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The Small Nation Podcast
107 | The Truth About Being a Real Estate Developer | The Small Nation Podcast Ft. Andy Warnock
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- [00:00]
A
What's it like in the middle of the day? You know, is there a lunchtime crowd in those towns? And if there's a vibrancy from 10am until 3pm they're doing something really well.
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B
The Small Nation podcast is brought to you by CoverLink Insurance, where people are more important than policies. Unpack lessons from entrepreneurs, break down development strategies and dive deep into small town success. This is the Small Nation Podcast.
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C
Hey, guys, I'm Jason Duff, the founder of Small Nation. Welcome to the Small Nation podcast. Today. I'm really excited to have a friend, a fellow developer, rockstar out there. Andy Warnock in the studio today.
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A
Thank you.
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C
Welcome, Andy. Andy is the founder and CEO of the Westwood Collective, which I'm excited to unpack and hear about how Westwood came available. But today we're going to unpack how easy it is to be a commercial real estate developer.
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A
Oh, boy. Okay, full agenda now.
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C
Andy is someone. You need these friends in your life that you can text and tell them about your day. Sometimes it's something to celebrate, meaning like, hey, I've worked really hard on this deal. I've worked really hard to maybe buy this building. And I always love because I get these like, you know, really nice emojis back of like, nice work, man. Congratulations, like, supporting you. But then also you need those friends in your life. You're like, hey, this happened to me like the sprinkler system burst and now I've got this gigantic icicle that is encompassing three stories of my building. What do I do? And I really appreciate you being one of those people that I can lean on, both celebrating when good things happen, but. But also saying, have you encountered this challenge before?
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A
Yeah, we oftentimes feel like we're on an island until you find those types of peers in the industry. And it's been helpful for all of us. So thanks.
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C
How many years in real estate has this been for you?
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A
My 20th year, 2006 was the first year I remember buying a property by Children's Hospital in Columbus. All we could afford, $38,000. Owned it until just a few years ago. Learned more on that property than any of the others I've ever purchased. It was not a very smooth ride,
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C
but, you know, you kept going. What were some of the headaches or the challenges that you ran into?
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A
My favorite was getting a call from the Columbus police department that our door had been kicked in and a drug dealer was hiding in an aquarium within the house. And as a broken real estate investor, I thought, okay, police, you're going to Pay for this door and all the damage you did, Right? And they said, well, yeah, you. You submit your form to get reimbursed from the. From the city. That reimbursement never came. So you learn very quickly that tenant screening is important. Having reserves for a rainy day are important. So, yeah, again, I was naive, young, hungry, which kept me coming back for more.
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C
Was there people in your life that inspired you to get into business? Like, tell me a little bit about how you grew up.
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A
Yeah. So I had a father who owned his own law practice. I always appreciated that. He was our soccer coach. He was at every game. He might have stayed up till midnight or after writing a brief in his home office, always had his yellow legal pad on the family room carpet. He laid there and would write on the pad while we watch sporting events and sitcoms in the evening. And I just always appreciated that he could set his own schedule within reason. And that was important to me. I wanted a job that gave me that type of flexibility and freedom. Probably didn't realize in those early years how hard that was for him until now. With four kids of my own, I'm living many of those same things now with my laptop versus a yellow legal pad. But he was my inspiration in business. He was an attorney who did things the right way, treated people the right way, built his own personal brand the right way. And then as I got older, I had a business mentor, Bill Roberts, who founded Red Capital Group. That's where I started my commercial real estate finance career, which is still part of who I am and what I do now, a company called Lumint. But Bill was. He was a philosophy major, if I remember right, at Notre Dame, but became a very prominent businessman. And I think that background in philosophy and liberal arts, which is where I got my degree at Ohio Wesleyan, it allowed me to think critically, taught me how to write, which has been an unbelievable advantage, I think, in the business world. But having somebody like him who allowed me to ask a lot of stupid questions, gave me an opportunity when I probably wasn't ready to be in the commercial real estate finance arena. Those two come to mind as the two that really propelled me to where I am today.
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C
So there's a lot of debate about the value of a college education.
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A
And.
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C
And you just mentioned that learning how to write and learning how to think critically. You went to Ohio Wesleyan University. Tell me about, like, how Ohio Wesleyan found you and, you know, the value that you got out of an education there.
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A
Yeah. So a handful of things. One, I probably realized later in life I like being a big fish in a small pond.
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C
Yeah.
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A
And going to a smaller college like that where you have 15 people in your class instead of 150. You get to know the professor. You have dinners, you know, barbecues on their back patio. The access to alumni and the network is so impactful. So beyond the classroom. I mean, people ask me, what do you. What do you use from your days? Income tax, accounting. Use it all the time.
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C
Okay. Yep.
