will put you in a. A distinct advantage over those that may be great, maybe better than you, but aren't there. And out of sight, out of mind. And I've always described the younger people my. My company that. You know how quilts have squares of different. Different. Different textures, etc, and they're all sort of sewn together. Well, think of everything you do, like this morning as a square. And when you go to your office. [00:58:10] Speaker D: Today, that's another square. [00:58:12] Speaker I: And sometimes they say, I have no idea what the hell that event was all about. Or a fundraiser. Boring. [00:58:17] Speaker A: Or something. [00:58:18] Speaker I: But you were there and something may have happened. And eventually you'll look around, you'll turn around and they'll all be living together. And Michael, this gets back to your capital question. [00:58:29] Speaker J: Who else is it? [00:58:30] Speaker D: All those events, bankers. [00:58:32] Speaker I: And you do the dinners and the lunches and the social events, and it's just staying present in public. Mind knowledge and showing our things that definitively can't hurt. [00:58:49] Speaker A: We are in the most connected industry that I'm aware of. I remember talking to Mark Bis now, who he was starting his business. By far. Real estate was the easiest business for him to put the network together. And because we all need each other, you can't build a building without an architect. All these other people. And the same is true on the capital side. And this is a phenomenon that should play to your advantage. Back to the 60%, the top 20%. 60% has gotten a ton richer. We're competing, writing $50 million equity checks on $200 million deals with family offices. If you backward into what that means, if you're a family and you're putting $50 million into one piece of real estate, that's probably 10% of your real estate portfolio. Your real estate portfolio is probably 10% of your total portfolio. So the point is there's a lot more big money out there. And the bear they want folks like you who are smart, entrepreneurial, future leaders. So take advantage of the connective tissue of the quilt. It's what makes this business unique and will give you the opportunity to excel if you do it well. [01:00:04] Speaker D: You've answered some of them. What advice would you give to 25 year old. [01:00:14] Speaker J: So everybody who comes to interview with so what's your five year plan? Where would you like to be? Where are you going? What's your ambition? Are you going to get there? And it's shocking how many people don't have a plan. I've never really thought about that. Like what the hell man. So first figure out what you love, what you're good at. Usually those are the same things. What you don't love and what you love, not good at, loss of and figure out where you want to be and what you want to do to get there. So that's my first piece of advice, like have a plan. And then my second part of the advice is listen to people. And my third piece is echo of everything that's been said over here which is relationships matter. Everybody at this table is a fiduciary of one kind or another to somebody and you're holding trust. Serve work with money with you or your government or your community. You are fiduciary and you need to stand up for that. I'm going to tell you my past. I've been through a number of recessions. [01:01:41] Speaker E: Because I grew up in real estate. [01:01:42] Speaker J: In the one that happened in 89 and 90, my partner today, Lois, said hey, wouldn't you like to come and work for the bad bank with me? [01:01:50] Speaker F: What? [01:01:52] Speaker J: And I didn't even know what it was. I was pretty young and I went. [01:01:55] Speaker E: To work for a place called South Charlesville closing on. My family had been in development generation. [01:02:03] Speaker J: And so at the age of 25 I started doing that and it was brutal. Like brutal. And there were people who looked like us who wouldn't answer a phone call. I was representing the bank and they wouldn't. It's like a game of hide and seek. And then there were people who stepped to the plate and they're like, yep, I got a problem here and I'd love to work it out with you and what would you like me to. [01:02:34] Speaker D: Do and how are we going to. [01:02:35] Speaker J: Work this out together? And there was a significant difference in how those people Performed over time. Horrible story. Right? But it matters what you do when the game gets you. We've been through good times together and bad times together. Together. And how people act during those periods of time matters tremendously. So I want you all to think about that for your careers as well. Like how you handle those relationships. Well, that's like people talk to me. A lot of people that we talk to talk about their entrepreneurial aspirations. Most honest ones will say, I would like to learn as much as I possibly can from you and go out on my own and build my wealth in business. Chick. I'm down for that. You know, a more suave approach that I've seen. Oh, well, I'd love to learn from you and then be a part of your team forever. But. [01:03:43] Speaker D: We know