Speaker 1 (00:00): More great stuff for General Contractors Baton Rouge.
This is the K-Cup, episode eight. Let’s see, K-Cup episode eight. Take one. Action. And here we go. Welcome back to the K-Cup. I’m Joe nor Tripp, your host. I’m here with John Kelly, the CEO, and founder of Kelly Construction Group. We got a great show for you today and man, OCHO episode Ocho Man, you
Speaker 2 (00:28):
Gotta redo that, man. That little week. Boom. <Laugh>. We like <laugh>. I wasn’t expecting it. It was like I gave you like Dicky by shock. I basically missed you.
Speaker 1 (00:38):
I thought you were gonna snail me. That’s why I kind of moved my hand up. Yeah. Alright. You wanna start over Snail you. Alright, here we go. Alright, so, K-Cup episode eight. Take take three. And action. Welcome back to the K-Cup episode eight, man. Can you believe it? Let’s do it. Episode eight. Here we are. I missed your, did I miss your fist again? No, you wanna reone you
Speaker 2 (01:06):
Connected with that.
Speaker 1 (01:07):
That didn’t feel good. I mean, you
Speaker 2 (01:08):
Did it like an 80-year-old man, but yeah. <Laugh>.
Speaker 1 (01:11):
Okay, we’re gonna have to do this one more time. I, one more time. I’m really screwing up here. So, episode eight. Okay. Welcome
Speaker 2 (01:19):
To today’s show.
Speaker 1 (01:21): Here we go General Contractors Baton Rouge.
All right, here we go. All right, the K-Cup, episode eight, take five. Action. Welcome back to the K-Cup. I’m Joe nor Tripp, your host. Ah, I screwed that up. Hold on. Here we go again. The K-Cup. Episode eight, take six. Action. Welcome back to the K-Cup episode eight, if you can believe it. We’re glad you’re here. I’m Joe nor Tripp, your host. I’m here with John Kelly, the CEO and founder of the, of the Kelly. Eh, screwed up <laugh>. You don’t you hate it when I say it. The Kelly Construction Group. <Laugh>. All right, here we go. One more time. This is the take. This is the one for the money. Money shot. All right, <laugh>. All right, here we go. So, the K-Cup, episode eight, take 10. Action. Welcome back to the K-Cup. This is episode eight. I’m your host, Joe nor Tripp. I’m here with the CEO and Founder. Your eyes are closed. <Laugh>, you look like you’re sleeping, like you’re looking
Speaker 2 (02:30):
At me. No, no, no. They weren’t close <laugh>.
Speaker 1 (02:33):
I think the CEO and founder John Kelly was sleeping on the job. So we’re gonna have to probably take a short siesta and we’ll return after these messages.
Speaker 2 (02:43):
Cut. Cut. <Laugh>.
Speaker 1 (02:45): Is this making sense General Contractors Baton Rouge?
Cut. Alright, here we go. This one’s for the money, money shot. I don’t even know what we’re talking about today, but here we go. All right, here we go. That K-cup, episode eight take 15. Action. How that hurt, <laugh>. Alright, welcome back to the K-Cup. I’m Joe nor Tripp, your host. I’m here with CEO and founder John Kelly, and this is episode eight of the K-Cup. Can you believe it? Episode eight. Yes, sir. Man, we keep rolling ’em out. That’s awesome. Let’s go. So today we’re talking about an interesting subject. We’re talking about you know, how, what, ah, man, <laugh>. I blew it, dude.
Speaker 2 (03:28):
About got eight minutes to cut out.
Speaker 1 (03:31):
Here we go. All right, let’s go. K. Episode eight, take 20. Action.
Speaker 1 (03:51):
Welcome back to the K-Cup. I’m your host, Joe nor Tripp, and I’m here with the CEO and founder John Kelly. Welcome back, John, episode eight, if you can believe it. That’s awesome. We’re on a roll. Let’s keep it up. Let’s do it. We got a great show for everyone here today. We’re, we’re talking about project types, and we’re gonna kind of focus on three specific commercial project types, and just talk about the pros and cons. We’ll start out with the logistics of each of these because they all have kind of a different way to go about approaching the project and getting it done. So let’s just dive in there and begin talking about these projects. Just so everyone knows what, what to anticipate. We’re gonna be talking about new developments or new construction what we call a white box build out.
Speaker 1 (04:40): Keep rolling General Contractors Baton Rouge.
And and then the third one’s gonna be renovations on an existing commercial structure. So let’s, let’s dive in, John, let’s talk about that first one. The first one, it being new developments. This is, could, you know, this is typically new construction that’s gonna take place on, you know, a commercial real estate plot. It’s either gonna be raw land that needs to be scrubbed and all that, or something that’s already been scrubbed and is, is ready for you know, someone to start putting together the building envelope. And it usually is gonna involve either like a standalone, single large you know, commercial building, or it could be a, a multiple unit structure where you have like mixed use of you know, retail mixed with even residential in some, some circumstances. So that’s what we’re kind of talking about when we’re talking about new construction in the commercial construction industry. So maybe you can go over some of the key logistics to a project like this. ’cause It sounds like a big deal.