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A
Any of my English coursework. Because, as you know, having to convince people that your project is the right project for their town or tenants to come into your. You have to be able to communicate with them.
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C
That's right.
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A
But off. Outside of the classroom, played college basketball. You know, the. The competitive nature, the accountability, the teammates, all of those things was important. And then I was president of my fraternity, and I think that was probably the number one thing in terms of leading your peers and running a little business at the fraternity. We had a chef. I'll recall the first person I ever had to fire was our chef who rolled in to. To cook our fraternity dinner with a gutted deer in the back of his pickup truck. And I just remember thinking to myself, this isn't probably the healthiest way to start the meal, but, you know, came in, did not take proper sanitary precautions before cooking. And I remember calling him a few days later saying, look, we have to relieve you of your duties. He was on family vacation. It was an awful conversation. But I think back to all of the things I learned and had an opportunity to learn by being exposed to that type of environment. So many parents think of fraternities. You're buying your friend, you're drinking, you're doing all of this. The social piece. There's so much more to it when it's done right. Just like anything business done right, fraternity done right can be an amazing education. And for me, that set the foundation to go have hard conversations as a business leader later in life.
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C
I love that. What fraternity? Let's give a shout out to that.
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A
Phi Delta Theta.
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C
Okay.
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A
Oxford, Ohio, at Miami University.
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C
Love that. So here in Bellefontaine, there's a group called Symposiarchs. And why I was never in a fraternity, I was in some social fraternities. I'm sorry, some honorary fraternities. But there's a group of guys that have been meeting for over 80 years here in Bellefontain, a part of a club called Symposiarchs. And it's just getting together with other people that went to university was a part either of a social fraternity or an honorary, just to get together, to share ideas, to hang out. I really enjoyed the camaraderie of that group. And I imagine you probably still stay in touch with some of your fraternity buddies and people that you got connected with through.
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A
And not just the ones I was sharing the fraternity halls with as an undergrad, but you have a house corporation who are alums, who are invested in mentoring and providing kind of governance support while you're an undergrad. So you meet all of these people, all these men from different eras, and those are the people you network with, you look for jobs from. You know, in our day now as we're raising capital for projects, there are times that we're calling on those folks and they're, you know, it's a relationship. It is. So, yeah, it truly is a brotherhood. But not just from your era. It extends to the grandfather and father figures that are part of the same fraternity.
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C
That's great. So Delaware, Ohio, you grew up there and you chose to stay there and go to school there. Tell us about what it was like in Delaware, Ohio, growing up and why that community is important to you today.
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A
Yeah. So I am technically a fourth generation Ohio Wesleyan student. So my grandfather, I guess great grandfather started there before he got taken to World War I. Grandfather and grandmother met there in the 50s, parents met there in the 70s, have a brother and cousin who went there. So it was in my blood. But my parents who met their father ended up starting his law firm in Delaware. I'll be honest, I was committed not going to school there. My grandmother said she'd never buy me another Christmas present if I didn't. That probably weighed some on my decision. But also, again, being able to play a sport at Ohio Wesleyan where my parents could come to the games and support, that was important to me. And it was almost two different lives growing up there and being part of the town was very different than being on campus. And I lived on campus and wanted to make sure I got the collegiate experience. But it allowed me to really understand all of the dynamics in play in that small town. One from the lens of the kid who grew up there, but also then realizing what an important piece of the. We talk about ecosystems all the time in these small towns, what a big piece Ohio Wesleyan is to that ecosystem there. And it was not until I spent those first 22 years in Delaware that I started to really appreciate what is a vibrant small town. And Delaware does a really nice job of being a vibrant small town.
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C
One of the best.
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A
So again, as you grow up there, you think, I just want to go as far away from home as possible. Then you land in your backyard for four more years, and then you think, I just, I need to leave and go far away and start my career. And then you keep getting this gravitational pull back, and you can speak to that here. So, again, I just. I think when. When I moved to Hilliard in 2006 to kind of plant my flag there and work in downtown Columbus, there was so much I saw in Hillyard that was missing that I realized I appreciated about the city of Delaware. And I said, okay, this is a blank canvas now for me to. To take what I learned and loved in my hometown and start a new hometown.
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C
A lot of developers ask, what building should I buy next? And one thing that I've observed working and getting to know you is I think the question that you ask is, you know, what does this neighborhood need next? Tell us a little bit about that formula and how you have used that in Hilliard.