better. [01:03:44] Speaker J: We know better. But. But people also, like, I'm gonna answer the first question, like the worst thing I ever heard. Oh, I like to vision projects like what the hell, man. Really? And Jr. Whatever. And it, it's. That's not a good answer. And so for me, I think. I think people who talk about being part of a team talk about relationships and talk about where they actually want to go and have. [01:04:18] Speaker D: I don't know. [01:04:22] Speaker I: We do to some degree. And I sense your skepticism, meaning it's well placed and that it's okay if some of the people that work for us want to move on. We had a young guy, Martin, ditto. Some of you know Martin. And he was a good developer and I could just health that. He was itching and raring to go. And instead of arguing with him about it, he just said, I think that's great and good luck and call us. I remember there's an old JDG model that I regrettably didn't follow, which is invest in the people. And I made a mistake there. That Martin, Martin Deluxe would be in a positive way, went out and raised money for friends and family. I should have been friends. I don't know why we don't typically invest in others. So I had nothing to do with money at all. But that was a mistake. And it's encouraging to watch someone succeed that represented your learn something of it because then it's this wonderful ripple effect. Thanks. And he gets into projects and I'm sure he will. [01:05:33] Speaker D: Will continue. So, Henry, I'm going to ask you, how would you recommend building professional network? [01:05:43] Speaker E: Well, when I look back at my career, I. I was at Charles e. Smith for 17 years and you know, not everybody likes to go to the events that we all go to when you talk about charitable events and I consider ourselves to be friends because we've done things at Children's Hospital or whatever together and we run into each other and we. I think we have a mutual admiration, respect. Mr. Smith had just given a lot of money to the Children's Hospital Research foundation, basically because I was the guy who was willing to go to these events. He called me into his office and said, I want you to be on the foundation, Children's Hospital. At the time, I think I was maybe 37 years old and the youngest person on that board other than me was probably six, you know, And I was like, really? Yeah, I want you to represent, you know, family. So once I got there, I was like, well, I got to do something. I can't just go to the meetings. And I became the chair, the co chair of Ball, which is now super. One of the most successful events in town at the time. It was not. It was fun. It's called Gas Matas. But I saw an opportunity, said, you know what? I think I can fix this. And even though everybody else on that foundation, I was kind of surprised. Nobody else foundation board kind of stepped up. It was, you know, had given millions of dollars themselves. And so, you know, it's hard work. [01:07:17] Speaker D: Your energy is such that. Oh, yeah, he's the guy. [01:07:21] Speaker E: Well, thank you, John. But take risks. You know, I mean, I will tell you, I sat there, I'm like, I'm gonna, you know, go over the names but apertzes and all these other people that were, you know, household names in D.C. and take those chances. The one thing I want to add to that is one time I was walking with Mr. Smith, who had made billions of dollars in Crickle City and developing in Washington D.C. and he was a very, very smart guy and really trusted people. But you didn't say dumb things in front of him because he was just like, what? And again, I was one of the younger executives at Chelsea Smith, which at the time was the biggest residential monopolist development in Washington D.C. and he had made billions of dollars, specifically Crystal City. And for those of you not been there, well, probably haven't been there because Crystal City used to have a road that went around. It was a loop. And all the buildings are called Crystal Sumpter, Crystal Place, Crystal Plaza, Crystal Gateway. So if you're coming to visit and you make a wrong turn, you are screwed by that. Yeah, yeah. For gps. Thank you. [01:08:44] Speaker A: Thank you. [01:08:45] Speaker E: But most of it was Department of the Feds Patent Trademark Office. So a lot of people that came there all the time we were trying to transition to being a true office destination nation, private office as well. And I went into a meeting and said, we need to two way all the streets to make into a good system. It was silenced just like now. And I almost stood up because they had made so much money on that system. But a couple weeks later, Mr. Smith called me up and said, you know what? I think you're right. We changed the grid system. We tore down some buildings at retail on the street, which everybody's read underground, is finally closing after years. And so my big takeaway is go out, make those connections. Keep all those. I'm still a card guy. I'll give you a card today. You know, make sure people remember, you know, get that card. Don't just email. Well, email is great email, but if you give me your card, your card's gonna be in my desk. That'll