The ROI of Art in Architecture: Designing for Better Returns

Years ago, a young sculptor named Jory Morgan Walker helped shape the design of iconic Las Vegas landmarks like the Luxor, Paris, and Mandalay Bay through his fine arts expertise. Today, that same classically trained artist leads one of the West’s most prominent architectural firms, Beecher Walker Architects, blending art, technology, and architecture to create top-performing spaces for commercial real estate investors. Walker shares how to harness the power of design and functionality to boost ROI in even the most challenging market conditions. Discover his insights and strategies for success in today's dynamic environment.

Transcript

Speaker 1 0:04

Welcome to Peaks and Portfolios presented by PEG Companies, your go-to podcast for all things commercial real estate investment. I'm Rachel oh, and together we're diving into current events, trends, issues and opportunities impacting the CRE investment space, from dissecting the latest market moves to sharing insights on today's commercial real estate landscape. It's time to maximize portfolios here in the Peaks of the Mountain West and beyond. Okay, welcome everybody from the Peaks of the Mountain West. Thank you so much for joining us today for this week's episode. I am particularly excited about our guest that we have today joining us, our longtime PEG partner and esteemed guest, jory Morgan Walker, who is the principal architect and president of Beecher Walker, an award-winning architectural firm here in Salt Lake City, utah. So, jory, welcome today.

Speaker 2 1:03

Hey, thank you, I'm glad to be here.

Speaker 1 1:05

You know I was reviewing some of the notes for today that the team has put together, and again I am just so excited to be speaking with you. We try to cover very different topics and we rarely talk about design and art, and so I'm hoping that you can kind of take us to a whole new level.

Speaker 2 1:26

Perfect. I would love to. I'd like to explain what kind of what we do and how we get there.

Speaker 1 1:29

Yeah, no, no, thank you. So for those of you that may not be as familiar, beecher Walker is a very prominent architectural firm here in Salt Lake. We have done I don't know, tons of projects together. Right, right, right, joy, like even our building that we're in.

Speaker 2 1:44

Oh yeah, I started with you guys in the very beginning, so we've probably done close to over a million a million square feet of office and retail and apartments and hotels and just have worked with you guys for about 20, 20 plus years.

Speaker 1 1:57

Wow, you've just dated yourself, by the way, but I'm not that crazy, no, no, no, but that's so great. Well, not only that, you know, when I was looking at your biography and everything, it sounds like you're well-versed in not only the architectural side, but the art side. So you have three degrees, right? You've got two bachelor's one in fine arts, one in architecture, and then you also have a master's in architecture from the University of Utah. Is that right?

Speaker 2 2:20

That's correct. Yeah, but that's correct. Yeah, but I went to school it's kind of a crazy story so I've always wanted to be an artist and so both my parents are concert pianists. So growing up we had to sing and dance and all that kind of weird stuff, and so by the time I was in high school I'd done like 75 musicals and plays. Oh my gosh, and so when I got back to my mission, I got a full scholarship to go to a school in Missouri that was an art school that had a mule barn theater that while you're going to school there you get your equity points.

Speaker 2 2:50

So you get your equity card and I got a full scholarship in theater and dance. But I always wanted to be an artist. So I went there and I played Tony in West Side Story. We played at the Kennedy Center in DC, Wow. And while I was there I got my art portfolio going. And so then I transferred from there to University of Utah and got my undergrad degree in sculpture and painting and my wife was like you need to get a real job, I'll be famous someday. I'm going to be a famous sculptor and make a lot of money. And we had, like you know, three little boys and she was working nights as a nurse.

Speaker 2 3:23

She's like you can get a real job, and so I went back to school and got my bachelor's in architecture, my master's in architecture, and then started my firm about 28 years ago in my basement, wow, and now you're one of the biggest and most prominent firms here in Utah and we're going to talk a little bit more about that.

Speaker 1 3:39

But a return on investment isn't just costs and interest rates and whatnot, but it's also the quality and design of what we're building, and then that, I think that I think, impacts the rents and everything that we're able to capture.

Speaker 2 3:54

So one of my favorite things. I tell clients all the time I said it doesn't cost any more to stack bricks right as it does to stack them wrong. Yeah.

Speaker 2 4:03

What I mean by that is every building's got bricks and stone and concrete and footings and walls and glass. But spending a little more time on the design and getting the design done right is one of the things that increases the value greatly on a project. If the design's done well, you can walk into a project and say you know it wasn't designed very well, but it pretty much costs the same or more than a project that is designed very well. You can walk into a project and say you know it wasn't designed very well, but it pretty much costs the same or more than a project that is designed very well. So it just takes a little more time to stack the bricks right instead of stacking them wrong.