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A
Yeah. So Westwood Collective, one of our mission statements is filling voids in communities. We very much want to listen to the community. What is it that you want and need, and what do we observe as quote, unquote, professionals in the space and try to fill those voids? So when we looked at downtown Hilliard, we were lucky that as we started our work there, Crooked can came in a few years after we started. It's a brewery. It's a great place to foster community. But those were the types of things that were missing. You know, you had the old baloney shop, you had some dry cleaners, you had a couple of barbers and salons. But the vibrancy, the walkability that the, you know, the things to be entertained were missing. So we listened to the community. We added Airbnbs and retail and restaurant and winery and indoor golf lounges, and all these things that are fun and cool and trendy. And very quickly we started to see that the ecosystem was growing in such a positive way that we started. It almost looks like we were on Shark Tank and we were the sharks, where we were asking people, bring your ideas to us if they make sense. We want to be the supportive developer and landlord to give you the walls to come and be the operator in the business. I am not an operator. I don't want to have to staff these businesses or these restaurants or make pizza at 10pm Are you sure? I'm positive. Nor does anybody want me making pizza. But I want to be the one that can bring the space to life and then bring the passionate entrepreneur into that space to do what they do best.
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C
And tell us about is tenant mix
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A
important and why exceptionally important. They play off each other. There are synergies. You know, we've talked before about having dessert next to a restaurant where somebody's going to make a plan to come to a downtown to not just go to the restaurant, but to do all the other things that are part of, of, of that downtown. So yeah, you're trying to find compatible tenants. You're trying not to overload a certain type of tenancy. So we all the time, we're saying no to certain tenants that we don't think are accretive to what culture we're trying to build. And nothing against those types of tenants and I won't name all of them because I don't want to offend anybody. But we have an opinion and it's shaped by what the community is telling us of who would fit within. And it's not always the same. You know, we're in Plain City, we're in Hilliard, we're in London, we're doing some work now up in Delaware in my hometown. Each community has kind of its own needs and personality that dictate sometimes the type of tenancy that we bring in.
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C
You mentioned Crooked can and several really great businesses that started in those early days of Hilliard really going through its renaissance. What business opened or what tenant did you have that really helped you realize this is some serious momentum and it, it's begun.
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A
Yeah, it's a good question. So I think that we've had a couple of restaurant tenants that have. Have been really real catalysts. Let's go back to the beginning. In Hill, your Legacy Smokehouse barbecue restaurant, they had a great 10 year run in town. We had this dumpy Victorian home that someone, Chad Smock, who started Legacy Smokehouse, saw an opportunity to add to the restaurant stock in old Hilliard. We just didn't have a great restaurant stock. And while restaurants are hard and the success rate is low, they do add that vibe that we were going for. So Legacy happened and then Sexton's Pizza came in and then barstool sports came in and rated Sexton's Pizza. Put both Hilliard and Sexton's. It was unbelievable to have that type of national media. And then a couple came and we, we built Firefly Winery for them. So you had all of these what I would call local organic brands that it was people who lived in Hilliard starting these restaurants that were the catalyst for now Harvest Pizzerias. Coming in to replace.
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C
Super excited about that. It's great news.
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A
It's a, it's a great addition. Our downtown core we have, which I'm sure we'll talk about but a mixed, mixed use development that we were awarded in downtown Hilliard. We're going to have four brands not, not quite ready to share but a couple of, you know, bigger regional brands that will make a great splash there. So it, you know, it goes back to just having those restaurant concepts that believed in us, believed in that town that made, you know, forged a path to then get the bigger brand names that want to take a chance.
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C
If you could create the Hilliard playbook from, you know, looking back over the last 10, 15 years, what is that recipe look like that may be helpful to other developers that are listening.
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A
Yeah, I think again what we did is we came in and we would have neighbors and community members sit down with us for a Q and A and try to disarm this idea of it's Westwood or it's Andy's way and move out of the way or we're going to run you over. It was more so take the time to be collaborative. We did this out in London as well. We did a public Q A when the new developers coming to town to again just try to get folks to understand that we are collaborative, we're not combative. And that was again it was disarming and I think that it set the path for positive engagement with others. The restaurant piece was a big thing. We knew that people wanted restaurant optionality so bringing those folks early. We brought the entertainment side. There was nothing to do with in the downtown.
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C
I think that was a lot of feedback that you were getting, right?
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A
It was.
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C
People were looking for more things to do and I hear that a lot in some of the markets that we work in. It's hard because some, many of the things they ask, it's like they want free things to do and maybe there's not the funding or the source of interest from the public side to create the new civic center. You found a way to I think find that middle ground of using for profit examples but keeping them approachable and affordable.
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A
Yeah. And look, I would be doing a disservice to the city of Hilliard if I didn't credit that there is a good deal of public investment in that town.
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C
Yeah.
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A
And I get it. We are in municipalities. They don't have deep pockets publicly to do those things. But the city put in a splash pad.
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C
That's great.