throw them away. I'm gonna see. I go, yeah, you know, we met a while back. You know, all these little things that nobody else is doing. I can't tell you how many people in your demographic, they're like, I don't. I don't. [01:10:09] Speaker D: I don't care. [01:10:10] Speaker E: It's below, you know, and can't tell how many people I look at later and go, yeah, that can help that person. Toby said, yeah, I use audible. I don't listen to music either, don't listen to news, because it just pisses me off both sides, you know. And so right now, I'm listening to an audible book. 10 times is easier than two times. Pretty cool. Yeah. Four hours and go to this. Once you start doing audible, books like that, that have helpful, Oliver will start suggesting more of those types of books to you. So you don't have to go out and find them. They're kind of given to you. But in conclusion, take risk. Like I'm talking about, you know, put the time in, think about how to do things differently. You know, go to some mindset. You know, I've been thinking about this. I think we could. We could do this project differently. What do you lose? Last thing is, if you're saying no to somebody, do it with a smile. Most people feel like they have to be all serious and. [01:11:20] Speaker A: You know, change. [01:11:21] Speaker E: Their composure to say no. Look at Vicki, look at Toby. When I said it, he smiled, you know, do it pleasantly. You're gonna do business. The people I'm doing business with, you know, people that I felt did not like me when I left Charles Esperance. This is an interesting story. When I went to now. I've been rap for 20 years. The people when I left, I thought were not my buddies. They're the people who called me up. [01:11:47] Speaker J: And gave me business. [01:11:48] Speaker E: You know, you don't know who's going to be your best mentor or source of business in the future. So this goes back to my conclusion on John's podcast. Love, everybody, it's easy. Smile is free, you know, And I think when you smile, it gives you personal enjoyment too. [01:12:11] Speaker D: Final question, what role does technology. [01:12:16] Speaker A: I'll sort of stay on the entrepreneurial. [01:12:19] Speaker J: Ben. [01:12:20] Speaker A: I think I look at the world as opportunities and barriers to entry. So I think that in real estate for a long time, information flow is a barrier to entry. Because if you wanted to learn, buy property in Phoenix and you were in Washington, you had to figure out who the brokers were, call them up on the phone, get them to send you a book multiple weeks to for them to generate, for you to process. We all have so much information at our fingertips. There are endless opportunities and you all are in your career on the front end of AI, which I really think of more as data analytics. Run a hugely data driven business, but the information is imperfect and dispersed. So I'm encouraging my teenage kids to really focus on data analytics as it relates to real estate. There are all sorts of inefficiencies that if you work hard, you can uncover and there are more efficiencies to be created. We're working hard to automate our underwriting. So our analysts in Excel are really becoming data analytics analysts and processing information not just on the individual property, but on all the comps, everything else, much more quickly and much more efficiently. I think we're much better able to analyze trends in markets. Our sector multifamily is driven largely by demographics. And if you can really understand where people are moving, not just city to city, but neighborhood by neighborhood, that can really help improve your performance. So we're dedicated to that. And again, the barriers to entry that are so low for you, you don't need to go build a system. Remember when Avalon Bay built the first revenue management system in the whole apartment industry? They spent like tens of millions of dollars on it and five or seven or 10, 10 years, and it made a difference for them for about two years until all the programmers who did it went and started their own company and then sold it. And it became the systems that we all use today. And so you have access to an incredible amount of technology that can help you find inefficiencies in the market and capitalize on Them. And so to me, those are the really some of the most important aspects related is prop tech. Everybody's familiar with all the new products that are being generated to do all sorts of things that were relatively mundane processes like our, our guys that go fix things at apartment buildings. They would. We never really thought, gee, there's a lot of inefficiency there. We knew it wasn't really well done. It was kind of the numbers. Now all that data is available to us instantaneously on our handhelds. We can look at rents into the future and tell leasing agents what the rent should be so they no longer have to spend, you know, five, seven hours a month sitting down with seven or eight people trying to figure these things out. So continue to look for places where prop tech or AI or data analytics are going to great opportunities and find a partner if you're not a data person