How Can Self-Storage Thrive in an Uncertain Real Estate Market?

[00:00:00] Jared Gabaldon: Tony Ardizzone, we are very happy to have you today. Thank you for joining us. And also today we're joined by Rich Saginaw, CEO and president of SteelBlue Building Components. So Tony, if you could give us a little bit of your background of ZZone Construction and also Legacy Built Storage Investments and your background in the self storage business generally.

[00:00:20] Tony Ardizzone: Thank you. Yeah, I'm honored to even be on the show. So thank you for having me here today. And how much time you got? Because I could go on for a while on this. Just the first question. I'll condense it as much as possible. I'm a son of immigrant parents.My father's from Sicily. My mother's from Venezuela.

[00:00:36] I speak Italian and Spanish fluently. Grew up that way. My father it was a architect by trade.Graduated, came to the United States. They both became us citizens he was an architect out of NYU is where his degree was from, but back in those days, things were tough.

[00:00:53] And my brother and Iwere getting into a little bit of trouble in the streets of Queens, New York, where we were born and raised. He picked us all up one [00:01:00]day. My mother never thought that would happen, but we were moving toCalifornia and we ended up, stopping in Arizona.

[00:01:05] My mother had somereally bad allergies, sinuses, that kind of thing that she's had all her life and the dryness of Arizona climate here just cleared it up and he said, that's it, we're not going anywhere. So we landed here. He landed here. I was roughly, probably freshman year of high school.

[00:01:21] Is when I came out here to Arizona and you gotta understand my father and the family really have all been, master tradesmen, master masons electricians, plumbers. They could build just about anything. So that really resonated through the whole bloodline.My old man used to always say that you make a lot better decisions and a lot more money with your mind than with your hands, right? And that was one of the things that he wanted of my brother and I to always have the ability to go to school, get an education and work with a computer, and our minds as opposed to a pitch, a shovel, and a pick handle. So those were the things that he really resonated with us and, could tell you even stories growing up. He always wanted us at [00:02:00] an early age for my brother and I both, but he would wake us up at two in the morning for a concrete pour, or if there was framing going on a storage facility.

[00:02:07] And, I had school the next morning and then practice after that. And he didn't care. It was just like, get your up, we're going to the job site. And I want to teach you what this is all about. And so we've learned, over time through repetitiveness and so forth. And, he always instilled quality in us and doing the right things, morals, the character all of it that goes along with having an evolution of a company, I guess that's now come to fruition at this point.

[00:02:33] So it's been one of those things where learning that part of the trade and understanding the value engineering at an early age and then going through schooling and all that kind of stuff at the end of the day I then got into brokerage. I got into a commercial real estate brokerage.

[00:02:49] Did that for a little over 12 years with one of the larger companies in the country and learn how to negotiate, put deals together, understood it until finally I said, I'm tired of this guy and [00:03:00] this guy making a decision so I can eat. I'd rather eat and make my own decisions.

[00:03:05] And that's where I jumped over to the other side of the table. And so for us, now call it, believe it or not, 2001, it was my career and where I started going was when the towers came down, that was a big deal. I left on that day. I left the brokerage community on that day.

[00:03:21] And an opportunity came my way within a week. My father was all over me for, 10 years plus saying, what are you doing? Build another storage facility across the street from the one I built. It'll fill up. I'm telling you it'll work. And I used to say to him, I was like, dad, it just ain't sexy enough.

[00:03:40] It just, it didn't get me going. Like I'd rather have been a plastic surgeon or something. Now that's sexy, but self storage at the end of the day and building and developing it, I didn't, I tripped over it. From a standpoint of being bred into it, but then understanding at the end of the day, what true development really means and the[00:04:00] true creative value is at the end of the process.

[00:04:03] And then having those partnerships are critical. I will tell you that when my father passed away, he passed away early. It was just a fluke deal, brain aneurysm. He was sixty seven old and when I was in the middle of this first, my very first project and I was scrambling a little bit and I'm like, where do I find subs?

[00:04:23] Where do I find the right people? How do I end up, putting this all together? And I found a diary.He was, back then there was no CAD or anything like that. So everything he did was by hand and it was meticulous. Like I remember even growing up, my handwriting was illegible on my homework after I'd have to show it to him, he would make me, he'd look at it and he'd say, go and redo it. So I'd have to redo it. And there's a couple of times of that and I don't want to do it. So my handwriting, people always comment on my handwriting and that's because of that, right? That impeccability of where, the devil's in the details.

[00:04:55] So with that happening, I found this journal and when I found his [00:05:00]journal, I saw all of these manufacturers, suppliers, subcontractors, everybody else. And I just started making phone calls and said, Hey, listen I'm the son of Carlo Ardizzone. I'm building a project in Arizona, I really need some help.

[00:05:14] I'm just looking through my father's stuff and I would like to, see if you'd be interested in working with us and people would, I still remember those days. It's 25 years ago, right? 20 little close to 25 where people would go, what was your dad's name again? So I told him it was, Oh yeah, I love that guy.

[00:05:32] Absolutely. I would love to work with you. As a matter of fact, I gave the company to my son. SoI'm gonna introduce you to my son and you guys get figured out, right? So it's generational and it keeps going. And so that's one of the things that I really, it was a lesson right out of the gate of that companionship and the relationships that everybody talks about.