Speaker 1 4:34

Yeah, no, I 1000% agree with that. I just think that you know, when I look, when we work with investors and investors, by the way, they very much care about what something looks like. You know they they have ownership and they're proud to be able to drive by something. It's like that's my building. You know they may have like a fractional share of ownership, but you know when they're proud about and I think beauty is universal Like people get what, something when something is well-designed, they can see if something is not well-designed and something that is. And so I wanted to back up and kind of talk a little bit about you know, I think your background to me is so unique in that you're not just a straight architect.

Speaker 2 5:14

Yeah, I think that's really important to understand because I believe that architecture and art really interrelate. And when I was in sculpting school, we would have a live model on a stand in the middle of the room right, and we would have our clay that we were sculpting on a little stand in front of us and they would turn the model like 10% turn and keep rotating the model and you would turn your piece as you were sculpting and you would keep adding and subtracting the clay and looking at the profile, looking what you're looking at and while they're turning the model, pretty soon what you're working on became what you were seeing, and it's a process of of looking at something, making a decision, changing it, going back and forth and having the ability to have that eye. I taught University of Utah School of Architecture a couple semesters ago and I was telling the students that I can't teach you how to see, and seeing takes really traveling. You just said you just traveled. My wife and I just got back from Prague and Poland and we went to Montforte in Italy and then went to Turin and we're gone about a month and I tell my students that you've got to learn to see, and what I mean by that is you've got to spend hundreds of hours looking in books. I remember as a young child my mother had these beautiful large art table books. One was Leonardo da Vinci. It was like two and a half feet, like one foot six by about six inches thick. And I remember when I was a little boy she would let me wash my hands first and then I could spend time looking through her art books and I spent hundreds of hours looking and seeing.

Advancements in 3D Architectural Design

Speaker 2 6:59

And I think that's what makes architecture so cool is now, when I design, I design everything three-dimensionally and I'm constantly looking at it, turning it, putting perspective, turning the shadows on it, and I tell people all the time it's crazy, but as I design, the decisions I make just keep progressing. It's kind of like painting. You add a layer and then you add another layer, another layer, and pretty soon it starts going the right direction. And when it goes the right direction you get a chill on your back and a chill on your spine and you know you hit it, you know you're going the right direction. I tell people all the time when design is right, it will feel peaceful and good. When it's not right, you'll kind of feel a little angst and a little bit of attention about it. And so as I work with clients and work people, it's this ability to see and that's why you know understanding that as an architect, as an artist, I'm constantly looking at what I'm designing, rotating in 3D, and then modify and changing and going back and forth, and then when it starts clicking, I get so excited, I just can't stop and it just keeps flowing and going, and so to me that's where it makes a lot of um, big difference.

Speaker 2 8:13

But what's really cool about architecture? Now I tell the story. I think it's a really good analogy. So, back in the, you know a mason, you're a Catholic priest or Catholic, and you hired this mason to design a cathedral for you, and that mason would take a piece of clay and he would draw a floor plan of what the cathedral would look like, and then he would draw a section of what the cathedral would look like. We use that archaic convention of portraying architecture almost to this day.

Speaker 2 8:53

Most people don't understand plan section elevations. It's something that you've got to kind of learn. But if I create a language that's a 3D language that you can understand and see, then you and I can be on the same page and I can help you understand why I'm doing and why it's important and why this works and why this doesn't work. And so, by creating everything we do now in 3D, it forces us to look at it and create a language that the client and the developer and the investor can understand, so they understand why I'm making these choices and why we're doing it this way and why this works and why it doesn't work. And so to me that's really an important aspect of how we design today. It's even got to a point now that you know I will do everything in 3D and then I've got a software where I'll do animations and renderings, put materials on it.

Speaker 2 9:46

But the other cool thing about it is there's a new program called Revit that came out about seven or eight years ago, where we actually build the entire building three-dimensionally in the computer with actual studs, bricks, concrete foundations, and so it forces us as architects to solve the problem, to really think through to the end.

Speaker 2 10:06

Because, remember, there was a lot of times before that I'd go to a building and go oh my gosh, I had no idea that duct and beam were in the same place. You wouldn't really know until you were actually building it. But since we build it today in the computer and all 3D, we have the ability to really understand what's going on. Even our structural engineers and our mechanic engineers build their models in 3D. We put them inside each other and then the software has what's called clash detection, where it can see if there's issues, if there's a beam running through a duct or if there's a toilet sitting on a beam or those kind of things. So what it does is it really has helped us, as architects, become more problem solvers and problem creators. Yeah, a lot of times there's the you go to the job site and the contractor would be would be cussing the architect, sure you know, because why? Oh my gosh, what was?