who can figure that out. Together with you raising the money and them figuring out the opportunities, and maybe a third person who's out buying and managing the properties, you create a team that over the next 10 or 20 years is going to do, I'm sure, incredibly well. So those are some of my thoughts on technology. And I know nothing about technology exactly. Because people of our generation tend not to. [01:16:07] Speaker D: We've got about 10 minutes for Q and A, so go ahead. [01:16:13] Speaker A: Yeah, I think that's a great question. I think there are a couple of factors. One is the scale of the players. If you were Oliver Carr, who built a lot of these buildings in the 70s and 80s and did a great job of turning the city around, he only played in D.C. and there were a handful of banks that were all regional banks that went to the DC developers. If you blew up that relationship, you blew up your business. Today we invest in 17 or 18 states and we invest with largely a handful of very large institutions that won't go out of business if we hand back a loan to them. So the dynamics are quite different. And I think that that's part. Part of it. I think the other interesting thing, and this, this is an opportunity for your generation. We have largely been a country that's where lending has come from federally regulated institutions. But as we've all read, private credit is on the rise. And we've seen private credit in other forms in the past. That's part of what blew up the economy in 2006, 2007, and it's going to move heavily into real estate. Those relationships are completely trading relationships, relationships. You know, you tell a guy you're going to default on your CMBS loan, He doesn't care, you know, and you don't know him. He doesn't know you. The workout people, they don't care. So that we're moving more and more in that direction. That sector is getting bigger and bigger volume of real estate. So I think it'll create an even less personalized dynamic. I personally think it also creates a lot of risk because those people are not regulated. We're in the private equity. We're in there partly because we don't want to be regulated. We are an SEC registered company, but we're not regulated like a bank. And I'm on a bank. You can't believe how much regulation banks are under. But we've seen it before. You put traders in a business with a lot of money, they're lending to the liquid sector, like real estate. Probably going to be a train wreck somewhere in the next five to 15 years. So keep your eye out for that because it could create more opportunity. [01:18:19] Speaker E: Let me jump on Lacey's saying, you know, the CMBS Special Services, not only do you not have a relationship with them, they are incentivized to support everybody. [01:18:31] Speaker A: Yes, totally. [01:18:33] Speaker E: It's the craziest thing. So bankers like, well, I'm going to do another loan with them and hey, I'll help you. I'll do this nut. They won't even speak. Special service are willing to talk to you until you are in the fall. You call them up three months ahead, say, hey, I got a problem. This lease is. Excuse me, this loan is coming due. Can we work out at extension? They won't even talk. So they put you on your heels from the very beginning. [01:18:58] Speaker A: And their fee quadruples or more when you go into special serving. And so they want to get you in and want to get you out. [01:19:06] Speaker E: And they want to keep churning, returning their fees as long as they can. Yeah, and. And so no, they, no, they do, actually. Well, yeah. No, if they could extort you for an extra 5%, they'll give you an extension. But if, you know, if you can't play that game because property's already, you know, X amount under, under, you take it. And then they, they. CW Capital was great last time around. We did a lot of business with them. But I think the CMBS special servicing industry changed since 2007, 2008, didn't it? Now you got the different piece of owners of the, of the bonds, and there's one guy that has the highest interest rate, right? He's the guy who's gonna do anything he can to make this group make money counter to the other bondholders. Can I explain this correctly? [01:20:04] Speaker A: I think to your point, servicers don't want you to turn the keys over because they have no clue what to do. Banks at least know what a workout looks like and how to do it. And so what I think that leads to, we certainly saw it in 2009, 10, 11, 12 is assets that are in trouble just tend to sit and they suffer because there's no one's pumping any money into them if it's an apartment to fix the heater or to do this or do that. So another opportunity, I think over the next five years, particularly in older apartments and maybe office buildings, is a lot of these buildings are going to sit and start to rot because nobody can get the keys and fix it. So if you're patient, you can pick up these rotted buildings, renovate them, reposition them, and make a lot of money. That's to happen some point in the next five to ten years. [01:20:56] Speaker D: Other questions? Go ahead, Aaron. Hey, Aaron. Go ahead. Aaron used to work with CW Cattle. [01:21:14] Speaker A: I think if I could, on behalf of the panel, I'd like to just further acknowledge John's role. John has essentially taken a nickel and turned it into a dollar through this program. And one of the things that's important is to keep in mind is everyone's career moves at a different pace. I've had a lot of friends who were enormously successful right out of college. I'm out trying businesses and failing and thinking that that's going to be the rest of your life. But many of those folks second half of their life didn't work as in the second half of our careers worked well. John has had multiple careers, but I think that it's really fantastic that part of this overall fabric or quilt concept, he's filled a void that I don't think anyone had ever addressed, which is the history of real estate and the relationships and what we can learn from one another. And I think that's a tremendous, important part of any family or any community community, the history, the fabric. And I think that, you know, when it's all said and done, John, your legacy is the is the quilt maker is going to be well respected and long remembered. [01:22:22] Speaker D: Well, in 2019, looked around the universe, here we are in the podcast realm. [01:22:32] Speaker C: Stories I'm hearing. [01:22:33] Speaker D: I've always thought and I said to myself, you know, I know a lot of people in Washington, including other people here and a lot of others. I said, you know, I'm just going to start doing this music. I called up Gary Rappaport. Gary is like I am everybody. He gives constant love. [01:22:56] Speaker A: He's the hardest, hardest worker in D.C. still. [01:22:59] Speaker D: Yeah. Gary Rappenhardt is seven. [01:23:02] Speaker A: He works seven days a week. [01:23:03] Speaker D: He's in the office. [01:23:08] Speaker E: Gloves. It breathes. [01:23:09] Speaker D: I almost cried. Anyway, so he was my inspiration to some extent. He encouraged me. Yeah, I love it. So I just went up about five or six other people I started calling. Sure, you know, let's do it. And evolved. And now we're at 123 and this is the next one today. Thank you all for being here. A couple comments I want to make. There's a QR code here and here Snap that I prepared a survey not only for today, but also. [01:24:00] Speaker J: We'Ve been. [01:24:00] Speaker D: In existence three years now. Kevin has said we toured. Two examples, I would say Ray Ritchie of lots of property investment down center spent a whole afternoon walking around and said gave us a full, you know, reception just for my group. And then he separately took us to 21 and then took it to one of the local pubs right there. Just an example of what icons have given that. So the program is to do once, one month, one tour a month, one ask me anything of that. And I have a curriculum. So all of you sign on. Remember, take a look at the platform. I have a program bill on the 17th, so weekly Friday and orientation for the members. This, as I said, is a podcast. So you'll be able to watch this again. I'm going to share the video of this. Not going to go live broadly with the video, but audio. So are there any questions or any other comments? [01:25:39] Speaker E: I would love to. This has been burning in my soul since I read it yesterday. I would love for the panel and please everybody in the audience to talk about the BXP deal in Metro Citizen. What do you think about them tearing that billing down? I get that because it's but making that move right now to build trust trophy building there, you know Folger Pratt. Anybody here from Folger Pratt? They built a building, Tyson's Corner to be a trophy building because there was no. There was no new trophy right by the Metro. Not Spring Hill Metro, but Queensborough. Thank you. And to my knowledge, it's just sitting there. It's a see through building. Now in the article yesterday talked about having a lease of 5 to 6 for something. Am I not the tenant? Yeah, I mean even so, let's go up 50% least. Doesn't that seem like a. You bet? [01:26:44] Speaker D: Well, I looked at 21. We took several of us here. Yeah, they put some of the tags for the. [01:26:59] Speaker J: Building. [01:27:00] Speaker D: $800 a foot, just incredible dollars. But the rents are over two triple digits. They're paying on over $100. The top tenants are able to pay government repairs. Well, it's an opera. [01:27:18] Speaker E: Okay. [01:27:19] Speaker J: Yeah. I'd say this. I actually think it's great. And if it was up to me, I take the line that is Independence Avenue and 395 and I tear it all down between there. Those, those buildings are good and they're, they're, they're done. And some people really like them because they like that architecture. I don't think they're functional. I think society. I think it's a place where people can be. I was on this little government commission about here, Downey's office and, or repurposing them. And a gentleman took me aside and he said, do you know the history of office buildings? No, I don't. And he said, well, office buildings really came to be after the Second World War when we started having big government enterprises. We had to push a lot of paper. And so this was a place where