Phil DeSimone & Chris Naff – Worcester Real Estate Podcast
Ted Finnerty, V.P. at Leggat McCall Properties joins Phil DeSimone and Chris Naff to share insights as to how professional project management can reduce the time and costs involved with complex commercial real estate projects.
Here are some take-aways from the discussion:
Naff: Tell us about Leggat McCall Properties and what it means to be in the project management business.
Finnerty: Leggat McCall Properties is a (project management) firm that serves the Greater Boston area, including Worcester. 20% (of our business) is in the principal side, which is the investing-financing side. The other 80% is in development management… so that could be anything from high-level advisory to commercial interior project management to complex development projects that could span five years or more.
Our clients range from healthcare, like medical offices and ambulatory centers, to corporate, including biotech, advertising, and legal, to laboratories, such as in life sciences, as well as academic institutions. It really runs the gamut.
Naff: From a commercial real estate broker’s perspective, why is it important to work with a project manager on a project?
DeSimone: I can’t stress enough to my clients that they should have a project manager early on. Project management teams help clients realize their vision. They help define the objectives, schedule, and budget. They answer questions that come up in the project that our clients wouldn’t necessarily think of on their own – like when does a landlord’s role start and a tenant’s begin? Project managers understand potential pitfalls, so working with one can reduce the time of the project and the cost of the project significantly.
Naff: Are there specific examples that come to mind in terms of pitfalls with commercial real estate projects?
Finnerty: In our world, you’re often thinking about the “known unknowns” and the “unknown unknowns.” As a project manager, it’s a very important at the beginning of a project and transaction life cycle to help the client and support its brokerage team in understanding what those “known unknowns” could be. Those could include the specifics of a lease, or the permitting process, or budget and construction risks. Ideally, your project management team will help you anticipate those potential curveballs and maintain comfort throughout the process.
And then the other benefit of the team aspect is to provide diverse perspectives. A good team will have different members that understand different market conditions and particulars of small- and large-scale projects, so you will always have someone who can lend an expert opinion.
DeSimone: I think there are probably a few main issues. One is over-designing the space. People will have this idea about what they want, but no understanding of the budget it takes to do it.
Another is schedule. It is easier to envision a space than it is to envision the time is will take to create that space. And then the third one is probably the construction piece. There are always issues that come up, no matter how much due diligence you do or what kinds of construction drawings you have. And some of those can be pretty costly.
Naff: The office real estate market has been vastly impacted by the current global pandemic. How have you navigated that? What is your take on the future of the marketplace?
Finnerty: We want people to feel comfortable returning to work environments, and that includes following CDC guidelines. Unlike in the pre-COVID era, now, when we think about schedule and timeline, we have to consider factors like floor plans and layout that will allow employees to keep distance. We how have to plan to set up work spaces that allow people to gradually return to work… and feel safe doing so.
DeSimone: As far as the office market goes, I think it’s about figuring out what the post-vaccine workspace looks like. My sense is that there is going to be a lot of unassigned seating, open collaboration spaces, and really good technology. Does that mean it’s more space or less space? I don’t know. I think it’s going to put spaces back on the market in the short-term for sure, but I think eventually people will want to be back in the office, even on a flexible schedule, just for impromptu meetings and human interaction.
Naff: If more traditional offices are transitioned out in favor of more permanent remote work setups, what impact do you see that having on the industry overall?
DeSimone: The two asset classes that are doing particularly well right now are the warehouse distribution market and life sciences. My guess is that we’re going to see a lot of commercial spaces renovated or revitalized for that purpose. A really frequent conversion concept is turning malls that have gone belly up into distribution centers. I wouldn’t be surprised to see a lot more opportunity to convert spaces for new purposes as the workspace model changes.
Finnerty: I think we will see conversion concepts, like the malls, but at a smaller scale. It’s an interesting time to be in project management, because the concept of shared spaces is radically different now from what it ever has been before.
Should you have any questions about this podcast – or any commercial real estate matter – please feel free to contact me at [email protected] or call me at 508-841-6412.