[00:05:52] But the only way that really comes about is when you put a plan to action. And a lot of the time is just reaching out, just like I do with, [00:06:00]Mr. Saginaw over there and his team and so forth. They know they can count on me and I can count on them. And that in it's of itself is it's hard to find in the real estate world, right?

[00:06:09] Development world, investor world, manufacturing world, right? It's it's a big thing. So that's, that kind of gives you a little insight. Then I went from doing that to I can tell you I have been the full circle gamut. From being in a three piece suit. Dealing with Wall Street bankers flying to New York.

[00:06:29] I had that ability to when 2006 7, the housing crisis came about to all of a sudden taking off my suit, selling my, expensive car, getting in something that was humbling all the way around, throwing jeans and a polo shirt on, and going out, driving a hundred miles away from my family to be able to go and rent storage units and lease up the project at the end of the day.

[00:06:55] So those are. Those are important things that have really molded what we've [00:07:00] done. So when people say you don't know what operations are. No, I do know what operations are. I had our management company that we stepped into and managing your own properties was a task in itself back then it was guerilla marketing, managers were hitting the streets and they were talking to apartment, complexes and anybody at the end of the day and giving out 5coffee cup coupons for any referral they gave. So that's the era I come out of.And it wasn't until somewhere around 2010, 11, actually it was 11, 12.

[00:07:29] The cell phone became more used than the computer, than the in place, CPU computer at your desk. So once phones took over, that really changed the game. And for guys, small guys at the end of the day that were building 2-3-4 of these a year.

[00:07:46] We couldn't compete.You can't compete with the big boys, the REITs. They're spending anywhere from80 to 100 million a year on their marketing. And, one facility, if you're lucky, and it's a good one, you could afford to spend maybe 10 grand a month. [00:08:00] Maybe? You're never gonna be found.

[00:08:03] You know what I mean? So you'll be the last one on the list. So those are things that I learned at the end of the day. And it was really one of the CEOs of one of the major REITs said to me, we want to manage your properties. And I said, what makes you think you're going to manage my properties better than I'm going to manage them? Cause they're mine. You could probably give a damn whether they work or not. And he says, no, he goes on the contrary. He says, let me ask you a question.

[00:08:26] He said let's take the hotel chain Marriott, right? How many Marriott's does Marriott own around the world, right? Not in the United States, but around the world, right? Give me a number, right? So I gave some absurd number. I had no idea. This conversation took place what, 15 years ago. And so I said, I don't know.

[00:08:46] 7, 7, 500. I think I threw out there and he says, no, he goes, you got the right number in there, but all those zeros, there's only seven that they owned. Everything else [00:09:00] was managed, right? And that's howMarriott and some of these, but you go into any hotel today that banner, that shield, right? The Hilton, the Marriott, the W, whatever it is.

[00:09:11] Those are Mr. And Ms. Smith own those behind the scenes. So that's when the light kind of clicked on. And I said, you know what, I think my value is in the acquisition because I know how to acquire, I know what the added value looks like, and then I knowhow to build them. So we just stuck there, got them done, got them where we wanted to, got them in the right spots and handed them off.

[00:09:35] And so that's what we've been doing. So for us, it's just imperative. It's critical of the relationships that you have, go circling all the way back to the beginning of this is with partnerships and having SteelBlue, as a partner to us. It's a game changer from a lot of different ways.

[00:09:51] And we'll get into that more here was a couple of more questions. But, I'm very grateful for all that.

[00:09:56] Rich Saginaw: At the end of the day, the things that we've done together, even way back when, [00:10:00]and the education you shared with us on how to penetrate a market and get in front of a new customer and do the things that we've been able to do to support our group. It's really learning from some of the trials and tribulations that you brought to us and always pushing us to be better as a vendor partner, like you say, and, for us it's it is those partnerships and when we startedSteelBlue, similar to how Tony's done in his past it's about being, transparent with your customer and your vendor and, understanding how you can deliver the best product at the right time.

[00:10:29] It's a very interesting story and not too dissimilar in some of the things that we apply here as we grow.

[00:10:34] Jared Gabaldon: Yeah, absolutely. And Tony, that was a really fascinating story. Thank you for taking the time to share that with us.

[00:10:38] Tony Ardizzone: It was a truth. I didn't know.I didn't throw the parts in there where I got beat up in the streets back inNew York. But that's a, you had to hold your own back then.

[00:10:46] Jared Gabaldon: I was gonna say, you got to give a beating to take a beating sometimes.

[00:10:48] Tony Ardizzone: That's right. That's right.That's right.

[00:10:50] Jared Gabaldon: Now people are definitely primed up to understand that you're very qualified to answer the question of, what has been the impact of the slower commercial real [00:11:00]estate market on self storage in particular, this has been something that I feel like I've been hearing about for years now, the sort of slow down in theCRE. And for your side of things, you come from a builder's perspective, you come from an investor's perspective what's your take on all of this?

[00:11:16] Tony Ardizzone: Yeah. That's it's an insightful question. So thank you for that. This is, I've seen, you could obviously see some of the gray hair here. This is like my third or fourth cycle. I want to say it's my fourth cycle going through it. But definitely in an economic context you got to consider, that we're in a phase now, COVID, everything else that happened prior to that.