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A
They brought Dora. Dora is an Unbelievable asset to these downtowns. And we've heard all of the horror stories about. It's going to bring folks the deplorables. I remember somebody saying in quotes, it doesn't. It brings the families down. The parents want to come have a glass of wine, have a beer. The kids then can run through the splash pad. Or on Thursday nights in Hilliard, they bring in bands which are publicly arranged, privately funded. And what I mean by that is there's someone at the city of Hilliard who's doing the programming, but they're going out to these businesses and getting sponsors, including from us. Right. And it's that type of collaboration that, look, do I always want to write the five or $10,000 check from Westwood Collective for these bands? Some years that aren't as profitable, it's harder to write the check. But I know, and we know that by writing that check and getting those bands on Thursday nights, you're bringing people down to the core. They're seeing all of those tenants that you've put into those spaces, and Rising Tide lifts all boats.
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C
So it's an investment for the future, too.
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A
Absolutely. So I just think the earlier you can get in and have that public, private conversation about how can we collaborate. Whether they have money or not, they might have resources to help program and plan. It's been huge for us.
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C
I think. Another Cadillac example of what I think you do really well is patience. This may surprise you, but I think I've observed you being very thoughtful about some projects and knowing that it may not happen overnight, but you're building something 5, 10, 30 years, 40 years from now. Tell me more about the term patience. And for other people that might be listening, how that's evolved for you.
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A
And my parents would be grateful that you said that. That's not always been my strong suit, but I think I've said on another podcast before that I think patience is a muscle that you can build patience just as you can going into the gym and working out. And we've had to do that. Nothing goes as quickly as I want it, want it to. But our mantra at Westwood, I tell all of our young, up and coming colleagues that you're planting seeds and you have to water those seeds. And many of those seeds will never germinate or grow into anything meaningful, but the ones that do are worth all of the time and energy and heartache and, you know, having to be patient so that that becomes a very critic. Critical education piece for our staff is, look, plant a bunch of seeds, go water them, and nurture them and, and it will eventually grow. And we're not as far into this as you. I always say you, you've, you're out in front of us a little bit. But we have had enough wins and enough success stories now that, that's the soul food. We need to keep going and know that this, this is meaningful and productive work.
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C
If you could talk to the younger version of yourself, is there any wisdom or lessons you would love to pass back 20 years ago?
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A
I'm sure there are, but honestly, I love that I was naive.
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C
Yeah.
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A
You know, I, I, I think that
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C
you have to have the courage to do stuff. And I think if we would have known some of the things.
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A
Absolutely.
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C
You may not have taken those steps.
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A
I, I have friends all the time who back in my early days were saying, you're crazy. What are you doing? Look how much debt you've signed on that now are saying, can I invest in your deals? Right. So it's just this funny full circle moment where. Yeah, I'm sure there are some, some lessons I would have rather not learn the hard way. Yeah, but, but being naive and not knowing and being competitive and all of those things, it fueled me to fight through those tough moments. You know, my father, you know, he was a landlord for a while, only for a handful of years because it was hard.
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C
Usually attorneys are risk adverse and that
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A
might been part of it too.
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C
But do you think that helped shape you, like things that he deals that he did, or what you would hear at home of conflict or lawsuits or anything that he was dealing with his world?
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A
Probably. But, but I was, my middle name is Thomas for a reason. Doubting Thomas was always something that was affectionately said towards me and I, I think I oftentimes went against the grain. So my father being an attorney, my brother is an attorney, I went the business route. I was a little bit more risk tolerant probably than, than the rest of the family. So I think again, sometimes I just like to swim upstream. And it again, over time that proved very fruitful and I've had, I've had some luck along the way. I tell people, you know, there are three things that I really hang my hat on. Working hard, not working anybody else to learning, constantly evolving. So the education piece and then there's this, the risk piece. How much risk tolerance you willing to take? I know a lot of people who are two of the three of those, very few who are three out of three. And the more times I talk to folks like you and others in our circle, you start to realize those who are willing to take risk, outwork the competition and constantly learn and obtain new information. They're the ones that tend to win in this.
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C
They're also a little crazy.
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A
We are a little crazy. We have a sickness. We have a sickness. A shared sickness.
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C
So taking the model beyond Hilliard, what did you kind of. How did you wake up and realize, hey, this has worked here. I've got this playbook. I've started to achieve some success. I want to take it other places?
- [24:04]
A
Yeah, I wasn't looking to grow in all honesty. Outside of Hilliard. I was senior level at the lending firm at Lumen that I still do business for. And Race Robinson, colleague now in Plain City, called and said, andy, I love what you're doing in Hilliard. I want to bring it to my hometown of Plain City. I'm not a real estate guy. Will you come and do it alongside me? I went out to Plain City and you just realized what a great building stock they have and the growth of that corridor in Columbus. And I said, let's do this. So we've now done three really marquee projects there. Had a colleague who was working for me that found a listing of. I want to say it was 40 plus thousand square feet in downtown London, a place that was not on the radar. But I had said, you know, I wanted to be in a 30 minute radius of Hilliard and I'd be willing to go out 30 minutes so I could still be home for dinner and to be with the kids in the evening. So London checked that box. It was 30 minutes away. It had great building stock. Both of those towns offer tax abatements in their downtown, which was unique. Hilliard doesn't. They didn't need to. In all candor. And then most recently, Delaware has drawn me home. You know, my parents are getting older. It's an excuse to get up there and reacquaint myself with the people in the town. And it's. I think those are more legacy projects where I can go back to my hometown. So again, we often talk about how organic this business is and sometimes best laid plans, you throw them out because you're led a different way. And that's really what's happened in our universe.
