In this interview with Invest: Palm Beach, Verdex President Rex Kirby discusses the company’s approach to the pandemic and how the commercial sector is shaping up.
What successful strategies did your company implement to manage the pandemic?
As an essential business, we were able to keep working. We put in a great deal of effort to make sure we were doing business the right way so we could stay open and operational. We learned how to distance people and keep them safe on job sites. Coming out of this pandemic, we’ve seen that there is plenty of money out there and people are looking to invest in real estate, both on the capital and the equity sides with banks offering low-interest loans. The challenge is getting supplies and materials in all areas. The price of wood skyrocketed, rising from an index of about $350 per thousand feet to close to $1,700. Also, all metals have been high and drywall costs 50% more per unit than it did a year ago just because of the cost of metal studs. We have some industrial work and we can’t even get bar joists in less than 10 months. There is only so much people will spend on rents so the project has to be financially feasible for developers. We’ve had to work around getting material and figure out ways to work with the client and do our best to reduce pricing so that projects can move forward.
What changes in demand have you perceived over the past year and a half?
The apartment sector is on fire with all the people moving into Florida right now. We can’t build apartments quick enough. We are also gaining traction on the public sector side.They had some challenges because their tax rolls were down but there is maintenance and buildings that need to be built, so they are still releasing projects. Industrial is strong, although one of the challenges is that Amazon is building so much throughout Florida that they have a lock on a lot of the material and they are willing to pay a premium for it so you have to get in line and wait. We’re thinking outside of the box, such as delaying the vertical parts of the job and starting the site piece so that we can get ahead and get the pipe out there. There is a PVC shortage as well, which is essential for all water and sewer installations. We’re trying to figure out ways to lock in our pricing of materials and balance how long it will be out there before we can actually get it in the ground or building. We’re storing material at times so that we can have it available.
What does the future of commercial real estate look like?
I’ve started to see more retail come back. We have a special projects group that does a lot of interior build outs, renovation and additions. We’re doing a lot of work for the landlord Related Group at Rosemary Square. Related is almost switching out its entire tenant base with all new restaurants and shops, so they are refreshing the whole complex to update it to today’s conditions.
The office market in West Palm Beach and all the way through Miami has been on fire, post pandemic. Primarily from hedge funds and financial groups that decided they could leave New York, so the floodgates opened. There are at least three more buildings planned to go up as office space. This is after people thought nobody would come back to work, but there is a lot of demand in this area.
What is the role of technology in your daily operations?
From a project management perspective, we’re dependent on everything being transmitted online. We use Procore but there are similar systems. As we have grown and are starting to get into bigger projects, we’re starting to use more BIM modeling for laying out our mechanical, electrical, plumbing and fire protection up through corridors and buildings so that everyone knows where their spot is from an elevation standpoint. Our use of Procore has expanded over the last year and we’re training our people on how to use more of it. The ability to synchronize our forecasting with our accounting system has also improved between Procore and Sage for our accounting. It’s all about efficiency and having one program that people can get familiar with so that they are not bogged down by the computer but instead can manage and build their work.
On the other hand, everyone is looking at prefabrication. The labor force is getting increasingly strained. Therefore, we’re looking for ways to preassemble components in a shop so there is less to build in the field. Assembling off-site in a factory setting cuts down on the labor needed on the job site.
What is your outlook for your company and the construction sector in Palm Beach County?
We will grow a little more this year. Next year, we will have stronger growth. We’re picking up steam in other Florida markets as well as getting our share of work on the Southeast coast. We’re in our seventh year, we’re gaining traction with our clients with a lot of repeat work and expanding to other Florida markets. We’re building more in Tampa, targeting work in Orlando and we picked up a project for the University of Florida in Gainesville. Our future looks bright and, fortunately, we are having conversations on how big we really want to be because that sometimes changes the dynamics of a company. The main thing is to continue focusing on making sure we maintain a good brand in the industry and that we are doing a good job for our clients.