people came, mostly men came to work and push paper as part of communications. And we now have computers. We've had them for quite some time. And so the whole concept of how it was set up with these big old pens of this and that, he's like, the functionality has changed entirely. I thought was really kind of interesting. Right. And so, and then we went through this swing of how small can we make the space for each individual. And then we've gone through this swing of propelling office space. And I think that the federal government office space thing, you can put a fork in it. It's done and it's been done for a long time because they've already contracted out in last machine. And so the cost of mutating those buildings building per employee is like $100,000 a year. Shoot me now. Like that's crazy. That's nuts. Like that's, that's a bad business proposition even if it is government. And so I think that gives us a tremendous amount of opportunity to revision this for the city. NCPC is going to cry. And that's just the bottom line because a lot of those buildings are not historic. And so there's got to be some kind of an overarching way and a plan could do it. I, I think the, the office building scenario has changed and that new building is probably going to be. [01:29:40] Speaker E: I see a little. [01:29:43] Speaker J: I think it's going to be Functionally very different. But I don't. I'm not a. [01:29:55] Speaker A: We have a small portion of our portfolio is in office and a couple things we've seen. One is again the top 20%. They're doing great. There's a lot of money out there and they have not really felt a recession. Why they shouldn't be able to pay more rent now they could pay 10 years ago seems an easy question. Seems like they could easily do it. And we're seeing in every market that in the class AA space is fully leased. Look at Hudson Yards numerous examples and talents. So I BXP is really small. I think it makes sense for somebody to say yeah, I'm going to be the very best building in D.C. there's big market. [01:30:40] Speaker D: It's one of the biggest in D. [01:30:41] Speaker A: There's got to be this 400,000 square foot feet of demand. I think that Moningfield was off is. [01:30:48] Speaker D: Pretty well with the war. [01:30:51] Speaker A: So it's great that they're doing it. I think it's one more example of the fact that we are on the odd upswing of this recession cycle. [01:31:04] Speaker E: Anybody? [01:31:05] Speaker D: Yeah, go ahead. It's coming. I've talked to somebody who's in Doge entity Yes. And I've been told a pretty senior person there that there could be demolition of buildings like that. [01:31:28] Speaker A: I think we Wall street journal article about 18 months ago we were luckily featured in Philadelphia. We renovated the office buildings. Residential, residential. The last 10 years it was primarily about Wall Street. And in 1990 Wall street, the population within that submarket was like 30,000. And it was a huge exodus of office from there up to midtown and. [01:31:56] Speaker D: Other parts of the market. [01:31:57] Speaker A: So the city got behind tax incentives redevelop those office buildings. Those office buildings were largely built before air conditioning. That makes floor plan very adaptable. That's the same thing we found in Philly. So that's in part what the story's about. But the main part of the article is that it takes a long time and you've got to have the right sorts of buildings. And we've looked at a bunch of these deals. Generally you've got to get the basis 100 bucks a foot or less. That's really hard to do and it's really hard to do in D.C. because you've got nothing narrow buildings work need about 70ft of depth for a part of the building. You've got this big square footplace that even if it's a lot doesn't work really well for building an office building. So I think it's going to be a long, slow recycling process. I don't think anybody's going to tear down a building unless they're ready to build it. So I think one of the challenges the city's going to have is what do you do with these ghost buildings. There used to be a bunch of them in New York when I lived there and that's usually where guys thieves hung out in the dark crevices of the entrances when you walk by. So and I think we've all seen it's going to be a huge dent in the city's revenue bucket. So we'll see how they adapt to that. [01:33:17] Speaker J: I agree. Although they don't have much revenue. [01:33:26] Speaker A: But. [01:33:27] Speaker J: That'S that the government. Sure, sure I agree with you. Government is works at Edison, why. [01:33:37] Speaker A: But it's the market, the free market can't you gave me 400 by 400 lot in downtown DC. I'm not sure what I'd do with it. [01:33:47] Speaker J: And so JLL is working on it. They've pulled together a bunch of different working groups of people and they are looking at what buildings to target first, what to do about it, trying to figure out the whole plan, what the value is. And I think the consensus was they might have overvalued their portfolio and mighty birthday this. And so those are things that are being discussed. And you know our new president is a