Speaker 2 (05:41):
Yeah, no, definitely. You know, just thinking about our journey and, and where we’re at with, with buildings and whatnot. You know, as soon as I started the business 17 years ago I wanted to have a building right away, and I wanted the building that I wanted. So that meant I wanted to, you know, build my own building. Yeah. you know, just so that I could get exactly what I wanted. Sure. it, it took me a couple years to, to start to understand that that might not be the best avenue. And you know, I think that that’s kind of what we wanna break down in the show today. We wanna talk about these different options. Yeah. And hopefully somebody will start to understand the best avenue for them to move forward. Sure. so yeah, to your point, the new development or the new building it’s obviously, you know, gonna take the most work.
Speaker 2 (06:29):
It’s gonna take the most time, it’s gonna take the most money. Yeah, for sure. I think that it’s, everybody’s wont probably in the beginning. But you know, just like here at our company, we, we realized that after some time that might not be the best option for some of those reasons. Yeah. And we actually ended up going a different route, but that, that it is the best route in some instances. And, you know, today we’ll just talk about, you know, what that avenue looks like and kind of shed some light on it. So in, in a new development there a lot goes into that. You know, there’s, there’s lots of things that that have to be done that don’t necessarily, you don’t think about. Yeah. You know, if you’re not doing this every day Exactly. Right off the bat, you know, you have to find a piece of property, you have to make sure that property is zoned correctly for, you know, what, what you’re trying to build it in.
Speaker 2 (07:19):
Yeah. you have to get it, get your project through the planning commission. There’s lots of other things that go into that as well. You know, lots of planning as far as drainage site study or drainage studies testing for your, you know, for the actual ground. Yeah. and lots of little intricate pieces that go into putting this thing together. You know, from there you’re hiring an architect to get some design work done. And, and then from there, obviously getting everything submitted to the, you know, the cities make sure all these things that we talked about prior to are checking the boxes and make sure everything’s up to code, blah, blah, blah. Yeah. and then from there, this thing finds an avenue for construction and, and before you know it way longer than you were thinking you’re building. Yeah. But it, it is just, it is a pretty intricate process that takes a lot of work. And like I say there, there’s times where it’s the best option, but there’s, there’s times where there’s, there’s other options. So yeah. That’s, that’s kind of what that process looks like. A lot of planning in the beginning find your property, a lot of planning with architects, engineers, submittals to the parish, submittals to the fire marshal submittal to the health department. Yeah. And once you kind of clear all those hoops, now you’re ready to build it.
Speaker 1 (08:37):
Yeah. So, so say like a project size under 10 million, like what, what would you say that timeline might rank? What, what might be the range? <Laugh> Yeah. In the timeline for a project that size.
Speaker 2 (08:48):
So, I mean, or under, yeah. Obviously every project’s gonna have its own timeline, but I mean, at a minimum on just a, you know, your typical office building I mean, I would think you’re looking at anywhere from nine to 12 months to, to get that project off the ground. Hmm. And not necessarily off the ground. I mean, you could, you could surely see it through to completion in that timeframe. Hmm. But I know oftentimes just, just trying to find the right piece of property can take some time. But yeah. Assuming that you have a piece of property and you’re wanting to do the new development, I mean, you’re, you’re talking about a couple of months worth of, you know, planning, commission architects, design bidding, back and forth. Negotiation. Yeah. And then actual construction things can easily take a year to happen as far as time goes. And obviously the bigger the project, I mean, you talked about a 10 million project. Yeah. I mean, at, at that it, you know, you’re talking about a fairly good sized structure at that point could easily take a couple of years. So it is, it is quite extensive to get into this development, into this, you know, new, new construction phase.
Speaker 1 (09:57):
Yeah. So let’s talk about some pros and cons for this, this type of construction project. So some of the pros, you get full control over the design, right? Right. Is there a way, is there a you know, a circumstance under which you might not have full control over the design, even though you’re starting from scratch? Can you think of anything like that? Or,
Speaker 2 (10:21):
I mean, you know, there’s, if your property limits you a little bit, you may, you know, you maybe, you know, that’s a good point’s. The way the property is. Yeah.
Speaker 1 (10:29):
Setbacks and stuff like that. Yeah.
Speaker 2 (10:30): General Contractors Baton Rouge, this is great stuff right?