[00:11:36] We're in a phase where the pause button has been hit for the simple reason that during that period of time in those two years or so, two and a half years. Lending, everything stopped during that COVID period and really right about up to it.You see a lot of guys who have come over from the office.

[00:11:57] And the retail and, [00:12:00] anything else that was some of the multifamily that really wasn't working, Class A stuff that was not working either. Those guys all pivoted. And where do they pivot to? Storage. Storage.And you could probably, you could ask Rich. I'm sure he has a spreadsheet of projects that were pending and that never got built. And that's where I really see the commercial real estate market and what happened during that period of time. And, you compound that with fluctuating interest rates consumer behavior, is another one you start looking at it and going, okay you've got all the saturation, you've got all this kind of mitigated risk that is out there.

[00:12:39] Investors were also hitting the pause button, right? So a lot of projects just halted, even people that had a shovel in the ground, they halted. So I just think at the end of the day that, storage, I've seen it for 45 years work and it continues to work. AndI believe it'll work not only in my lifetime, [00:13:00]but my kid's lifetimes that'll continue to work as well.

[00:13:03] And it'll work at a high level. I think it's just going to evolve and come into a different type of a space as the decades move on and so forth. Because you start looking at stuff that people are, in economic times, right? The good and the bad, the downsizing and the upsizing.

[00:13:20] Those are all times and place where storage plays an integral part. I can tell you that when I told you the story earlier about me taking off my three piece suit and driving 100miles and working seven days a week to lease up a property that I had everything invested in at that point. I can tell you that sitting behind a counter.

[00:13:41] I used to do 100,200 million deals to be able to get some of my projects funded and scaling that right, which is what we were on a path to. To all of a sudden renting a 100dollar unit, 120. You're like, I think I had enough skillset to be able to do that.But I also have, I come from culturally from a [00:14:00]lot more passion, right? I also run very hot. That's another story. But that's one of those things where culturally, you know, having a heart and so forth. So the compassion when I can tell you story after story of how people would come in, grown men would come in with their wives behind them, with their kids behind them and say, I need your help.

[00:14:25] Sure. How can I help you? You want to. I need more help than that. Like we've been paying our rent to our landlord who owned the house and he wasn't paying the bank and the sheriff just showed up, knocked on our door and said, we have 24 hours to get out and

[00:14:42] all the while, this grown man is crying, right? Or he's got tears and he's fighting it back and the whole thing. And I'm just like, Hey, you know what we got? We were at the time that first year, the first deal, we had some ancillary uses and we had U Hauls we were renting out. I said, you know what, here's the keys, take the keys, just fill it up with gas.

[00:14:59] When you bring it [00:15:00] back, how big is your house? What do you got? So there's a 10 by 30 over there. Here's the deal. Signed them up. I said,You got two months free rent, just take it, get your life in order, do what you got to do, and I'm glad we're able to help. That, in itself, led to us in a down economy, in a down cycle, and really not being able to pull into the demographic analytics that I thought I was smart enough to figure out at the time.

[00:15:29] Cause I've never been faced with something like that, something that drastic like the housing market that it actually just resonated because he ended up telling friends and family and they told friends and family what happened. And the next thing you know our 140, 000 square foot class A facility got leased up during the bad times.

[00:15:49] And that's a story on downsizing. And you guys know, at the end of the day, when things are good, which I'm knocking on right now, glass, but in the next three years you're going to [00:16:00] start seeing this economic ship that's being held by this administration start to turn it's a big ship so it's going to turn slowly, but I really think that we still got some head wind here a little bit for anywhere from 12 to 14, 16 months still, before banks start lending and so forth. Cause I talk to them all the time, right? So they're really cautious and really minimizing and mitigating the risk at the end of the day. Then you start taking into also consideration in the shift, the dynamics of what's happening out there.

[00:16:28] You've got e commerce, is also huge, so storage is playing a big role. You've got, the work from home type of stuff that's going on as well. Companies starting out, they're not, we're competing with the flex industrial space out there at the end of the day. The only difference is that for 230 a month, you get yourself a 10 foot by 20 foot by 12 foot, right?

[00:16:54] So what is that?200, 1200 cubic feet of space that you could put for 200 feet as [00:17:00] opposed to renting up an industrial flex space that'll cost you a couple thousand dollars a month, if not more, right?Plus triple nets or whatever, however, whatever kind of a lease you have, whether it's modified gross or triple net, you're looking at a costly scenario, larger scenario, be able to house more, but if you're, coming in and coming out, different story.

[00:17:19] So yeah, I think, telling you all those things. I can also tell you firsthand, being in this industry, the downside of the economy and the stability of the downside of the economy is better than the upside. The upside, you don't have to worry about so much about the move outs and all that kind of stuff at the day.

[00:17:38] And you could charge more but it's a little harder to, get the acquisition of those clients, the ROIon them. On the downside, like COVID, for instance, I can't tell you how many times I used to drive around to our projects and just go and make sure things were get, were kept, I'm just detailed that way as I was raised, and I would never say who I am or whatever, or, and then walk around and [00:18:00] I'd see people wheeling in, on the big, huge carts, they'd be wheeling in loads, like hundreds of paper towels and toilet paper and all the, the conspiracy theory stuff that all happened back in the day and guns and whatever else they had. I was like, hey, what do you got over there? What are you doing? It's oh, yeah, we're getting ready. I can't find any of this, right? At the end of the day I know my family. I'm gonna be able to supply it all to my family if they need it, right? I'm like, ah, okay.