- [25:46]
C
The projects in Plain City, I happen to live five minutes away so I get to enjoy them. You know, when you work in, you know, I love Bell Fountain and I love what we build here, but sometimes it's good to go to another town where you can sit down and actually enjoy a dinner and not worried about.
- [26:05]
A
Absolutely.
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C
Sewer drain that's backed up or a trash can that's not getting empty. But the clock tower certainly is something you have to be incredibly proud of. Not only what you did in the transformation of that building, but also the finding the operators and the quality restaurant that you have there.
- [26:22]
A
Well, thanks to you for bringing the operator to us. But we are. I mean, it's. Every time you go in there, you know, that was not an easy project. Contractor issues, whole host of things. I'll spare the audience, but really tough to bring it to a head. And now to be able to go in there and just take a deep breath and know you're in good hands with unbelievable tenants and a building that, you know, it was one. It was built. Buildings were built better then than they are now. But for us to be able to go in and really put our finishing touches on it, like, it just. It's exceptional. But to your point, it's really hard to go in your buildings, as you always see something that needs fixed.
- [27:01]
C
Oh, don't worry. I text some of your team members things that I see, and they do
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A
the same for me.
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C
So thinking through some of those deals that haven't played out the way that you hoped they would, how do you accept that loss or how do you pivot? And I think that's another lesson that we probably don't talk about a lot. People normally see the successes on the surface and they think that it's very easy, but in reality, you're making tweaks and turns and readjusting information almost all the time.
- [27:37]
A
Yeah. So I'm lucky. Not every small town developer has the multiple revenue streams that we do. So we have the lending business at lumit, we have the apartment portfolio that we built for many years that has become very profitable. And then we have what I call the missional development work that we're doing in these small towns. And the problem children are the deals that are just grossly over budget. And those happen in these old buildings more often than any of us want to. Want to admit. So I'm blessed in that I have these other means to fund those holes, or those are deals that can really turn a business upside down in a hurry. But it allows us to take these apartments, which, you know, they're not the sexiest or the most fun. They're suburban apartments, and take those dollars and plug them into these, these hometown deals, these, these downtown deals. But I think, you know, once you've weathered a storm again, you can talk about building up these muscles, whether it's patience or whether it's getting through the challenging days. I mean, there are days every year I say I'm selling it all, I'm done.
- [28:47]
C
You know, you get that email, it could be a government regulator, it could be, you know, a tenant, an employee. Employee that leaves like all those. If you've not been through that as a, as a developer, it's probably coming.
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A
Yeah, right. It absolutely is coming. And those storms are the test. And once you make it through those challenges, you know, a roof that you didn't think you were going to have to repair or replace and insurance isn't there because it's not an insurance related
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C
and your bank may even decline you to get the extra capital to do it.
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A
That's exactly, that's exactly right. So you get through it, you learn from it, you put some protections in place the best you can to prevent that in the future and you then breathe your sigh of relief and move on. But look, this business, you get kicked in the mouth, you have sleepless nights. Yes, but again, you talk about the clock tower or those deals. Firefly Winery was another one that comes to mind that when you get to the end of an arduous marathon and you can just sit there and take it all in, that feeling is the fuel you need to just keep going.
- [29:59]
B
Running a business is risky enough. Your insurance shouldn't be at CoverLink. It's people over policies, real advisors who understand your business, your risk and your bottom line. Protect what you've built.
- [30:12]
C
As you think about the industry, what's most exciting for you right now, do you think for developers that may be just be getting into the game or if you want to expand or grow your portfolio, what, what has you excited right now?
- [30:29]
A
I think there are some real shifts post Covid that you know, particularly for us who, who are playing in this small suburban downtown development space. I just think the world is looking for developments to fill needs differently than it used to. The big downtown Columbus projects, I mean you see guys like Jeff Edwards who've been very successful pulling out of the down the big downtown projects because I think there's a fundamental shift. We know there's a fundamental shift. We know the down, the major core downtowns are different and these suburban downtowns are becoming where people want to eat, drink, be entertained, shop, share in community. So for me, in the space that we live, I'm just really excited to see how the next five to seven years play out in terms of how these communities and these neighbors within these communities continue to redefine the spaces in these suburban downtowns because every day there's something new and exciting that's happening, particularly in the markets that we're playing in. So while there's a much bigger industry at play, I just, I love when there are, there's change and people have to find a way to adapt and you're seeing that play out in a big way.