Even the parish or, you know, the, you know, the city that you’re building in, they, they may have some restrictions and stuff that need like, height consider Yeah. So even, even just facade, I mean, I know there’s some areas that we work in that want, want it to look a certain way. Yeah. Imagine they want your sign ing be built a certain way. So, so things like that would need to be considered for
Speaker 1 (10:50):
Sure. Oh, okay. So still, still though, you do have a lot of opportunity with design that you wouldn’t have with an existing structure. And then the other thing is, is that typically this is gonna be like a project for someone who’s really invested long term. Yeah. Like, this isn’t something you’re just gonna build and flip when you’re talking commercial construction, like maybe a house, you might build a spec home residential and then, you know, obviously sell it. And yeah. But with commercial, it’s typically a, a long-term investment ’cause you’re, you’re gonna be invested. Yeah.
Speaker 2 (11:22):
And it’s gonna be a big investment. I mean, it’s something you’re gonna be committed to for a long time.
Speaker 1 (11:26):
Yeah. The other thing that I think as a pro that we talked about earlier was with new construction you get to use the latest technologies, the latest, you know, building systems and things like that. Is that something that, you know, you see a benefit too? Like, is that a plus? Or is it just a difference?
Speaker 2 (11:47):
Yeah, I mean, anytime you can utilize the, you know, latest and greatest, that’s always good. Yeah. But there’s, there’s definitely some there’s definitely some positives, you know, on the other side of things, and we’re gonna talk about that some as we get into the show. But I mean, yeah, it’s, it’s, it’s nice to be able to use the latest and greatest stuff. But, but there’s also some benefits to, to, you know, finding some existing older structures that, that maybe they don’t have that, but they, they still make sense.
Speaker 1 (12:14):
Yeah. So on the con side, so those are some of the pros. You know, you get you know, a lot of leeway with design. You get you know, the opportunity to use the latest and greatest stuff, hopefully. And and it’s, you know, when you get done, you have a really solid, you know, up to date, long-term, you know, investment.
Speaker 2 (12:38):
And generally you’re getting exactly what you want in that
Speaker 1 (12:40):
Situation. Exactly.
Speaker 2 (12:41):
You know, you’re getting Exactly, yeah. The product that you hope for.
Speaker 1 (12:44):
That’s right. So with the con on the con side one thing is cost, right? I mean, would, would you say that it’s significantly more expensive to do the new construction route?
Speaker 2 (12:57):
Yeah, definitely. So, I mean, a lot of lot goes into it, you know, we talked about all the design and the planning. A lot, a lot goes into that initial phase that that’s, that can be very costly. That, that you wouldn’t have, you know, if you’re, if you have an existing building or if you’re doing like a build out.
Speaker 1 (13:17):
Yeah. So, so that’s definitely a con. And then the other thing that could be a challenge, like you to, you touched on it as timelines longer process to get permits and, and all that you gotta get through the planning commission and different things with, depending on the municipality you’re dealing with. But a another, you know, prohibitive thing could be financing. You know the bigger the project, the more challenging getting financing might be. Right? Yeah. And you know, you’re, you’re gonna have to have a lot of what, what they call skin in the game, likely <laugh>. And even, and even with that, and we’ve run into this, you know, in some of our private work opportunities where, where we could tell that the owner was really, you know, having to really go to bat for themselves in their project to, to get the financing that they needed and stuff. So, yeah. It, it can be a challenge. Yeah.
Speaker 2 (14:12):
It can be an obstacle for
Speaker 1 (14:13):
Sure, because, because even the banks understand this is a big undertaking. Right. And and of course, the bigger the undertaking, the more scrutiny it’s gonna receive, so, right. That’s where, you know, having a reputable builder, like Kelly Construction Group on your side, <laugh> is a feather in your hat. If you wanna do new construction,
Speaker 2 (14:31):
Get a little plug
Speaker 1 (14:32):
There, huh? That’s right. Sorry about that. <Laugh> had to get that in. All right. So I got an insider tip, and the insider tip is in quotations. It’s, you know, it’s not a big secret <laugh>, but, but I have one for each of these three types of projects. I was
Speaker 2 (14:46):
Waiting for it myself,
Speaker 1 (14:47):
<Laugh>. And the insider tip on new construction is that these projects are really ideal for developers and investors. And so if you happen to be a developer investor, and you’re looking to partner with a general contractor that understands, you know, all the nuances involved in you know, new development, we certainly are, would love to talk to you. So definitely something we, we love to do. We love new construction. So let’s talk about our second construction, commercial construction type of project. And that one is one we’re familiar with. I know that you’ve got a lot of reps in this particular area and it’s called the, you know, the white box build out type project. So you know, typically what we’re talking about with a, a white box is that you’re, you’re gonna be finishing out a a previously built shell, you know, whether it’s new construction, or it could even be an existing building, but you know, it’s been gutted or whatever.