Speaker 2 10:54

he thinking yeah, yeah and today we really have an ability to if really understand fully, yeah what the building's going to be when it's being built. And the other cool thing about that is for construction, the contractors today can take our models because they have building information called BIM building information modeling in them and they can plug it into their computers and do takeoffs and know exactly how many studs or how much concrete or how much sheetrock or how much glass. So even their estimating and their cost takeoffs are much more correct because all the information we can now give them. So it's changed how we do things.

Speaker 1 11:32

Yeah and so okay. So I love that and I love how technology is aiding in all of this and there's collaboration, and then to your point, how there's hopefully less friction right between the architects and the developers or in the construction group, because you know you're not making missteps in the way. So does that mean then, everything is more efficient, that we can be more cost efficient, that things are shorter?

Speaker 1 11:56

like things take much shorter than they used to Like. Help me, because, again, this is, you know, we are listening bases, investors, and so how does that impact then? Just the overall investment?

Speaker 2 12:07

Well, a couple of things it really does. You know, for us as architects, it costs me more. I've got to hire more advanced, technically advanced and more technically trained people. You don't really have just draftsmen anymore. You know it used to be. You know, in Frank Lloyd Wright's day, if you've seen some pictures of the studios they were in, there'd be a studio with 150 men or women leaning over a desk with lights, things on their arms to keep their dirty hands and stuff off the drawings, and they were drawing everything by hand. Wow.

Speaker 2 12:41

And today we can do that same amount of work with about 10 people Wow. And today we can do that same amount of work with about 10 people Wow. So it's really it's. It's. It's helped the profession a lot, but it's also made it so it's a lot harder profession to get into, because you need less people to do the work, but also you need smarter people, because you can't have just people that aren't trained, just picking up red lines. You got to have somebody who really understands architecture and how it works.

Speaker 2 13:05

And even when I was teaching the design school at the University of Utah, I even told the guys even if you're not doing the design, design goes all the way through the project. So even though I might design the initial concept for the project, if you're working on it, you've got to keep all these design ideas in your mind why you're doing the detailing, why you're doing other things. So the design goes all the way through the project. And then what's really cool about it, too, is also we can even put a virtual headset on and you can actually walk into the building today wow, you know and really look around, so there's no way it's really gotten kind of crazy, but it really has helped us become become better at justifying why we're doing what we're doing, instead of saying you just got to trust me, it's going to be cool.

Speaker 2 13:51

I can show you why it's cool and why it works, and why it's worth doing it this way. Yeah.

Speaker 1 13:57

So okay. So now let's bring it down to kind of a real life, real world example. You know costs are higher now than they've been in a while. You know labor is expensive, materials et cetera, interest rates and I'm just talking about, you know, in our world of construction and development, interest rates are such that financing now is much more expensive than it used to be, and so we just have to be tighter and smarter all around. How do you like, if a group comes to you and says, hey, we need to build this, but this is your budget and, by the way, we want it to look best in class, world class? How do you accommodate, you know real budgets and needs and still not sacrifice your architectural principles? I mean, what do you do to deliver on that? Because that probably happens every day.

Innovative Solutions for Real Estate

Speaker 2 14:45

Yeah, I'll be honest with you, that is. You know. That is kind of what my gift is. I tell people all the time you know why do we have so much work, why do we have so much under construction? That's because I have the ability to look at and know what we need to do to get it in budget. I'll give you a great example. You know we've been working with your staff working on the Freedom Commons apartments which is a bus, building your office building.

Speaker 3 15:08

Yes, and we've worked on it for a couple of years now. Yes.

Speaker 2 15:11

And you know.

Speaker 1 15:12

And you know we want to push that, we want to be top of rents, we want to deliver something that is going to be aspirational and hopefully push the rents. But go on, go on. But we have to make it work. So just curious.

Speaker 2 15:23

So we've gone through probably 15 different versions and renditions. But what's great about it is I'm really quickly at pulling together a concept and so we can create drawings to a schematic level pretty quickly that the contractor and developer then can put some numbers to and see where the budget gets. What's really struggling now is our price of concrete here in Utah has almost tripled.

Speaker 1 15:50

Right.

Speaker 2 15:50

So the cost of parking and parking structures and podiums has just gotten crazy. Yeah, the cost of parking and parking structures and podiums has just gotten crazy, crazy, yeah, so it's forced. You think about it. We've gone from $18,000 a stall to $38,000 a stall for parking structures, wow, and so it's one of those things that's made it very, very difficult to make especially apartments work. Because you do apartments, you think about it. Every bed needs to have a parking stall. Yeah, yeah. So if you're doing 225 units, you might have 450 beds. Yeah.