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C
What is housing going to look like as we look into the crystal ball?
- [31:58]
A
Look, we're working with a gal at Ohio Wesleyan, unbelievable undergraduate who has a concept called grad house. And I can talk about it because it's, she's getting some traction with it, but it's kind of micro living, independent, you know, tiny home type type living in and around college campuses to retain people that graduate from Ohio Wesleyan. Instead of letting them go to the big city, give them an affordable housing option, a trendy, fun, different housing option nearby campus. So you're seeing all of these people trying to solve this affordability crisis in really unique ways. And I'm, I don't have those answers. If I did, we'd have the next billion dollar idea. But you're seeing 3D printing of homes. So the speed and execution of getting homes from start to finish faster would, would allow a cheaper product to be built, not more, less expensive product to be built. So I'm just, I'm really excited. You've got factories now that are doing modular housing where they can assemble apartments. You know, in, in a factory build year round weather is not an impact. You see zoning codes changing to allow accessory dwelling units, adus in the rears of properties above garages. All of that to me is very exciting. You know, apartments are a four letter word in most communities. But I think if you had the ability to have a, an accessory dwelling unit in your backyard and be a landlord and offset some of your mortgage, you know, those are the things that people embrace. So I don't know, it's a blank canvas. We'll see where this goes.
- [33:39]
C
Well, you know, I look and I admire you've done a few unique models in real estate things like co working and creating shared office space. You also have invested in building an athletic pavilion for basketball, something that you're very passionate about in your community. You've done models like creating virtual golf clubs as you think of different things that is like the future. Is there anything that you're curious about right now or studying or looking into for real estate?
- [34:14]
A
Well, I think the AI craze has us really interested in terms of how you use that to find new designs. One and then speed up the design process too. So I hate to be cliche because everyone's talking about AI, but I think it's so relevant even in real estate development that I talked to some of our design team, some of our architects that I'm convinced I can give them a parcel of land, give AI a parcel of land in the very near future and tell them this is the type of product I want built there. I need you to do the electrical, the plumbing and the H vac design. Here are the code requirements for the city. Here's the Ohio building code that you have to adhere to. Show me what's available and in minutes rather than months. And look, one of the things I lament about all the time as a developer is how much money you have to spend before you. The preplanning, the preplanning, the engineering, the
- [35:13]
C
architecture, and it may not even go through. We've done a project together where we had really great visions and big hopes and it just didn't.
- [35:21]
A
That's right. Sometimes six figures worth of plans that if interest rates move against you, the economy moves against you. The product type is no longer in vogue. Those plans now are collecting dust on a shelf somewhere and cost you hundreds of thousands of dollars in some cases. So I'm really excited about how can AI transform Really the pre planning piece of this. And no offense to all of my architect and engineering friends who are watching, I think there's still a role for those folks. It's just going to look differently. So that will allow us just efficiencies that we've never seen before in our lifetime.
- [36:00]
C
Is there any fun, creative ways that you're using AI to make yourself or your team more efficient that you're like, hey, this prompt was actually pretty helpful to me. Or I'm using this tool. Anything you want to.
- [36:14]
A
More so in space planning, again, we're taking some of these ideas and I tell people all the time I'm a visual creative. Meaning. Meaning I need to see someone else's really cool idea and then steal it and modify it.
- [36:26]
C
Make it authentic to you.
- [36:27]
A
Correct.
- [36:27]
C
Yeah.
- [36:28]
A
So I'm really good at responding to what AI gives me, whether it's good or bad. So we have a nine acre site in Hillyard that the landowner came to us recently and said, hey, what would you do here? And we have enlisted architects to really help define what we can and can't do. But the reality is we went in and we modeled the site with AI. We came up with some really neat concepts for a concept called the garage, which would Be an outdoor turf, outdoor bar, outdoor concerts, right next to a high end miniature golf course. So again, something to do in these towns that need more activity. And what it spit out was exceptional. So we've. The other piece is. One of the things that drives me crazy is as the business leader is how many people come to you and ask a question before they've tried to find the answer. And AI now is that tool where we say, look, have you asked chat before you've come to us? Right, and if you haven't, go do it, then come to us and we'll corroborate whether what they're giving you is good or bad. And it, that piece frees me up to be the visionary, the, the leader and not be so much in the weeds. So again, every day we're asking our staff, play with it, just learn it, learn how to prompt it, let it, let it start to learn who you are and what you're, what you like. So again, I am by no means an AI expert, but it is an amazing tool. And then you get into running Airbnbs and all of these different things that I can be that bot that makes that process even more efficient.
