ARTICLE WRITTEN BY INVEST
June 2022 — Invest: spoke with Rex Kirby, president of Verdex Construction, and discussed the rapid population growth that has helped spark a boom in construction of homes and rentals. “The challenge now is that it’s getting unaffordable,” he said.
How has your 40 years of experience shaped your vision of the industry?
No one will forget the recession between 2008 and 2012. It was probably the toughest time we’ve ever had in this business because the struggles were so bad and went for so long. My takeaways during that time were twofold. For one, I started my own company and immediately started to diversify the project types we were involved in. We’re active in seven industries right now, with a lot of emphasis on apartments because there are so many people moving here. But we don’t want that to take up more than 50% of our portfolio because eventually everything slows down, and you don’t want to ride one wave for too long or you’ll end up empty. That is important to remember in our current economics. Secondly, we want to grow at a steady pace and not get ahead of the ability to find good people to join our team. We don’t strive to be the biggest, we want to be the best.
How are relocations to Palm Beach impacting the area and economy?
Relocations are very much still a trend. People are still pouring in and our projects have reflected that. We have a 402-unit apartment called Tuttle Royale in Royal Palm Beach, with another 264-unit apartment called Tortoise One starting in Downtown West Palm Beach. We’re also starting 1415 Centrepark, a 250-unit apartment building near the Palm Beach International Airport, as well. It shows the huge need for rentals and that the market is still very active.
The challenge now is that it’s getting unaffordable. Rents have been going up dramatically and I know some properties that have raised their rates five times just because they could. The
concern right now is going to be where is everyone going to live who can’t afford $3.50 to $5.00 per-square-foot lease rates? It’s a huge topic in Palm Beach County and the county government is considering a bond referendum right now to help with that. To that end, a lot of apartment complexes are putting a higher percentage of workforce housing into their portfolio. Some of that is a base requirement but, mostly, people understand that it’s something that needs to be tackled. The requirement is 15% but some developers are offering 20% to 25% workforce housing in their market rate apartments. We have to do that in order to make it work financially for everyone.
What is your assessment of talent recruitment in construction right now?
As we’ve grown, we’ve still been able to attract great workers because we work hard to maintain a good brand. That’s important because people want to work for a company they feel good about. We’re construction managers so, for the most part, we have professional people managing and building the projects and that group is in high demand.
As an example of real industry need, you can hardly find a plumber with any capacity right now. If we can find young people who want to be plumbers, they’d make a fortune. We haven’t quite been able to solve the pipeline issue to feed our craft industry and get it back to where people respect having a trade that offers a good living. We promote it all the time but getting more emphasis on vocational training for people who don’t want to be behind a desk is something we need to do more as an industry.
How can your personal story of starting out with a small crew and evolving into a major construction management company inspire a new generation of talent in the industry?
It has been a fun and remarkable ride here. We’re eight years in and will be doing $250 million in revenue this year and already have a backlog for 2023 well in excess of that. We will grow easily in the next two years. Honestly, it just goes back to relationships built over time. I’ve had a lot of developers who didn’t have to work with us but wanted to see us succeed and we got their support as a result. They were willing to give us that first job and first chance. The second thing is that I wanted to make sure we didn’t sacrifice our brand by growing too fast. We want the right people to fit our culture and grow the right way. We’re doing our fifth project right now for our very first client and that’s the way I want the company to grow: not just doing one and done projects but building relationships with clients and growing with them. People in the industry still like to work with people they like. That is something that will never change.