Speaker 2 16:20

Well, all of a sudden you have that many parking stalls and then you double the cost of that parking stall. How do you make that pencil?

Speaker 2 16:26

Yeah, and so really interesting. So we've been having the opportunity to really try to think out of the box and really try to think of different solutions and different ways of doing things. And so I think what makes this work really well is the ability to 3D model it, look at it, give the client something to visually look at, but then give to the estimators enough information that they can do a justified guess to make sure we're going the right direction. And I think that's the key and that's what we've been doing a lot of now is designing, working with the estimators, because what happens is you know, it's an interesting world we're living in right now.

Speaker 2 17:04

You think about the cost of money, and the cap rate is kind of the amount of investment you're going to make on your investment kind of thing, right? Well, what's happening right now is that banks are offering, if you do a T-bill, you can get 5.5% on your money without any risk, right? So if you're going to invest in something, it's going to be a two to three year payout, right? You want to at least get maybe a six, maybe a six and a half, maybe even a seven.

Speaker 1 17:31

Seven is the going minimum, but yes, yes, yeah, so you need that to make it work?

Speaker 2 17:36

or why would you invest in something and not knowing that it might not pay off?

Speaker 2 17:39

and it might be a couple of years Right. So the challenge is, with the cost of construction so high, the cost of money so high, I think that's the trick. And so it's thinking out of the box, thinking differently and then creating scenarios very quickly that we can put numbers to and start steering ourselves in the right direction. And so, on the Freedom Apartments, we've really gone back and forth from doing two levels of podium parking with the podium with the buildings on top, to saying, oh gosh, that's 38,000 installed. That's pushing us out of the box. So what's something else we could do? How can we make it work? And so we've come up with a solution now where we've got a standalone parking structure in the middle, because a standalone parking structure is cheaper than the podium parking structures, and then kind of plugging the buildings into it, and I think we're going in a really cool direction.

Speaker 2 18:31

I think we're finding solutions. But that's what it takes in this market. It does you. But that's what it takes in this market. It does you know it's crazy. I've got about $600 million right now under construction, but it's all stuff that was financed and budgeted before.

Speaker 2 18:43

Before the rates it was a year, year and a half ago, even though it's under construction now. Yeah, and that's what people don't understand as investors. Yeah, if you want to be under construction in six months to a year, we need to start right now. We have to design it, get it budgeted, get the entitlements, which are the approvals from the city. Well, that's the other thing too right Cities are not.

Speaker 1 19:07

I mean, you're on their timetable, so that delays things. Yeah, you've got that whole element. That's.

Speaker 2 19:12

The tricky part is that you know, all of a sudden the markets let's say in four months, five months, the markets kick in, the election's over, the rates come down. There's like $22 trillion sitting on the sidelines. People are ready, there's a ton of need. So all of a sudden that breaks loose and you guys call me, say Jory, let's go.

Speaker 3 19:36

Well, we're six months to a year before you're going to put sticks in the ground.

Speaker 2 19:38

And so that's where I feel right now we're starting to get busy again, because people are saying you know what? We got to have things teed up for the next three or four months, because that's when things are going to start cranking again. And in order to tee them up, we've got to start designing it, we've got to work with the city, we've got to start figuring out how it's going to work, what it's going to cost, start getting the approvals, getting the budgets figured out. And so it's tricky, because right now people think well, gosh, that's four or five, six months away, but it takes us at least four or five months to get the project approved. You see that things are turning. It's almost too late to jump in. You already kind of missed the boat a little bit.

Speaker 2 20:27

So it's one thing we're seeing a lot of.

Speaker 1 20:29

Yeah, we really believe that this time period will be a vintage year for real estate. The numbers don't necessarily pencil that, but the supply and demand, and actually it segues so well into what I wanted to talk about next, which is, you know, this economy and lifestyles have created, you know, what we believe is more of a generation of renters. Right, Today's, those folks that are entering into family formation stages and whatnot are delayed, you know, by a decade. Almost two People are, you know, valuing experience over, like, ownership. We have more renters by choice than ever before. It's not because of income, but because they don't necessarily want to be strapped with a mortgage and obviously mortgage rates are such that it's not as accretive to them. So, you know, we talk about, if that's the case, we need to as a real estate. You know, investment firm, look at more multifamily, look at more residential. That includes single family rentals. And there's, you know, now we're catering to a whole different type of renter which really values experiences. Right, they want to live in spaces that are conducive to their lifestyle.