Speaker 1 (15:47):
And now you have these opportunities to do a white box. And, and they can, you know, the, the level of involvement with the GC can vary. It can go from, you know, just providing, you know, gip you know, on the walls and, you know, maybe the HVAC system getting roughed in and, and all that. And maybe dropping a ceiling grid in there and some basic lighting to, you know, maybe finishing the thing all the way out, you know, per some franchise spec or something like that. So it could really you know, vary on what’s involved, but maybe you could tell us how the logistics are a little more, you know, they vary from the new construction, obviously, and they’re a little more simplified. Maybe you could go into that a little bit.
Speaker 2 (16:33):
Yeah. So definitely not as intense when it comes to the design part of it. You know, you’re, you’re moving into a building that’s, that’s already existing. It’s, it’s already been through all the stuff that we talked about with the new development. Yeah. It’s, it’s already had all the drainage studies, all the utilities are there, everything’s in place. So it, it takes a significant amount of time, you know, off when you’re trying to move into a building for sure. And, and typically what this process looks like. And, and it can be, it can be, you know, pretty basic and can, it can be get a little more extensive. Yeah. if, if you’re doing a simple office build out, I mean, I’ve seen it to where you could actually draw some hand sketches on, on, you know, on the, on the plan provided by the building owner. Mm-Hmm. And, and basically go get you a permit almost where you’re dropping out this to the fire marshal, submitting to the, you know, the parish that you’re gonna build a couple offices in this existing shell. Yeah. And I mean, I think the reason that’s, you know, a possibility, the fire marshal seen it already. The, the local building department seen it already.
Speaker 1 (17:33):
That’s a good point. So they’re familiar with the property. Yeah.
Speaker 2 (17:35):
So it’s, it’s, it can be a little simpler, and then it can, it can get a little more extensive. I mean, if you’re doing a restaurant or if you’re doing, you know, some type of building that’s gonna require a bunch of people gathering or whatever, you know, you may actually have to go the route where you’re hiring an architect and, you know, getting a little, a little more design than you would, so in the instance that I talked to in the beginning, but it’s still a much simpler process. Review’s typically not nearly as long. Yeah. And and, and this thing is a construction, you know, a lot faster. Yeah. faster. So just I would say there is some design in the beginning, it’s gonna be less extensive than a new development. Yeah. And you’re gonna be under construction much sooner. Yeah. And, you know, from a, from an owner’s standpoint, you know, a lot of these, you know, a lot of the HVAC, the plumbing all the electrical needs, all that’s kind of a counter for already. And, and it’s just not something that the owner has to think through. They basically just think through what they want their space to be. Yeah. And lot less work, you know, for an owner trying to move into a, a, you know, a build out project, if you will.
Speaker 1 (18:45):
Yeah. So this, this type of project is really ideal for a, a small business, somebody that needs a commercial space, but they don’t need to own the building. Right. They just need the space and they need it you know, developed in such a way that they can carry out what their, you know, what their specialty is, whatever it is they do for, for a, you know, a product or service.
Speaker 2 (19:07):
And it may even bridge the gap, you know, I mean, maybe they do have, maybe they do want a building or something down the road, but Yeah. I mean, you can, you know, you can just bridge the gap with a project like this. You go get your business off the ground. Absolutely. So at a lower cost. Yes. And you don’t have to the headache of trying to maintenance a building and doing all those type things. Yeah. but you get your business started and you grow it to a point where maybe you move into one of the other developments that we’re talking about, the new development or even the, the renovation or buying a building
Speaker 1 (19:37):
For sure. So, so turnaround time on something like this, what would you
Speaker 2 (19:42):
Yeah, I mean,
Speaker 1 (19:43):
This is guesstimate
Speaker 2 (19:44):
Again, it’s, it’s hard to put times on these things, but certainly a lot quicker, quicker deal here.
Speaker 1 (19:49):
So weeks instead of months, you think?
Speaker 2 (19:51):
Yeah, I mean, I would think, I would think, you know, on a basic build out, you probably looking at, you know, four weeks of design or whatever, then probably another, maybe that in the permitting office mm-hmm <affirmative>. Of fire marshal. So, I mean, potentially you are looking at getting one of these you know, getting one of these projects underway in a couple of months and Wow, that’s nice. Typically, a build out project 90 to 120 days. So you’re looking to anywhere from, you know, let’s call it six to eight months to, to get one of these things done. Hmm. So, so definitely a little a little faster timeline, typically.