[00:18:28] So you're paying me,230 a month to store your toilet paper. That a boy.

[00:18:34] Jared Gabaldon: Let's go, let's do it.

[00:18:38] Rich Saginaw: And it's been a strange market for sure. At least on our side, we see a lot of the your point, Tony, post COVID, there was a lot of the, with the economic downturn, the malls and theToys R Us's and the Sears and the Pennies that went out of business because people weren't out and about doing that thing.

[00:18:54] And there was a kind of without what I'll say is probably a artificial spike in [00:19:00] some of that bill in demand because people were taking advantage of that, downturn and, again, the residential side of it as well. And, that was a lot of quick hits and call it mid 21, 22.

[00:19:10] And then when that started dying off and slowing down a bit. You had the opportunity, you saw the economy start to take a hold, and pause up with the interest rates going up.One of the big things in storage for growth and it's well known in the industry.Is the transient, right?

[00:19:25] The displacement of people and job market and people being transferred from town to town via their jobs, or they decide to move from California to Arizona or New York to Florida.And again, as that slows down and interest rates have gone up, that big piece of what drives storage growth has been a challenge in that market.

[00:19:42] And when we startedSteelBlue in 2022, we were a startup company that took advantage of maybe that slowness and the opportunity for, another opportunity in the market to take hold. And I think about some of the Mattel and some of the Monopoly games are created post depression and the successes that they've [00:20:00]had.

[00:20:00] And that's the right time, right place for SteelBlue. And, again, having partnerships and relationships with guys like Tony, it's helped us get our namesake out there and understand who we are. And, the team that we have is, very experienced, but, learning again from that kind of understanding of the real estate in a global manner helps us navigate and grow the best we can.

[00:20:18] Yeah, completely different market today than it was, a few years ago, pre COVID for sure.

[00:20:22] Tony Ardizzone: Just to wrap that question up there, what Rich is saying, with a downturn in the economy and where things were and where we are right now at the end of the day. This is a time where. Yes, it poses challenges, but it also poses a lot of opportunity.

[00:20:36] And one of the things of what SteelBlue was able to do during that downtime was, get their processes in place, cause I know talking to them through that whole process and where they were and how they were going to scale and what they were going to do and the machinery and everything else.

[00:20:49] It's the same thing that we do on our side, right? Because the opportunity exists when everybody hits the pause button. It's the guys like the Warren Buffett's of the world [00:21:00] who end up buying at that point. And that's where we are, you just got to make sure you solve that piece of the puzzle.

[00:21:05] And Buffett says, it's it's not until the tide rolls out where you see who's really swimming naked. The guys who are all opportunistic about it, they're the ones that were sitting out there naked. And they were the ones, with embarrassment, but having properties repossessed or taken back or whatever the case is, or companies that were folding that were not ready for it.

[00:21:23] Rich and his team and Brett and those guys they hit it right when when I say they hit it they were in the right time at the right place. Better to be lucky than good. Rich.

[00:21:31] Rich Saginaw: Lot of that going around for sure.

[00:21:33] Tony Ardizzone: yeah.

[00:21:34] Rich Saginaw: We're thankful for it all the time. Jared, I've had some conversations too, you're absolutely right. As a startup and Tony, you can really appreciate this. There's 2 things that can drive you to bankruptcy, right? Not having customers and good relationships and partnerships to sell to.

[00:21:49] And growing too fast, right? And I think when we got out of the gate and maybe a stagnant declining kind of opportunity, to Tony's point, it allowed us to get where we need to be. We [00:22:00] got our equipment in place. We designed a good product. We understand who we needed to get in each group. We're responsible.

[00:22:06] I think that's a big part of our success for sure. And again, always nice to be here to say it all the time, but right time, right place and right people and right processes and right relationships. Yeah.

[00:22:16] Tony Ardizzone: And I commend you Rich for how you've handled yourself during those times because Rich, being six foot eight and 300 pounds. He's a, he's an intimidating factor over there. I love the fact that he would call me a lot of times and go, Hey, what do you think about this?

[00:22:32] What do you think about? I know he's, I wasn't the only one, but there's other guys that he was relying on that were not in the industry. In the manufacturing side of things like he was right? But he was asking questions of people from the outside to get that understanding. And then, you can never have too much information.

[00:22:49] And so I, I commend you and that's why you guys are crushing it. Oh, good for you

[00:22:53] Jared Gabaldon: Yeah, we appreciate that. And also, we've been talking about how hard it's been, but I also want to talk about what's coming up for us, [00:23:00] and so what we have right now is a new presidential administration. We have a lot of new policy that's coming our way. And I feel like whenever there's a new administration, there's a lot of, excitement about what's to come, finally, things are going to change.

[00:23:13] And what do you think the new. Administration's impact is going to be on the CRE from here. And yeah, what's your overall take on the sentiment? One thing that, before you jump in, one thing that I think spooked us a bit was, the tariffs possibly, and how it's going to drive up the cost of our side of things on the manufacturing side.

[00:23:32] And, we've been preparing for that, but I think outside of that, it's been generally positive from what I've seen. And maybe you could touch on this, Tony.