Speaker 1 21:46

They care about design, right, Like nowadays. You know, because I'm an Instagram person, I Instagram, I scroll, I look, so I am exposed to so much more design than I ever have in my life. Like I follow interior designers, I follow architects, I you know, and obviously in the business that I am but now it's like, oh, I don't have to live in someplace ugly, I can live in a beautiful place like that person. And so now there's you know, when people choose, they can choose beautiful spaces. You know when people choose, they can choose beautiful spaces. And so, anyway, I'd love to hear your thoughts on I imagine other groups are approaching you with this like we need to think more thoughtfully about the spaces we need to think through, like you know, working from home, we need to think through the different amenities that we want to bring. Tell me how that has changed or evolved over the last decade or several years and how that's impacting the way you're approaching, let's say, any kind of residential design.

Evolution of Office and Living Spaces

Speaker 2 22:43

Well, it's really interesting. I'll give you a little background. So 10 years ago I've done over nine million square feet of office. So I've done a crap little office. 10, 15 years ago the interior design of the offices was pretty basic. We'd do some corporate ceilings, nice furniture, nice carpeting, a nice lobby, but it was pretty basic. It was nice, it was elegant, but it wasn't anything crazy.

Speaker 2 23:09

Then the dot-com boom happened and all of a sudden you had all these young guys, young women and they're making these incredible businesses that wanted their spaces to speak about them, and it changed everything on office. All of a sudden you had cafeterias and places to hang out and places to play ball and play games and, you know, full-on gyms and people were spending a ton of money to create experiences for their employees to want to be at their space and because there was such competition to grab these people, they were trying to really create this environment. These people really wanted to be there. Now let's fast forward. We've got the pandemic, we've got all these things that are going to happen and it's kind of changed office when all of a sudden, office people or some people are working from home and some people are working, you know, in our office. We work Monday through Thursday and everybody doesn't come in on Friday, saturday, sunday. Right.

Speaker 2 24:04

I work 10 to 3 and work from home most of the time if I want to. We've kind of changed how we deal with that. Yeah. The other thing that we've changed is we learned that people are willing to live in a lot less space if they can feel like they're living in a resort, yep. If they feel like they're living out of four seasons, yeah, and there's an incredible pool and there's incredible areas and space and beautiful areas to hang out and do things that people are much more about. I'd rather travel and be gone and do other things than to have a three-bedroom home in Draper. Yeah, and it's changed how people see things. They've also seen people who've gotten way upside down because of the up and downs of the mortgages, and so people are looking and saying, well, gosh, that doesn't make any sense to me, yeah, well, and they can invest that money too, right, exactly, yeah, it's a whole different mindset.

Speaker 2 24:57

But what we're doing? We just finished a cool project called Holiday Hills, or it's called the Grandeur. It's over on the old Cottonwood Mall site.

Speaker 1 25:05

I know it exactly Right by my neighborhood. And I've been walking, I walked that area. So which one did you do the multifamily there? What did you guys do? We did the multifamily. What did you guys do? We did the multifamily.

Speaker 2 25:14

We did Block D. We did the big building there, okay, and so it's got the two levels of parking. Then it's got four levels of apartments and the top level is high-end condos. Okay, it's got some restaurants and stuff and the amenities for that place are freaking rock star. The condos on top were vanilla shell. They were selling for $1,000 a square foot and sold out in two weeks. Crazy, because people are saying I'm willing to live in an apartment kind of setting if I can have a terrible pool and gym and concierge and all that kind of stuff. So people are saying I'd much rather have that kind of lifestyle where I can be more flexible and do more things. And so we've looked at it. How can we bring that kind of environment? You know, as a young architect, when I first got out of school with my degree in sculpture, I got hired to work in a firm that did all the sculpture and theming for all the hotels in Vegas.

Speaker 2 26:11

Oh yes, I saw that yeah like. Mandalay. Bay.

Speaker 2 26:15

Yeah, I did Luxor, mandalay Bay, paris, okay, and being an architect and a sculptor, I was like the dream come true for these guys. Yeah, because we had 25 sculptors back in the shop that were sculpting things. And then I was the interface between all these high-end designers, like Dougal Design out of LA and Jeffrey Beers out of New York, and I was working with these world-class designers doing all this crazy design stuff, and so I saw how taking an idea and a theme and creating a space that people want to be in really draws people and brings people there. And so as we started looking, trying to apply that more to apartment living and to more of that, or condo living and apartment living what things do people want to see? What do they want to do?