Speaker 1 (20:23):
Nice. Nice. So, so talking about pros the faster timeline would definitely be one. Cost is another one. Yep. If, if the scope is clearly defined, you know, from the outset. So if there was a little bit of design consideration done or maybe it is just prepping a white box that like a franchise is gonna come in afterwards and dress that out. Mm-Hmm <affirmative>. You know, based on whatever their specs are. And we know a lot of franchises have, you know, companies that go, you know, all around the country installing the finishes to, you know, brand, a franchise or whatever. So you know, it could be a very limited scope for, for the GC getting in there. And then oh, I’m sorry. And then <laugh>, we’re hit, we’re playing Footsie down here, in case you didn’t see that on my, oh, my. We’ll cut that Footsie thing out. We’re not really playing footsy, it’s just happening. So anyways some big size
Speaker 2 (21:23):
15 you got, man. Yeah,
Speaker 1 (21:25):
Right. <Laugh> so, and like you brought out another pro is that it’s a great entry point for a business. Yeah. But I mean, just the, the reduction in cost is, is huge and it can really help a small business get, get off the ground. And like you say, down the road, if their business is, is booming and they’re growing and being successful, they may be able to move into, you know, a nicer structure or one of their own anyways. Yeah. Down the road. So
Speaker 2 (21:53):
That’s actually a route that, that I kind of took, you know, with, with buildings you know, just young needing the space a lot easier to go to the bank for, you know, a couple hundred thousand dollars. Yeah. Rather than try to go for a million dollar deal, you know? So Yeah, for sure. Definitely use that avenue, you know, here and, and worked out really well
Speaker 1 (22:15):
For sure. So another, some of the cons, let’s talk about the cons. One is that you’re gonna be dealing with the landlord, so we know that misalignments can happen mm-hmm <affirmative>. Like, you can sign a lease, and then, you know, next thing you know, you’re finding out that the landlord may not be the easiest landlord to deal with or may not be responsive, and you’re trying to get something done. So there could be a challenge there. We know that older existing shell spaces may hide some surprises. Yeah. So what are some of the areas that you would look at to kinda, you know, make sure you weren’t gonna get surprised later? Like once you, you know, got involved in a project like this and it was an older space, what would you look
Speaker 2 (23:00):
At? Yeah, I mean, in an older space, I would, I would wanna just make sure that I’m one, the, the biggest thing that comes to mind is just heating and cooling. Like, you wanna make sure that system’s up to par. You wanna make sure that they’ve been maintenance and, you know, you wanna make sure that it’s, it’s ready to go. You don’t wanna open up a business and, and an old shopping center just, or, you know, strip mall, whatever, to realize that your air’s gonna be going out every yeah. Every couple months. Yeah. that would be one of the biggest things that I, that I would check out, you know, right off the bat. Sure. but, you know, just thinking through the cons, and, and this may be one that you’re gonna mention, I’m not sure, but just wanted to hit my brain when you were talking about it Sure.
Speaker 2 (23:36):
Is you are, you are gonna make an investment and you are gonna put some money into this space that’s ultimately not your space. Yeah. And, and it’s an investment that you’re not gonna be able to keep. That’s right. And you’re not gonna be able to take with you. Yes. so that’s a little bit of a con, but I guess the hope is that you’re gonna go open this business and it’s going to produce at, at a great rate. Yeah. And then you’ll be able to, you know, kind of, kind of take that in, take, take that investment and, and be able to lose it, I guess. Yeah.
Speaker 1 (24:06):
Recoup that cost.
Speaker 2 (24:07):
Yeah. You’ll be able to surpass that cost in a short amount of time
Speaker 1 (24:10):
For sure. Get an ROI
Speaker 2 (24:12):
Yeah, that’s right. Yeah. So, you know, that’s, that’s the one kind that was really just kind of hitting my brain as you, as you were going through the cons there, so I wanted to mention it.
Speaker 1 (24:19):
That’s a good one for sure.
Speaker 2 (24:21):
But anyway
Speaker 1 (24:23):
And then, and then the one that we had mentioned and had made a note on was how the budget can creep, you know, if, if you’re not defining it, and then you’re getting into an, an existing order structure you know, like I said, you change, orders could happen, things might unforeseen, things can pop up, and then the, the budget can start blowing up a little bit on those. So
Speaker 2 (24:47):
Yeah. What, what I’ve seen, Joe, sorry to interrupt you. No, no, that’s good. What I’ve seen on those is just not clear communication between the, the owner Yes. Or, or the, the, the guy leasing the building and the owner you know, maybe you’re assuming that he’s gonna have ceilings and floors provide that as a part of you leasing the building. Yes. And, and then at the end of the day, he’s not. So I would think a lot of, I would say that a lot of times the budget, you know, becomes discrepant, if you will. Yeah. when there’s not clear communication in the beginning. So if you are moving into a space like that, you gonna wanna make sure that you understand exactly <laugh> what the building owner is providing Exactly. As, as a part of the, you know, a part of the build out. Yeah.
Speaker 1 (25:28):
Yeah. That’s a great point. I mean, and that happens on the front end with your, you know, with your CRE professional, hopefully they’re representing you well and you know, you’re getting all those things in the contract clarified. Right. Because you know, you, it’s easy to say, ah, don’t worry about this, or Don’t worry about that. I’ll take care of it later. But then all those little things add up to thousands and thousands of dollars. Right. And all of a sudden now it’s a problem. Yes. And now you’re stressed, and now you’re over budget and Right. You know, it’s not all sunshine and roses <laugh>. Yep. So anyways, great point. Glad you brought that out, because that could definitely, it, it probably happens more often than not.