real estate developer and I think our mayor went to see him about creating a world class city and making an opportunity and I think that took a hell of a lot of guts and smarts to go and do that and who knows how it'll work out but I think there's a pretty solid bet for it and my expectation is that they will pick the low hanging fruit first. [01:34:48] Speaker A: Again, it's worth noting that DC's office I see rates the lowest in the nation and the US is way behind European. I personally think we're at the bottom there and it will trend better and I think the federal government's going to get a little heavier handed in pushing people do it. That apparently is going to lead to a lot of early retirements but I don't think those jobs will get filled. Hopefully they get filled by young people who are going to live in apartments downtown and it'll create even more. [01:35:18] Speaker J: I don't think they'll get filled. I think they'll get contracted out, all of them. [01:35:22] Speaker A: But the contractor has to hire a person. [01:35:24] Speaker J: That's right. [01:35:25] Speaker A: And that person's going to need an apartment. Right. But they're going to be in D.C. somewhere. That federal building hopefully will get sold, maybe lease to the private sector. [01:35:37] Speaker J: I agree and I think that's largely like I walked through the HUD building. [01:35:41] Speaker E: I was going to meeting with the. [01:35:43] Speaker J: Commissioner and she took me aside and she's like oh yeah, 40% of our people are retirement eligible. And if the administration changes for the election, I think they're all going to retire. They're not coming back to work here. They're just not doing that. And so is what it is. And maybe that's okay. Maybe it's okay. Maybe it's time for a new day and better processes. [01:36:05] Speaker D: Well, it's interesting talking about HUD housing. Fanny and Freddy make turn highways. [01:36:15] Speaker J: It's a pendulum, right? [01:36:16] Speaker D: Yeah. So what does that mean? Capital markets, what does that mean? The other. [01:36:31] Speaker A: You know, we were back solving for sort of 5, 600 bucks a foot. So that's depends on the market. But presumably the land gets crammed down to whatever value makes the numbers work. Renovation, even with new construction. I think the challenge with renovations are there are always more surprises than the contingency anticipates and so that harder to finance and so on and so forth. [01:37:02] Speaker J: I think the construction costs for an office building conversion and new construction are converging. They're very close to. So it puts it on the borderline. Do you tear it down or do you keep it? I have two office building convergences. There are two buildings next to each other and it's a unique location, unique environment with a unique program and not replicable by sharing it because we certainly looked at it and it doesn't work. They're very kind of residential to the down at the southwest waterfront chart. They're Lex and Leo and we sold them to Bernstein. It's very hard to find a contractor who's comfortable doing that. Our contractor made money. [01:37:55] Speaker E: But let me tell you, those buildings. [01:37:57] Speaker J: Were built in 70s. They were the first close to actually buildings ever built, ever. And so it's a belts and suspenders building which allowed us to do some things that we actually can shift 2,000 poles in each building for plumbing and other things that needed to go floor to floor. And we had somebody who was willing to do that and could do that because ground penetrating radar was not as good a tool back then. And if you had to judge the toilet a little this way and shuzh the shower a little that way we had enough room inside the footprint to do that. But it was, it was really something and they turned out to be really beautiful. But you really have to Find the right contract to do that. It's not that easy. [01:38:52] Speaker D: Right. [01:38:53] Speaker A: Not surprisingly, EXP is not doing that. [01:38:55] Speaker J: Right. [01:38:56] Speaker A: That's the opportunity for the small entrepreneurial local strip shooter. And if you want to be in business on your own, you got to find those opportunities and then get really good at them. When you do, suddenly growth occurs. [01:39:13] Speaker D: One more question. [01:39:19] Speaker J: Said to me I should start on this. You want to start? [01:39:23] Speaker E: Yeah, just we've got a piece 75 unit piece of land zone for steam housing over at Skyland east of the river. And you know with all things we set for interest rates, construction costs, it would be odium probably stick built on top of podium. [01:39:45] Speaker D: That's not gonna work. [01:39:46] Speaker E: So less, less, you know, district or somebody comes forward. [01:39:55] Speaker J: Yeah, we own a fair bit of affordable seniors now and does super well. It's always full people. Nice thing about seniors is once they're in, they stay even for a long ditch. We've also got a little bit of assisted living that's affordable at multiple and that circulates for people who are indigent. [01:40:13] Speaker D: That ever happens 