Speaker 2 27:02

So I think having those things and they make people everything from a dog wash to places where there's been, like bike repair centers, part of the apartment. We've done things where you'll have full on theater that you can go reserve for your family to come down and see a movie in a theater. You know we've got full on areas where you can reserve it to have your birthday party with your whole family there. Maybe your apartment's only 600 square feet, but there's a 2000 square foot great room with TVs and a kitchen and you rent that space for your apartment's only 600 square feet. But there's a 2,000 square foot great room with TVs and a kitchen and you rent that space for your family's birthday or something. And so by getting them those spaces, they're much willing to live in a smaller space because there's so many other places they can hang out and be.

Speaker 1 27:47

Did you build pickleball courts? That's my big question. Yes, it's a little tricky though, because there's been a lot of um stuff about noise and so like on the freedom, but they do like the I heard they like address it with like a felt um, felt paddles, and well it's more, but it's more that it's so fun that people are pretty vocal when they're playing. Oh gotcha. So it's less about the pinging and the no, it's more about what it's so fun.

Speaker 2 28:17

Yeah, yeah, yeah yeah, yeah, no, that kind of stuff. So, like on the Freedom Apartments, we're actually putting the tickle ball courts on top of the parking structure. Yeah, yeah, so they're out of the way so that they aren't going to be noisy for the residents. Because when you're in these um, these, these um deck and rooftop plazas or areas that are in between the hotel, in between hotels or apartments, um, you want to have a sense of some privacy, sure, a sense of some noise control, sure? Um, you don't want to have people outside your window partying, you know? So you want to. You want to create these. We actually create these nodes and pockets where people can gather that are somewhat more private. So it's almost like these little cabanas, these little gathering spots and hanging out areas where there are these really cool spaces and your apartment opens up to the amenity space. How do you create some sense of division between that amenity space and your deck and your apartment? So we've done things we'll do, like a three-foot planter wall.

Speaker 1 29:26

Just to soften that and have.

Speaker 2 29:29

The people that have their private deck have a little bit of sense of this is mine, a little bit of privacy and those kinds of things. So it's balancing all of that but giving everybody what they want. You know, making places to do outdoor yoga has really been really big and places to go.

Speaker 1 29:45

Health and wellness is a big theme right now. Yeah, absolutely Big thing right now.

Speaker 2 29:49

And so I think those are things that you do, but I think also by providing really good design in the unit, really making sure the space is not wasted If you've got 600 square feet, that every inch of it is working and cool and feels good, we will do things. We'll lay furniture in and do 3D renderings of the space just to make sure we figure it out and get it right. We've even done things. We've given them a little bit more height. Instead of like an 8, eight foot or a seven foot six ceiling, we might do a nine foot ceiling to give them a little more height, a little more volume, those kinds of things. But I think those are really important aspects of it all to make it all work.

Urban Living and Neighborhood Connections

Speaker 2 30:24

And the other thing that's really important with these kinds of developments is making sure they're connected, do other things they can do. If I was living in a downtown apartment and I could walk to a really cool restaurant or a bar or a really cool bookstore, having that connection and that flexibility is what really creates neighborhoods. Ninth and Ninth is a real good example of this. There's other areas downtown that really made that happen. It's not just living in the apartment. How do we connect them to the neighborhood and create a whole sense of neighborhood within an apartment setting?

Speaker 1 30:59

Yeah, no, I love the walkability piece. Like you mentioned, 9th and 9th and for those who don't know Salt Lake as well, it's just kind of an eclectic neighborhood. But, as you were saying before, I'm guilty of what you just mentioned about resort like amenities appealing to people, because I lived in earlier on in my life. I lived in Southern California and I lived in a box apartment but the resort or sorry, the pool was absolutely drop dead gorgeous. Like you said, it was like it came out of a Four Seasons and so and I paid a lot of money just to live there because I wanted to be at that pool every Saturday and exactly Fast forward and that was.

Speaker 1 31:40

You know, I'm dating myself, but that was 20 years ago and now you know I want my living space to be that way. You know my home and etc. That's just different. But I'm also the generation it's like where you scrimp and you save and you buy a home and you stay in it forever and that's how you build wealth and then you sell it whatever. But this generation and I get it, I get it they probably can make more money if they rent and then they invest that money into other things and then they can be nomadic.

Speaker 2 32:08

They've seen their parents struggle. I mean, my parents had. You know. I grew up in a house in Kalamazoo, michigan that was Henderson Castle. That was 18,000 square feet, had a ballroom on the third floor, you know. They lived there and then they moved here and bought a big house down in Provo.

Speaker 1 32:24

I'm sorry your parents lived you grew up in an 18,000 square foot home. Is that what you just said?

Speaker 2 32:29

Yeah, it was cool.

Speaker 1 32:30

It was built in 1860.

Speaker 2 32:31

Yeah, it was cool.

Speaker 1 32:31

It was built in 1860.

Speaker 2 32:33

That's not normal.