Speaker 2 (26:05):
Yeah. Well, I know we’ve seen it quite a few times where, you know, we get into a project and we start building and the owners or the, you know, the person that we’re building for the client is saying, no, that’s under the owner scope. Yeah. And the owner’s like, no, that’s, they’re taking care of that. Yeah. So that’s an area that we’ve seen the budget get a little outta whack on these build out type projects.
Speaker 1 (26:25):
Yes, that’s right. We definitely have seen that. All right. So insider tip number two on the old white box projects. These are perfect for tenant improvement projects, and they’re also great for CRE professionals and brokers that wanna prep a space to, you know you know, speed up leasing to make it lease ready. So, you know, you have a general contractor come in and go ahead and get some clean GIP up, you know, make sure that you got stub outs for your restrooms. Everything’s up to date, everything’s up to code. And and really make it almost on the inside, like a new, a new build to where your potential lease clients could come in, see the space, and really visualize getting their space, you know, built out in there. So you don’t have to necessarily wait to have the space leased to do a white box build out.
Speaker 1 (27:15):
You can do this as a property manager you know, or just as a, you know, a an investor developer that just wants to prep a space out instead of waiting until you start showing it to a client, because it may not show as well. And you may actually miss out on some great client opportunities because of the state of the building not being cleaned up, so to speak. And, and allowing that person to visualize what it’s gonna look like with their stuff in there. Because let’s face it, just because someone’s a business owner doesn’t mean they’re a builder and they can’t necessarily visualize the space being done Right. But by having it white boxed out and cleaned up, definitely gonna show better and definitely gonna have a higher rate of lease ability or occupancy, whatever you wanna call it. Right. So I would say that’s definitely some, an insider tip for CRE professionals on that.
Speaker 1 (28:05):
All right. Well, we’re moving into our third area, and that’s gonna be renovations on existing commercial construction buildings. So this is, this can mean, you know, something as you know, as little as like what you were talking about earlier, going into a, an existing commercial building and, you know, throwing up a few offices inside some partitions. Or it could be like a complete, you know, redo it could be an exterior update you know, could get really extensive and stuff like that. So kind of walk us through the logistics and maybe you, when you know, and I’m sure you’re gonna do this just naturally ’cause there’s gonna be some comparisons, but maybe show how like com compare this to what it would be like new construction and, and kind of, you know, show the difference of the two options there.
Speaker 2 (28:55):
Yeah. So I mean, you know, when I’m thinking about, you know, this avenue, if you will, you’re buying an existing building that’s been there for some time. Yeah. or maybe it’s a building that you’ve owned for some time and operate it out of, and you just need to do a few additions or some renovations to make it, you know, to grow it with you. Yeah. but either way, this is another great option. The, you know, the design, the planning, all the permitting and that kind of stuff, typically way easier in this, in this situation, not nearly as extensive. You know, to your point, a lot of times if you’re buying an existing building, you’re, you’re making a few simple offices inside, you’re updating the front. Yeah. you’re, you know, maybe doing some repairs in the parking lot to make it more appealing. But
Speaker 1 (29:43):
Signage
Speaker 2 (29:43):
Yeah. You, you getting a structure that’s, that’s pretty much ready to go Yeah. And you’re just updating it great, you know, great option for a lot of companies. And to me, it’s kind of middle of the market. It’s, it’s not as cheap as, as your build out would be. Yeah. but then it’s not nearly as expensive as a full development. Yeah. I think this option is, is is good in a lot, a lot of ways too. You know, typically very fast turnaround. I mean, you’re able to secure a building fairly quickly mm-hmm <affirmative>. Renovations. I know I’m getting to your pros and cons a little bit, but
Speaker 1 (30:20):
That’s all right. Have that
Speaker 2 (30:22):
<Laugh> just thinking about, you know, the logistics side of it. Yeah. It’s something that you buy and it’s ready, you go do your construction really fairly quick. Yeah. And, and then you’re, you’re up and you’re up and at it,
Speaker 1 (30:32):
So you’re not breaking that ground and Right. Stirring up that whole mess.
Speaker 2 (30:36):
Yes. And then, and then the same thing applies with the, with the addition, right? I mean, you’re at, you’re, you have a business that’s operating well, you’re growing if you have the property, it’s very easy just to do, do an addition there. Yeah. and, and, and keep rolling. And there’s few rules around that that, you know, if it’s, if it’s not a certain, you know, if it doesn’t go over a certain value you, you, you kind of grandfathered in on a lot of the same stuff that you already have with your existing building. Yeah. so sometimes it just makes sense to do an addition to your building. But like I say, it’s, it’s, it’s definitely less intense in the design. It’s, it’s, it’s ready to go a lot quicker. Yeah. And a lot of times a great option.