[00:23:40] Tony Ardizzone: As a business owner, it's a thought provoking question. That's for sure. I am excited. It's the first timeI've been excited in over a decade, 12 years worth. This is, I've never seen anything happen as fast as it's happening. And it needed to happen fast because there was so much damage done in the last [00:24:00]10 to 12 years of different administrations and what's halted the process.

[00:24:06] In a lot of industry, there's some industry that was great as well. Maybe some government work, things of that nature was all great, but, from our standpoint, it was always cautiously optimistic, whether it was the lenders, the investors, but storage has been that resilient class that has, a line usually waiting out there, right?

[00:24:24] There's still a lot of money on the sidelines. It's still robust, right? So I think the storage industry has demonstrated over the years that it can hold its own and with the current economy and where it's going and where you're starting to see all this talk about the tariffs and, everything that people are scared straight about or talking that it's going to raise prices and so forth.

[00:24:46] You know what? The market needed to be adjusted to begin with anyway, right? And so this is a true market adjustment of where it's going to be. I'm hoping, unfortunately, as a developer, I'm not as optimistic when it comes to pricing [00:25:00] and steel and hard goods to come down. I think lumber is probably the only thing that has come down in the last four or five years, but storage is not built with lumber, right?

[00:25:10] So the housing market, things like that may be able to capitalize on that. But for us, I just think that, you've got resiliency and demand. You've got diversification strategies out there that a lot of investors are pivoting to, you got repurposing of assets within that diversification.

[00:25:28] You've got people who are saying, you know what, I like storage, but I also like multifamily or I like industrial or, there's a manufacturing opportunity that I can get into whatever that, that's coming back. So that diversification strategy is critical to the growth of this economy and what's going on out there with investors and with users and operators out there, the growth potential.

[00:25:48] I just think the growth potential both in storage and in this economy and the way it's going to be treated and the things that are happening out there. I think everybody's gonna win. You're gonna see a lot of people kicking and screaming at the end [00:26:00] of the day, but I truly believe everybody's gonna win.

[00:26:02] And the winning part on both sides will come and play with even sustainability and adaptability of resources. The solar panels, the windows, the glass, the the energy efficiencies that we're talking about, right? So all of that's still gonna stay in play. Most of it but you just won't see it as a mandated type of a situation. So yes, I'm very positive. I'm excited. And yes, overall, I think you're hearing that a lot from everybody. Things are different. Things are different. And I don't think in, in Rich's or my lifetime I've ever seen anything like it at this point in time.

[00:26:35] Rich Saginaw: Yeah, it's dynamic for sure. I was talking to my father last night on the phone and he said, feel a lot better about where we're in the world headed today. And I said you have yet to be seen. The dynamic and quickness and pace of play that's happening. We had a big discussion just last week internally.

[00:26:51] And we're talking about the tarrifs and, we do buy some stuff, foreign, but I think one of the things we just reflected on is, 90, [00:27:00]95 percent of what we buy is made here in America. And really our vendors are supplied. I think our furthest vendor that we use today is 500 miles from our plant.

[00:27:09] And they are buying globally, and we're asking them, what that impact might be. And they said, hey, we got you covered at least for at least in the short term, right? So no impact right now, but. Again, that's something we're very prideful of, but look, the economy is going to be administration aside, and again, I'm a capitalist and love that too, but, look, the economy is going to go where the economy goes, regardless of who's in office, and that's been proven over, over many years, right?

[00:27:36] What I'm excited about is the policies and procedures that put it more internal and push it back to the United States and build the confidence of the American people. For me that when the economy is robust, the storage tends to go. And again, people can buy a home and they can start to move again and they can see job opportunity.

[00:27:51] That's real, Tony's side of the business when he's looking to develop or other developers that are out there and that grows our business too. Yeah, the economy [00:28:00] recovering is certainly a better economy.And Tony, correct me if I'm wrong, but I think pre COVID, storage typically grew on a four to six kind of annual, CAGR compound annual growth rate type situation.

[00:28:10] It's slowed down since then, but, was there return there, time will tell, right? So we're really excited about where we sit and what we're trying to accomplish. And we're really excited with the changes at the top for sure. Because we only know that the economic situation will improve as American confidence gets better.

[00:28:26] Jared Gabaldon: And Tony, as an investor yourself, investors are always looking at the positive scenario and the negative scenario because you're always trying to make sure that you got your butt covered either way, on the positive side, I'm just curious of say things really start to work out from here.

[00:28:39] Like you're saying, banks are looking at maybe a year from now that, they're still going to be able to start lending more and whatnot. And from say things turn to the right direction, what are the opportunities that you start to see arising in that scenario. And then just on the flip side as well, say, things start to stay more challenging, like it has been, what are the adaptations that [00:29:00] investors, manufacturers, and developers like yourself, have to make in either way.

[00:29:04] Tony Ardizzone: Yeah. Great question. I'm gonna, I'm gonna put it in a couple of phases here. But I think what you start to see from the investment standpoint. of what they're looking for. And then the adaptability of it is truly the flexibility of our space, right? So the increased demand for flexibility of being able to pivot really quickly, at the end of the day, based on whether it's big box retailers or whether it's like the drug stores right now or all you know that's all starting to go out.

[00:29:33] So it leaves opportunity to do different things and to re gentrify neighborhoods and repurpose assets. So the increased demand for flexibility is big in this deal.And then, you've got to have the other components too. I've said this before, you have to have strategic partnerships.