Speaker 1 32:34

You know that right. That's not normal. You know that right. I know it was on six acres. Wow.

Speaker 2 32:40

Six acres in downtown Kalamazoo, okay. And it was built by a guy who made uniforms for the Civil War Okay, he made a crap load of money. It was their arms and regalia company and it was called the Henderson Castle. It was a Victorian, 1860s, 1870s castle.

Speaker 1 32:56

Okay.

Speaker 2 32:56

And the ballroom on the third floor was really cool but it had a little outcropping off it that I made my art studio and then it had servants' quarters and that's where I lived, in the servants' quarters on the third floor. But on my senior year in high school we had a Christmas cotillion in the ballroom at my house Wow.

Speaker 1 33:15

And it was in the yearbook. It was pretty funny. That's amazing, I think I— but what happens?

Speaker 2 33:20

is people live in those kind of big houses and my parents in their old age did a reverse mortgage and had nothing left. I mean, we've seen our parents suffer through having these mini mansions and seeing how it really doesn't make sense and I think the younger generation is looking at that and saying you know, I don't want that lot Right, right.

Speaker 1 33:43

I want to experience. I want to go to different countries.

Speaker 1 33:46

I want to kind of move around and so long as I have my nice resort pool and a pickleball court, I'm good, exactly Okay, well, I, good, okay, well, I, you know, super, appreciate that, because that's very helpful. I wanted to talk a little bit about some trends that we're seeing. Well, we've been talking a little bit about office. You know, I think in certain markets and we know class A office is still, you know, still really works. In fact that's where people are flocking to. So then you've got these older office buildings that are more, you know, they're not as inhabited.

Speaker 1 34:22

Obviously it depends by market, but there is this trend to, you know, reuse, renovate. You know PEG has done a couple. We bought a building in downtown Phoenix and we converted it an office building into a hotel, and then we've also converted an office building, a smaller one down in Mill Creek, into apartments. Neither project was easy or straightforward. Nation are trying to do because you've got these old historic buildings that are sitting on prime real estate in these urban downtown areas and they are doing the conversions right now. So I know there's a big one going on up in Salt Lake downtown. I haven't followed it as well that Heinz has been doing, but I'm just curious what have you been seeing? Are you involved in that as much? What are your thoughts? Because that is definitely a theme that we're seeing right now.

Speaker 2 35:16

Yeah, we are still getting involved in that. It's one of those things where people are asking us to look at it Because, you know, with office changing its dynamics quite a bit, I think we're re-looking at things. I know for a while Peg was buying old resident inns that were just deteriorating and falling apart and converting them into apartments because they were, they were close. You know that they had good bones yeah great, and they the whole um, the whole idea of residence inns kind of changed.

Speaker 2 35:45

They used to be kind of little apartments you'd rent yeah and now they've kind of made them into a part hotels with a with more of a kitchen amenity, and so their their marketing has changed and their long-term stay idea has changed. They had tons of these old three-story walk-ups, garden style things that were kind of bad and ugly, but taking those and retrofitting was really a brilliant thing that PEG did. So I think they peg for a long time has had foresight.

Speaker 2 36:16

you know, one thing I appreciate about peg as a development company is they they have to be developing and making good choices to keep working yeah there are some developers out there who don't need to really worry about making money every day because they have a large portfolio or they have a large bankroll, but Peg has always had to keep the ball rolling. A bunch of young, smart guys are like okay, how do we shuck and jive to adapt to this market? And that's something that I've always appreciated is that it's kind of like for us as architects.

Speaker 2 36:54

my payroll is like 400,000 a month and I've got to need a lot of architecture to keep all these guys fed guys and gals fed. And so to understand that sometimes we've got to rethink how we're doing things, think out of the box, try some different ideas and thoughts, look at property differently, you know. So I think that's really a big thing. What we're doing a lot of, too, now is looking at different properties more in the downtown area and tearing down a lot of small old little houses and doing some cool. I guess two real cool products that are in the old baseball district One's called Tradition and one's called so I that are just studio apartments with really cool amenities, um some cool retail stuff, but in those more downtown areas and trying to in that transition from, you know, really um bad, depleted housing, trying to bring some energy and stuff back to those areas. Yeah, that's been really big. We're doing quite a bit of that right now, which has really kind of changed how we do things.

Speaker 2 37:58

But I think, having the ability to look at what's happening and, instead of being scared by it, move with it, that's what I think Peg's been doing is saying, hey, right now, maybe this podium, two levels podium, five level, stick, which you're seeing built all over. Maybe that's not counseling right now, but what else is? Yeah. And what else can we look at? Yeah. And what else can we make work? Because you don't want to sit and just wait and hope that it's all going to go back the way it was. Because it's probably not.