Speaker 1 (31:20):
Sounds like you’ve had a little experience with this. You wanna elaborate
Speaker 2 (31:23):
<Laugh>? Yeah. No. So we’ve kind of been through a couple of these. Like, like I said, you know, new, new development was what I wanted way back, starting way back. But we, we ended up doing, I ended up doing a little build out project where we, you know, got us a white, we came into a white box, built a few offices, and had a warehouse. Done that for a number of years. Yeah. then we actually leased another space that was more of an office space as we began to grow a little bit. And, you know, in the last few years we actually bought an existing building and Yeah. We’re able to do actually a little bit of both. We renovated the existing building, we did an addition to it. Yeah. And and it was a very fast process. Yeah. I mean, we were able to buy the building. We actually didn’t hire an architect. We did all the design here in house and we were able to get that submitted to the fire marshal and per, you know, permitting office and get it built. And yeah. It was a quick turnaround for us. And I wouldn’t say that we got exactly what we want, but we got really close to what we want. Yeah. For sure. And very happy in our space. Yeah.
Speaker 1 (32:26):
So functional and Yeah. More it is really beyond functional. It’s
Speaker 2 (32:31):
Nice. Yeah. Yeah. Actually, yeah. So we’ve actually, I mean, we’ve done some of this stuff and, and kind of went through it and yeah, it’s fun to talk about, honestly. It’s, it’s fun getting a building and there’s obviously avenues to do it.
Speaker 1 (32:43):
So nice to see a plan come together, huh.
Speaker 2 (32:45):
Exactly. <laugh>. Yes.
Speaker 1 (32:47):
All right. So, so talking about you know, the, you know, renovating and existing commercial building you talked about a lot of the pros. Often it’s more cost effective. Sometimes you know, existing structures, depending on how extensive the remodel you can get, you know, what they call green credits for making it more efficient. If you’re updating, you know, mechanical systems, you might get some sort of credits for that. Tax credits. The other thing about it is that it, you know, it may help renew or rejuvenate a particular part of town where you live. Right. Something like that. You’re investing back into the community kinda when you update a building, if it’s a part of the community, you’re updating the community. Right. You know, and that little footprint. So that can be huge and, and a benefit as well. Some of the cons, a lot of unforeseen conditions. Like maybe you could tell us a little bit about some of the unforeseen conditions you run into with renos in old buildings. Like, I’m thinking of one right now. It starts with an A, it shows up everywhere. It seems like an old building. Yeah,
Speaker 2 (33:53):
Yeah. Yeah. I’ll let you talk about that one. Okay. You know, one, one thing that we one thing that, you know, this is, this is fairly simple, but in our, in our one of our projects, you know, drainage was a big deal. Like yes, the building was purchased. You know, you don’t, you don’t have a real history of, of what the drainage or there was because you, you know, you haven’t been there. Sure. but bought a building and got ready to get everything going, realized that the drainage wasn’t great. And, you know, the, the parish was like, okay, that’s your, that’s your, that’s your baby. You gotta get it fixed. So it was up to us to go in and kind of redo all this drainage that was bad. That was really there was no way that we really would’ve knew that that wa that condition existed. You know, and fortunately for us, it wasn’t super expensive. More, I mean, it was more expensive than we wanted Right. Because we didn’t figure to, to repair any of that. Yeah. Percent
Speaker 1 (34:53):
Cost.
Speaker 2 (34:53):
Something like that is something that you’d certainly wanna look out for and could be a con, you know, if you’re buying an existing space.
Speaker 1 (34:59):
Yes. So then in this region, for sure, drainage is huge. Yep. The other thing and it kind of goes hand in hand with your drainage thing is like mold. You know, hidden mold could be a problem. You might, you might get into a building and start improving it. Yeah. And discover a bunch of mold in a commercial building. Right. Next thing you know, you need to, you know, abate that. Yeah. And and along with ab baiting, the, a word I was thinking of was asbestos.
Speaker 2 (35:26):
Yeah. Yeah. I mean, you see a lot of that. You see a lot of that in older buildings around here. Yeah, definitely. Have another story on that one also bought a structure some years back and to realize real soon that it needed about $12,000 worth of abatement. Wow. That’s a lot that wasn’t planned for in the budget. Yeah. So yeah, that’s the real thing too. You definitely gotta look out for that, you know?
Speaker 1 (35:51):
For sure.
Speaker 2 (35:51):
Let that be front of mind for sure. Yeah. We’re buying an old structure.