[00:29:49] Those strategic partnerships have to happen with the critical mass that you have in being able to bring this to over the goal line per se. So when it comes [00:30:00] time, I could tell you, and this is what, one of the reasons why I do backflips whenever I do business with SteelBlue because I know they're not going to fail me.

[00:30:09] And look, we all make mistakes. We all have challenges. We all have problems. If I make a phone call to say, Hey guys, your driver just delivered the doors and one of the cases fell off the truck. And it damaged some of the doors, it's like, we'll have new doors to you within 48 hours, right?

[00:30:24] Rather than, all the other stuff that most other companies will ask you to do, right? That again, isa strategic partnership, right? Because there's trust and for a developer, fora guy like me. Or even if I buy an existing asset, at the end of the day, and I start to add some value to it, there's an interest carry cost that most people don't think about.

[00:30:43] The dollar's clicking every day, right? So every day that I get rain or I don't have material at the end of the day, it's earth shattering. It could cave you, it could cave a project in. So from an investor standpoint, you've really got to be looking for a [00:31:00] sponsor, someone that knows what they're doing at the end of the day.

[00:31:03] I can't tell you how many deals I see a week right now across the United States. I'm gonna tell you that legit seven to 12 a week for the last three quarters straight. Of properties and guys who have just walked away, they've got it entitled. They spent two years, three years, seven years getting a property entitled.

[00:31:25] And then all of a sudden the rents have moved, the interest rates have moved, the construction costs have moved, all that have moved, right? Which for us, our added advantage is we're not only a development company, but we also, telling you a story about my family, we have an integrated construction company.

[00:31:40] So we build our own projects. So we're saving money for our investors and we're applying that discounted costs and bringing that back to returns. Those dynamics, that go into that are important moving forward. And anybody who's listening to this webinar, find yourself someone that knows what they're doing, not someone who just came out of the [00:32:00] retail sector or maybe there's I can't tell you how many guys have said, Oh, that looks pretty easy. Let me, I think I could do that, right? I think I can become a manufacturing door company. Yeah. What's so hard about that?

[00:32:11] I know what machines you're using, right? But I think you're just going to start seeing also the investment side of it. The other flip side of that is, upscale development.This country has been decimated for so long, right? Neighborhoods, communities in major metropolitan areas.

[00:32:25] And I think slowly you're going to start to see, people with a vision and people that can create a vision, especially now with AI, you've got renderings and models and so forth of what it can be. We're gonna start seeing those upscale developments, becoming more relevant into those neighborhoods, right?

[00:32:41] Because you're going to sit there and go, there's, dilapidated building over there. But all of a sudden, there's like this 20 million property over here. It's like, why would they do that? Because it follows, right? It all follows. So urban redevelopment, upscale developments and then entering into dynamic new markets.

[00:32:55] I think you're going to start seeing not only because of the saturation and because of [00:33:00] everything that's out there, you're not only going to see the major MSAs being targeted. Now you're starting to see guys making it work in the secondary markets and the tertiary markets right at the day. So it's becoming a little bit more diverse in a lot of different aspects.

[00:33:18] But I'm just going to keep saying it. You've got to know what you're doing, because if you don't have your analytics and your research and your relationships and your partnerships in place, which takes years, this isn't something you make a few phone calls with. You know what I mean? It takes years. It takes time.

[00:33:33] It takes lunches. It takes face to face. It takes dinners. Those are all things that I think is the positive. And then on the downside again, if you don't know what you're doing and you think you're smart enough to know what you're doing and you don't do the little things like Rich has done early on by asking people on the outside.

[00:33:50] What do you think?I'm not betting on you.

[00:33:53] Rich Saginaw: It's interesting, Tony, you talk about that creativity, right? We have some recent customers that have been going into some of these things [00:34:00]like. We were literally on a visit with a customer and we walked past their unit twice purposely for a reason, right? We just walked past it twice, right?

[00:34:10] And they blended it in. And inside there was a, a 15 or 20 unit storage facility, lockers and some swing doors. And again, not the full scale, 353 story type place, but it's taking use of those creativity spaces and doing some of the different things and, things with people who are on college campuses and all these other things that are going on.

[00:34:30] But again, asking the right questions and doing the right things are, yeah. Again, getting in front of guys like Tony who bring these opportunities to me because they're grinding and investing in a market that's, maybe not the best situation. It is definitely a different ecosystem all together.

[00:34:45] And it comes right back to what Tony has been saying. It's about having that right partnership and right relationship and more importantly, that right conversation. Even if you're not sure, you can always learn something from somebody. That's the approach we've taken again. Part of our growth has been [00:35:00] that, being open and humble enough to ask the right questions of the experts that know.

[00:35:03] Tony Ardizzone: Yeah, something else that I think that hasn't really been touched on in this question, at least, is that, the innovative technology side. I don't know, Rich, are you using A. I. In any form or anything like that at the end of the day? Because that I think that'sA. I. is not what people believe it to be like this robust deal, right? I think it's still being worked through. Eventually it's gonna go through the maturation of having that understanding of it being self learning. But right now it's being fed information, right? How do you see, the innovative technology side of it?