Speaker 1 38:28

Yeah, no, definitely. Things have changed and I love that you're helping us figure that out. I've heard a lot about this project and we want to move forward. We know that it's the right location. We know that it's the right time. It's just how do we make it work?

Speaker 2 38:47

So we really appreciate having you. You talked about your love of Instagram, those kind of things. You know we've actually done projects now where we're doing things to make them, so they're Instagram worthy. Yeah. We're doing things, you have to.

Speaker 2 38:58

We have to.

Speaker 2 38:58

I just did a really cool mural down at Trolley Square where we recreated like you're looking back in time and looking through this mural and you're seeing the old trolley cars and they've got, we've got the trolley cars and the conductors and the people are all painted in this trompe l'oeil which looks three-dimensional, so it looks like it's going back in space.

Speaker 2 39:23

And then there's a conductor in front who would be conducting one of the trains and there's a place you can stand, take a picture of yourself by this conductor with this trompe l'oeil train in the background, and then people are posting that and posting about trolley. At our Holiday Hills we have these large murals on the outside of the parking garages where we've done different kinds of art that people can stand in front of, take pictures of and tag themselves in it. It's getting that buzz that the younger generation says, oh my gosh, I want to check that out or I want to see that or I want to be in that. You've seen those big wings that they've done on buildings where people will stand in front of them and post the big wings?

Speaker 2 40:03

Oh yeah, you got to have wings somewhere or something, some sort of background, but the idea is is how do you create that Instagram buzz with your apartment project so that people say this is just different? Yeah. And I want to be part of this. This is cool. Yeah. So I think that's a really important thing. So, as our amenities, as the design, the things we do, we want to make sure that people think it's cool and post about it, right?

Speaker 1 40:29

Right, right, right, which the traditional you know. You know my, my, some of the guys may not fully appreciate the power of Instagram, right, because they're not necessarily on it that's not their jam, but I try to explain to them. But your renters are, and actually Cameron's really great, he loves social media and he's like he knows the importance of it. But just as you described, it's that extra layer that you know we didn't have a few years ago even right, that wasn't as important. But now every little piece is important, down to the Instagrammable worthiness of a project. So I love that you understand that and that you incorporate that into your designs. Okay, well, no, listen. As I said, I was super excited to speak with you. You've kind of reiterated things I've always thought, but it's nice to hear it from someone who's been in going through it.

Speaker 1 41:22

I wanted to just leave with one last question to you. You know we're in a challenging real estate environment. Real estate assets valuations are down, mainly because of the things I described before From your vantage point, and you work with so many different groups. What are just some last nuggets that you would share with investors today as it relates to the developers that you work with, the different projects that you're working with across the region and nationally. What are just some thoughts.

Speaker 2 41:55

Yeah, I had a friend tell me once. He said, jory, only invest in things you understand or things you can control. And I always thought that was really good advice, because I don't have a lot of money in the stock market, because I just don't get it. And so I think, as an investor, make sure you put two things invest in things you understand and put smart people around you. Yeah.

Speaker 2 42:17

And that's what Peg has done is they've hired the smartest minds anywhere in Utah, probably from around the United States, to be around them and don't be scared of having somebody smarter than you around you, oh no. You know and have them, and so I think that is finding the right people and putting the right people around you. Oh no, you know, yeah, and have them, and so I think that is finding the right people and putting the right people around you. And then I've had to make sure that you understand what you're investing in. Yeah.

Speaker 2 42:42

Is it really exceeding my mind? Yeah, because once you understand that, then you understand how it's going to work and how it's going to flow and which ones are really good ones, which ones aren't really good ones. But to me that's kind of how we've done it. And then I think it's also understanding the team. What we've done and this is where we found a ton of success is we have a team, we have PEG, we have Beecher Walker, we have Hunt Electric, we have CCI Mechanical, we have groups that we've done hundreds of millions of dollars of work together with. So we kind of know what to expect and we know what we're going to get, and I think having the right team together makes all the difference. And so look at the team, because that's really what you're buying when you're investing. You're investing in people, and make sure that the right people are there and the right team is there, because that is how you're going to ensure that you're getting out of the investment what you need.

Speaker 1 43:38

Yeah, again, we are so grateful to have bright minds like yourselves that have helped to innovate and to make an impact as we've built along the Wasatch Front and beyond, and so we're so grateful that you know to have a team member like yourself, like Beecher Walker, to help us on this journey. So maybe we'll have a post-mortem after our freedom project. What do? You think Okay cool, okay, so thank you, listeners, for joining. We so appreciate you um from the peaks of the mountain West until next time.