Speaker 1 (35:55):
Sure. So those are just some of the cons, like you can run into some stuff with, with these older buildings, but you can also find the gyms that give you a, a great opportunity to get into a nice building and you know, just make it something more than what it was currently. So yeah,
Speaker 2 (36:11):
I think it’s a good option, honestly. I mean, I think a lot of times people don’t wanna think about buying an old building or an existing building, but for the, for the pros that we talked about, I mean, yeah. The cons with a, to me, with a little bit of homework, you can eliminate some of those cons. Yeah. But the, the pros go a long way. I mean, it’s, it’s a fast turnaround, you know, more cost effective. Yeah. And and, and you truly can make it what you want a lot of times. Yeah. So I would say let’s, I would say consider that option for sure before you go, you know, thinking you need to build something new.
Speaker 1 (36:44):
Yeah, I agree. I agree a hundred percent on that one. And we’ve definitely experienced that here with this structure, and it’s, it’s serving us well and it’s, it’s a great place to get ’em to work. And, you know, and, and it wasn’t nothing like this when you, when you first
Speaker 2 (36:57):
Yeah. It looks
Speaker 1 (36:58):
Totally different, purchased the property, so it
Speaker 2 (37:00):
Does look totally different. Yeah. And we did it for very, you know, minimum cost.
Speaker 1 (37:04):
Yeah. Yeah. There are, there is a couple other cons I just wanted to mention, or one in particular. And that is, depending on the level of upgrades, it, it may trigger certain code upgrades that you have to, you know be able to meet. Right. Like a DA for example. And this is just so that if someone’s out there listening that’s considering doing this, just be aware you’re gonna have to make the building aada a compliant, probably. There, there may be fire code, you know, requirements that maybe didn’t exist before, but Right. But because of the level of the upgrade, now they’re gonna enforce those. And then, you know, egress, you know, you’re gonna have to make sure that, you know, the building could be you know, accessed and egress safely. Right. And so that may require, you know, installing a door in a wall where there wasn’t ever a door, you know, something like that.
Speaker 1 (37:59):
So anyways, just, just some things to think about that, you know, each of those three items could amount to, you know, a few thousand dollars. And so it’s something that you definitely want to consider. ’cause Combined it’s, you know, that would be a bump to your budget. So, yeah. But other than that, that’s great. The insider tip on this is, is that and you kind of touched on it, is that it’s a great opportunity for investors that want to be able to get an ROI on your investment. You can buy an existing structure, update it, upgrade it, or if you already own one, you can get it upgraded and updated for much much less than it would cost to ever lead that, you know, location and go build a, a completely brand new project. So there’s certainly you know, reasons why all three of these project types would be used. You know, there’s definitely a, a, an area for those who are investing in real estate long term. They have you, you know, you may have money that you need to get into an investment, like a reconstruction you know, development. And it may just be one of those things where you’re managing, you know, your portfolio and it’s something that’s really is the right fit for, for what you’re doing financially.
Speaker 2 (39:20):
And too, just as a, you know, as opposed to what we talked about a while ago, you’re actually investing in an a in an asset that you own. So, I mean, you’re going to, you’re going to keep the money that you’re putting into it, but it’s actually, you know, you’re gonna grow it really.
Speaker 1 (39:33):
Yeah, that’s right. And, you know, and you might call that, you might consider that like a legacy type investment. You know, it may be something that, you know, your kids are really gonna benefit from down the road. So, so there’s, there’s a place for that. The white box build out we’re familiar with. We’ve done a ton of those in the past. And, and they’re a great option for small business owners to be able to get into a space and get up and running and start developing your business. And and then the, the third one, of course, you know you know, renovating existing spaces, we, we’ve talked about that great length. It’s a great option. We love this space that we renovated and made a, made a great office for us. So, so anyways, call to action. This is your opportunity to, if, if you fall into one of these three categories and you think you might be looking to get involved in one of these types of projects, reach out to us here at Kelly Construction Group.
Speaker 1 (40:33): So let’s wrap it up for the General Contractors Baton Rouge.
We definitely are well versed in all three of these and would love to work with you. And we’re a very collaborative company. We like to you know, put the team together. We’d like to work with the design team upfront so that we can budget a job as it’s being designed, would save you a ton of money. And it also saves time for everybody. So you can go to our website kelly construction group.com and submit a, a form, do a form submittal, and set up an appointment That way you could actually call us here at the office. The number’s 2 2 5 2 4 3 4 9 4 9. I’ll put that in the show notes and you could even email me directly, joe@kellyconstructiongroup.com, and I can get that to the right people. And and they would definitely get right back to you and find out about your, your proposed project. So, hope you enjoyed the show today. Anything you wanna leave the folks with
Speaker 2 (41:31):
No man, just go out there and find a building, building, get you a building, or get you a white, white box or whatever it is. Just call us. And that’s right, we’ll, we’ll help you put a bow
Speaker 1 (41:40):
On it. That’s right. What, what do you like to say? Let’s go <laugh> when we get it done. So thanks for watching today, and make sure you check back in a week for another episode of the Cake Cup. Later.
Speaker 2 (41:53):
Later. Alright,
Speaker 1 (41:57):
Good. <Laugh>.