4. [01:40:15] Speaker J: I guess a couple of them is VC but not many. So that's one thing. And when you have market rate senior under development you look to the pseudo process slow. I keep, I keep asking these hypothetical questions like you guys are kind of too young to have put your parents in a senior's house. [01:40:33] Speaker A: Right. [01:40:34] Speaker J: But I've done it and my parents are too busy so I can see whatever I want to say. But it was, was. It was probably a six month process process looking for it. My mom came out of an eight. My dad was a bedroom eight bathroom and. And she just lived near all by herself in Potomac. You know it was just a lot. She was still working in paper and so we found her a spot and then she insisted that it had to be fully renovated and so did that and move her into it. And I think there's a typical process of leasing these that's really interesting. A lot of them are co. Op, some of them are condos, some of them, you know and there's a whole selling the home business that gets into it. So it's a major life thing. I think there's, there's. Most seniors have lived in their housing for a very long time and, and most of them are not renters. They're homeowners. 65% are homeowners. And even if they're mortgages more the they paid them to a point where they pay. You know I always joke and I do this with local jurisdictions When I'm talking, what's the most affordable housing you have in your jurisdiction? And it's my mother's house with eight bedrooms in it where she's paying $1,000 a month to live there. That's your most affordable housing. And it's prevalent. Right. And so there's a gap in imagination for seniors and they're like, I'm going to move into an apartment that's a third of the size of my house and I'm going to pay three times as much. Is that right? And it's so I think it's a resistance to moving. And so I've been thinking about how do you do that during lease up? Do you offer six months free rent for a two year lease? Like do you do that and say move on in and do it yourself, we'll spread it over time? Like how do you accept somebody? Because lease up faces are one third of a market rate. So that's, that's your conundrum. But got to think about what incent. [01:42:36] Speaker D: That person make that go. [01:42:37] Speaker E: But to Chad's question, you think the demand would outstrip that supply you like be a rush to move in and just. [01:42:49] Speaker I: I think you're right, Henry, but you're right. But the person with no mortgage has to sell their house to somebody that's. [01:42:56] Speaker D: Going to put a mortgage on it. [01:42:58] Speaker I: And they don't want to get a mortgage for an eight bedroom house at 7%. So there are a lot of scientific comment, forgive me, but there are a lot of people stuck and they say, oh, I like Vicki's new building. I would love to move there or maybe I could see myself there, but I have to wait. So I think the economy has to break, get a little better. But nonetheless, I think the macro theme chat is focus on demographics. Right. The largest two groups are baby boomer millennials. I already talked about millennials. The baby boom is now aging into housing of some sort or should or will. And not everybody wants to live in. They don't want to feel old. So some might rent. So I bet you could come up with a product type that was some variant you poked around. [01:43:50] Speaker D: I kind of like the business, but. [01:43:52] Speaker I: It'S really slow to your point, so I kind of don't. [01:43:56] Speaker J: But once it's full, it's full. [01:43:57] Speaker I: Once it's full, nobody leaves. [01:43:59] Speaker J: Well, they do. [01:44:00] Speaker I: Well, they leave, but not on the horizontal to me. [01:44:03] Speaker D: Also creating experiences. Oh yeah, but you create experience. I mean I'm seven, so I'm five to 10 years away from maybe where am I going to go. I'm going to go find a place that has experience most of my my children. [01:44:26] Speaker I: So John, we did the Ritz CR in condos and case the classic not meant to be lazily a place for older people, but it marketed it accordingly. And those that live in the building, including my parents, by the way, have the ability to have social. They have cocktail parties, they bring speakers in and they candidly, the people in the building are so interesting in their own right. Cocktail party alone with your neighbors. And so so they're engaged without feeling like they're living in a place for older people. [01:45:04] Speaker A: Beware, that stuff costs money. [01:45:07] Speaker I: Yeah, that's the. [01:45:08] Speaker A: You also start down the acuity. So you do have a doctor come once a week and does checkups. So we've looked at it a number of times. Beware of the leave stuff, beware of the cost plating. And if you find a way to make old people make decisions on lifestyle, call me because I got two sets of parents and it's been 10 years in the process of getting them to move out. That's part of it. [01:45:39] Speaker D: Thank you very much. Thank you. [01:45:44] Speaker E: Thank you. Thank you. [01:45:47] Speaker D: Ron Garter. [01:45:49] Speaker J: Yeah. [01:45:49] Speaker I: No, right.