[00:35:32] Because to us, On our side, that's our differentiator, right? We know plugging into our model.I'm going to have to not spend just, 100, 000 on a security system with, the bells and whistles. I may now have to go and spend 200,000 because now I've got, the apps and the self locking doors and the tracking system and everything else that is the technology side of it that people want.

[00:35:58] And that's what is going to put [00:36:00] the next guy out of business if you don't have it.

[00:36:03] Rich Saginaw: It's true, the advancement of technology and really you talk about where we enter the process from a project management standpoint and job site readiness standpoint, some of the conversations our PMs have with, Tony's PM, we've used AI right now to report those conversations.

[00:36:19] And we've actually used them back to say, Tony needs this material on site on such and such a day, but it needs to be these pieces, this section, various sequence and mark for that project. And when we have questions, or there's a dispute we're using that kind of technology to say, hey, no, this is a conversation we have, and it's building that trust relationship with, the partnership we have in building that facility.

[00:36:40] And Tony's role as an investor, the clock's ticking a second, they cut that first check for the first, piece of steel or first the groundbreaking event that they have, right?So for us, Tony service, say, that's probably for the last 5 or 10 years, but our mantra is from P.

[00:36:54] O. to C. O. Right.How do we get that project for those guys, whether developer G. [00:37:00] C. What have you from P. O. to C. O. And we can have tools like in technology advancement where we can go back and reference those conversations because literally it reports line by line. Tony said that this is what he was going to do.

[00:37:10] Rich said this is what he's going to do. You start to get that collaborative feel for how a project can really go from start to finish. And yeah long story short, and this is probably dating some of us, but there was a video way back when, as a consultant, they would always show us about the four hour house that was built,I believe, in California. It was literally a blank acreage of lot, and they built a house in four hours and had everybody moving in, in from start to finish. And it was literally bulldozed, slab board, building up, and it was, showing how we, everybody went together and put the plan together every single minute, every single part of that four hours was all the way down to the sodding of the grass in the front yard.

[00:37:52] And I think that's something that, we look at and make sure that we're asking the right questions, we're making sure that the opportunities are there. How do we value [00:38:00] engineering? Get those guys on and off project. I think that becomes even more important when you're in a tight market. The money is critical.

[00:38:06] Interest rates are piling up. And the second you missed that, not only took Tony's point earlier, you lose some credibility, but it's something we were very prideful in and making sure that we get our guys on the site.

[00:38:17] Jared Gabaldon: And just to finish up on the AI conversation too, the cool thing about it is we're really dealing with the dumbest version of AI. The absolute worst version of AI is right now, and it's still pretty darn useful. So for me, I'm really excited to see what it really turns into from here on out.

[00:38:32] It's growing exponentially and how smart it is. And as we're like closing up this conversation, Tony, I would really love to pick your brain on just what's that piece of advice you're giving everybody right now? You find yourself, you're on the phones, you're talking to everybody and,

[00:38:45] what is the piece of advice you find yourself giving to people about the CRE market right now?

[00:38:50] Tony Ardizzone: Wow. That's a thought provoking question. My information's worth about two cents and it's free. Just about, but I will say that [00:39:00] what I tell most people at the end of the day is stay in your lane. Stay in your box.If you really don't know what it's all about, then seriously take the time and effort to do two things, and that's research, and understand the analytics.

[00:39:16] If you can't do those two things, you're doomed and you're going to doom your family. You're going to doom your investments. You're going to doom a lot of things, at the end of the day, where your health, where, you will have some heartburn, you put, there's a lot of time and effort that goes into buying a property.

[00:39:34] There's a lot of time and effort goes into developing a property. And there's a lot of time and effort that goes into researching on whether it's going to be a good property or not. And you got to know, that was one of the things that my old man used to say is the best deal you're going to do is a deal you don't do.

[00:39:46] Because there's so many deals out there and there's so many opportunities out there. So pick the best one based on your analytics. We've got a secret sauce that I've had for the last 45 years. I won't share it because that's my secret sauce. It's like mySunday [00:40:00] sauce, right? A little pasta and some meatballs and the whole thing.

[00:40:02] It's a sweet sauce and that sauce has to do with, analytics. It has to do with demographics and what has worked for us in 45 years. I don't want to pat ourselves on the back because a lot of this started with my father and that first generation of him doing it. But in 45 years, knock on glass, we've never had a failing project. We should be in the hall of fame for development of not having a bad project in 45years. But that all goes into knowing your market. And look, you're going to get lucky. A lot of people get lucky. The harder you work, luckier you get, you're going to get lucky.

[00:40:38] But then there's going to be times where you're going to be stressing, right? And you need to understand how to be able to pivot and how to be able to enhance, where you're at on, on this deal. And I just think that the two biggest things that market research, analytics, understanding what you're really going after, because truly.

[00:40:59] Even if you're opening [00:41:00] up a pizza shop, I'll use a pizza shop. You want to know at the day, how much can you charge for that slice of pizza? And you want to know how many people are gonna show up for that slice of pizza, how much competition you have around you right at the end of the day.All those things go into play of how many slices of pizza you're gonna end up, selling by the end of the month or the end of the week.

[00:41:18] And for us, especially with the saturation market and especially where this is today. You have to be cognizant of your competition. You got to be cognizant of what the pending competition is out there in the market, because they may not be competitors today, but there'll be competitors three, four or five years from now, and they could hurt your business.