- [38:06]
C
That's right. It is going to be wild how you know, more of us are going to be incorporating those tools, more consumers are going to be incorporating those tools. And there's just shifts, there's these massive shifts. The other shift that could be quite interesting for historic downtowns is some people rebelling because of how much time we are on devices. I mentioned I got first pair of eyeglasses about six months ago and I'm fighting it as long as I can, but how often we stare at devices and, and what that's doing to our bodies and the need to maybe go a little more analog. And I think that's. Historic downtowns are perfectly set up to be these experiences that you can sit down and have a conversation with someone, you know, admire the beautiful streetscape, walk in and actually physically shop in a retail store. I've been probably in three or four historic downtowns over the past few weeks. And the ones that have used bookstores, the used bookstores are popping. I mean, people there. And I'm just looking at the audience, the people that are in these shops, they're generally younger people too. So I don't know as you, you know, you're a data for kids. As you are around your kids and looking at them being future consumers does that shifting how you're thinking about and planning about designing some of your projects.
- [39:31]
A
I Love that you said that. I think the fast paced nature of life, including the amount of information available to you in your pocket, on your phone, has folks craving simplicity. And not everybody, but I think there's. If people are being honest with themselves, they want a simpler, easier way of life. And these old downtowns are nostalgic. And nostalgia is an unbelievable drug. But I go back to, we used to vacation at lakeside on lake Erie. It's a charming gated community. No one locks their doors. You feel like you go back in time 40 years. The patio restaurant at the time was cash only, old school movie theater, putt putt, shuffleboard, you know, a diving dock into the water. No one, even when phones started coming out, was using a cell phone. It was almost like you walked in there and people forgot that they had a device in their pocket. And I look at that community and how genuinely happy people seem to be on that type of vacation. And that's what I want for our downtowns. The engagement. And as a father, you know, the looking somebody in the eye, the putting your phone away and having real conversation, getting out of your bedroom and going to be social with your friends, that. That is something that we have forged in our community. Now the problem then you're dealing with, which I think is a great problem, is what do you do with these darn e bikes that are flooring through your downtowns? And I would look anybody dead in the eye and say, look, that's the problem we want. Because these kids are now out of their house. They're out of their house and they're engaged and there's a reason they want to come down there. Whether it's, you know, the ice cream shop, the pizza place, to sit on a bench with their girlfriend by the splash pad. There's a reason they want to be in these downtown cores. So I say let's solve the problem. Let's have e bike parking. You know, put the restrictions you need to in place, but invite them down here because they become a critical consumer to a lot of our tenants.
- [41:33]
C
I love that as you travel around the state and you look at other places that are trending, that are interesting. Any shout outs of other really awesome downtowns or places that you're keying off of right now?
- [41:49]
A
Look, we, we travel for aau basketball all the time and we get to go to these places. So Hamilton, Ohio is a really unique example at an old paper factory that's now called spooky nook. It's a incredible model. It is, yeah. That's a town that literally people not very long ago wouldn't want to walk around town at night. And now you have all of the coffee shops and breweries and things around this, this hotel and event center and this, this basketball volleyball facility. And you look at places reinventing themselves. Obviously that was a paper town that when that paper mill went away, that town started to deteriorate and they thought, okay, sports tourism is something that we can use to put ourselves on the map. And they threw resources behind that. So I love these towns that were prominent. They fell on hard times, they've reinvented themselves in a completely different way. And that's one example of, I think, great public private investment and leadership that it's still, I think, probably in its infancy on what it could be. But that's one place that really struck a chord with me.
- [42:58]
C
I think a goal that a lot of developers have is how do they get their town strong and sustainable? What signs tell you that downtown has become self esteem? It doesn't need those grant dollars that public prop up. Is there anything that you kind of look at when as a developer is like, I do this test or I do some mystery shopping that really kind of helps determine the real situation there?
- [43:28]
A
Yeah, a handful of things. What's it like in the middle of the day? You know, is there a lunchtime crowd in those towns? And if there's a vibrancy from 10am until 3pm they're doing something really well because that is a really tough stretch of time for retailers and restaurants. So if there's a vibrancy middle of the day, why? I want to know why.
- [43:54]
C
Obvious.
- [43:55]
A
The obvious one is if storefronts are full, that's a great. And then, and then people who's down there, what are they doing? Are they. Are they there for a meaningful period of time? Are they stopping in to get their dry cleaning and leaving? But the towns that people come and they park and they stay for hours tends to tell you that they're doing something right with those downtowns.