[00:41:41] And it's the same thing that's happening right now to that first generation type of storage facilities, the outdoor drive ups and so forth that are just getting decimated because the climate control, beautiful class a building across the street or down the block. Just came into the neighborhood and, for 12 bucks more a month,[00:42:00] you can have, a different experience, a better experience.

[00:42:02] And so for me, research analytics, understanding what you're about to get into, don't just jump in don't listen to, Hey, this is a great opportunity at the end of the day. Says who and what is your. background in it at the end of the day, because if that person doesn't have a resume, it's like doing surgeries or at the end of the day, a pilot's got to have so many hours to be able to fly a commercial jet.

[00:42:23] If you don't have that type of a resume behind you moving forward, then go and learn it from somebody first before you go and take your family's money into the thing, right? Because the last thing you want to do is like the story I heard two days ago was a guy who put all of his money into this one multifamily development situation.

[00:42:43] And it was a do or die situation and it was dying on the vine after, I don't know, eight months.And it came to a culmination to where the guy had a stroke. He had a massive stroke in the hospital, and now he's letting his wife down, his children down, the whole deal because of the [00:43:00] stress.And, you just don't want to be in that spot, right?

[00:43:02] You want to be able to sleep well at night. You want to be able to know that, you're partnered up and you're with some good people at the end of the day. Same way that I am with my components and my guys in my corner at the end of the day, that's, that makes me sleep well at night.

[00:43:15] And it should, hopefully that resonates with the audience.

[00:43:18] Jared Gabaldon: Yeah we appreciate that, Tony.And also, for people that want to work with you, how do they work with you? How do they get in touch? And yeah, how do they, I know it's hard to it's hard to get on your line sometimes. I know you're a busy guy, but,

[00:43:29] Tony Ardizzone: I appreciate that. No, thank you for the question and thank you for asking it. I've been working with institutional lenders and and partnerships for a long time 24 years of it, right? It wasn't until this last year. Where I decided to break away. It was actually during COVID where I thought it through.

[00:43:48] But as of January one, we actually took the step forward. We put at least a year and a half into preparing a program for friends and family. And right now we're offering opportunities to [00:44:00] come and join us,to be a part of our partnerships, it's a fund that we have. It's called LegacyBuilt, which is Legacy Built Investments a little spinoff of the 45 years that my father's been a legacy of passing this on to me.

[00:44:12] And now hopefullyI've passed it on to my kids, but in the meantime, I'm gonna pass it on to my investors and their kids, right? And generate, generating that thatgenerational wealth. So Legacy Built Investments is a fund. That you can go to legacybuiltus.com or legacybuiltus.com. And you can see, you can become an investor right there.

[00:44:33] What we're offering is the low, the floor to be able to invest is 25, 000. And for that you get an8 percent preferred annual return on that money. It's a five year hold. So it's passive in nature. And then you get the ups right at the end of the day which means when we sell the project in five years, if we triple it, quadruple it, whatever it is at 25 grand, you get your 25 grand plus your 8%.

[00:44:58] Or better yet, if you're putting in a [00:45:00] hundred thousand dollars, you get 10%. That's the next threshold. It's only two thresholds, eight and 10. So if you put in a hundred, you get your, you get your 10 grand back per year, you get your money back and then whatever the ups is on that. So we're projecting high multiples over a track record that we can show.

[00:45:19] There's never been anything in our 45 year history that we've never had at least a minimum 2 to 2.5x multiple on our projects, so we're expecting it to be a lot better. So thank you for asking that. We're having a lot of success. We just kicked it off January 1st. Our pipeline right now is a little over 100 million that we've got going and everything that we're looking into, with the matter of fact, Rich, this could be a call for later, right?

[00:45:44] And let's just see what the pipeline's looking like. but we've got some big projects that are coming up and we've got some dynamic projects of where we're we're really what we were talking about in this webinar is we're capitalizing on the flexibility and the pivots that are happening in [00:46:00]the real estate market right now.

[00:46:01] So we're repurposing some assets that are going to be quicker to move to market as well as being able to find some decent acquisitions where we've got a value added play with some expansion land or, boat and RV and so forth that comes along with it. Yeah, legacybuiltus. com or call our office at 480 719 3000.

[00:46:22] And be happy to talk to you guys. I sound like a car salesman. I'm sorry about that, but I've never done this before. Usually it's been one or two phone calls, right? So yeah, butI'm enjoying it. I'm enjoying talking to people and, every investor that we have, we've done phenomenal, since January 1st.

[00:46:35] So what's today? The7th? Yeah, we're 37 days in and we're, well over, 7 million bucks so far. And just people giving us, small increments of money and so forth. And, I treat everybody's dollar like it's our own and we put our, and I put my own money into it too.

[00:46:50] So, you know, I got skin in the game. So that's the key. I'm not like all the rest of them who are,I hate to use the word Ponzi scheme, but it's not that every [00:47:00] single dollar goes into bricks and mortar at the end of the day or into a real estate asset. Yeah, thank you, Jared.

[00:47:06] Jared Gabaldon: Yeah, Tony, congratulations onall the success and wishing you much more in the future as well. And also thank you for the partnership that you've had with us here at SteelBlue. We deeply appreciate your partnership and thank you for your insights today. Also Rich Saginaw, thank you for joining us as well.