- [44:15]
C
Great example. And I think a lot of developers rely on demographic data. They're looking at things, you know, on their computer, but doing that real walkabout test, eating in the restaurants, spending money in the shops, and observing from early till evening, weekends versus weekday. Those are some really great tips. Andy. This is my favorite part. This is like our rapid fire. I'm going to shoot you a few key questions. One project you're most proud of,
- [44:46]
A
Westwood Field House. You talked about the gymnasium facility. It's arguably my least profitable deal. I've ever done. It's just hard to make money in a smaller boutique gym. But it's the one we've made the most family memories, most community centric. And frankly, I just love giving kids youth, the opportunity to play the game that I loved.
- [45:06]
C
I love that. Can your kids beat you yet?
- [45:09]
A
Not yet.
- [45:10]
C
They're working.
- [45:10]
A
They're getting closer by the day. I'm going downhill, they're going uphill.
- [45:13]
C
And one day we'll cross a business every downtown needs.
- [45:18]
A
Oh, boy. You know, it's funny. I just met with a salon owner this morning. And salons and barbershops bring people during the day.
- [45:26]
C
They do.
- [45:27]
A
So as much as people may roll their eyes at that response or they
- [45:31]
C
say, we already have those. You don't have enough.
- [45:33]
A
That's.
- [45:33]
C
That's really the answer. You do not have enough.
- [45:35]
A
That's right. So. So again, to. To start the foundational core of redeveloping a downtown, having salons and barbershops are important.
- [45:43]
C
I agree. A mistake that communities make
- [45:49]
A
thinking they have all the answers.
- [45:51]
C
Good point.
- [45:52]
A
You know, I think bureaucrat look, we have a great city planner in Hilliard. Not every community has that and they're trained professionals and many of them want their ideas for a town. And oftentimes they don't live there, nor are they from there. So I think making sure they're also listening to what people want.
- [46:13]
C
One thing communities worry about too much. That shouldn't matter.
- [46:18]
A
Oh, boy. Signage.
- [46:22]
C
We could do a whole episode about signage.
- [46:24]
A
Yeah, I mean, like that's.
- [46:26]
C
I know.
- [46:26]
A
It's one of our biggest pain points, I think so might not be the sexiest of answers.
- [46:30]
C
I thought you were going to say parking, but no signage parking.
- [46:34]
A
Maybe I try to push that from out of my brain.
- [46:39]
C
One trend that you're most excited about.
- [46:44]
A
Outdoor space.
- [46:45]
C
Yeah, People really desiring outdoor spaces. They can hang out.
- [46:50]
A
There's a development. My favorite development in Ohio right now is Quarry Trails in Hilliard. It's old Quarry. Just unbelievable outdoor amenity space. And for me, again, maybe it's just that I'm stuck inside, you know, working all day. But you see, there seems to be even in places like Ohio where the weather's not perfect year round, that people want to be outside.
- [47:15]
C
I love that. So kind of as we're wrapping up this episode, I'd like. I got a closing question for you. Imagine someone listening, owns one or two buildings, and they're downtown on Main street, and they're not trying to become the biggest developer. They simply want to make a meaningful Difference. What's the mindset shift that takes them from being a property owner to truly being a neighborhood developer?
- [47:40]
A
How much are you willing to subsidize? So those early years, you know, you want your tenants to be successful. You want to bring tenants into your town that might not already be there. Are you willing to not make a dollar for some period of time to get the right type of business in your town and in your building? Because once you do again, others will follow. And then the pop comes and, and I've been in this long enough, bought my first building in 2006, so been in it long enough to know that those early projects that don't make a lot of money, it's a marathon, not a sprint. And eventually they make money. Rents grow, you pay down your debt, there's appreciation of your asset. So again, how long can you be uncomfortable in. In the financial side of it?
- [48:36]
C
There it is, folks. That's the secret. And truthfully, it I'm. It really is the early days of building and rebuilding downtown Bellefontaine. It was very lonely and it took putting all the chips in, knowing very well that maybe this wasn't going to work. But some things we had to, you know, put that, that right leasehold improvement in the right light fixtures in the space, the right signage on the building, and then find those right tenants and operators that you lock arms with that you're going to work harder than anyone else to make it work.
- [49:10]
A
That's right. That's right.
- [49:12]
C
Well, I think today that the story. I know your story reminds me that meaningful developers aren't just measuring square footage. They're not just looking at occupancy and the financial returns. It's like, what can we do to make a positive impact in our community, in our neighborhood, amongst our team members? And that's one thing I think, Andy, you built an incredible team. There's so many things that I know that, that you've inspired me on. And I think for a lot of the other listeners, they're just excited about what's to come. And I think you teased out a few of those projects today. I know we're looking forward to watching them and seeing them continue to grow. The difference between developing property and a place is that being becoming that neighborhood developer. Thank you for joining us on the podcast today and excited to follow your journey and what's to come.
- [49:59]
A
Thanks for having me.
- [50:04]
B
Thanks for listening to this episode of the Small Nation podcast. Be sure to follow the show for future episodes on your favorite podcasting platform.