Q&A: Ryan’s executive looks at supply issues and key areas
Big management changes are coming at Ryan Cos. US Inc.
In the wake of a busy construction season, Ryan recently announced that the company’s president, Jeff Smith, is retiring and that several of its long-time executives will take on new roles starting in 2022.
Among those on the new role is Mike Ryan, who has been promoted to president of the construction and development company’s northern division and overseeing its expansion into the Denver-based Rocky Mountain region.
Ryan, a fourth generation executive, has been with the company for 11 years. In his new role, Ryan will take over a geographic area that includes Minneapolis, Chicago, Kansas City, Cedar Rapids and Des Moines.
Other people with new responsibilities at the company include Rick Collins, Collin Barr, Chuck Carefoot and Tony Barranco.
Barranco takes over Ryan’s former job as head of the Northern Region, which includes Minneapolis and the Dakotas. In addition, Ryan announced the hiring of Peter Fitzgerald, formerly of Cushman & Wakefield, as vice president of real estate development for the North region.
In the following interview, Mike Ryan talks about his new role at the company, which plans to deliver 146 projects with a total of 28 million square feet of new construction this year. He also reads tea leaves for the office and industrial sectors, and discusses topics such as the challenge of the supply chain and rent control.
The interview has been edited for length and clarity.
Q: Talk about your new role within the company. For the past four years you’ve been running the Northern Ryan region, haven’t you?
A: Yes. The northern region would be pretty much anything in Minnesota, the Dakotas. Tony Barranco will now have direct responsibility for this geography.
Minneapolis is our historic headquarters. It is also our operational headquarters. We have about 800 team members in Minnesota. It’s a great responsibility and it was just a total privilege. I love this job and I leave it sadly, but I leave it in good hands.
Q: What can you tell me about Peter Fitzgerald, a newcomer to the company?
A: He’s been with us for about two weeks. And he’s really going to fill the void to be our office expert, and also partner with Dan Mueller and help deliver all of our industrial assets. These two worlds are ironically blending more and more together than they should be. It created the place and a need for us, and Peter is a perfect match for us.
Q: You mentioned the office and the industry, which have been really affected by the pandemic. What are your prospects for these sectors?
A: A story of different worlds. First of all, on the office side, we anticipate slow growth, a kind of steady turmoil, and make it a potentially turbulent market. We really believe that many of the biggest users of office space will be using less space. There will be a huge influx of new spaces to the market as people shed their older, less relevant type of space. What happens to this is a huge opportunity and a question mark. This will create strong headwinds for the office.
But the bright side is that recruiting / retention is so strong, and a need so urgent, that many heavy users will still be building new office space and looking for new office space that they can be more competitive and productive. as a team. So this will shoot at both ends and in different directions, one negative and the other somewhat positive. Peter will have his hands full to find out.
The industrial world is very different. The industrial world is dominated by a new space by large users – the Amazons, Target, Kroger’s – all large users of logistics and distribution. They grow up. We don’t see it slowing down.
Plus you have this whole supply chain conundrum, where people are first recognizing, hey, it’s not the best solution to have just-in-time purchases for everything we own. We should probably be having some backlog.
The manufacturer is therefore going to take advantage of it and is already seeing it. And then you see that e-commerce in general generates more industrial space, more storage space, more direct-to-consumer space. And a lot of the lab-like space and creative office looks a lot like an industrial area to me and lives in an industrial park. So we are working on a few installations, one for Kindeva [Drug Delivery] out in Woodbury. And it is in an industrial activity park. But it’s anything but industrial, it’s a high-tech laboratory space.
I think most people predict the industry will continue to be strong. And the office will be rowdy and you know, full of pocket opportunities, but not a white-hot market.
Q: You mentioned the supply chain issues. How do you deal with this from a construction or development perspective?
A: Most of the answer is you find your way there. Much of this is beyond our common control. What you’re hoping for is a traffic jam moment that’s about to dissipate, not a traffic jam we’re just getting into. And I don’t know if any of us really know the depths of that.
But obviously what you are seeing on a lot of our projects right now is that we are speeding up purchase time and commitment time on so many materials. So when you took maybe six months to design a project, then you buy everything and start building the next day, we take a very different approach where we do a month of design and then we start to engage and lock in; the steel is going to be made so that we can bring it to the market and now the mechanics are going to be made so that we can bring it to the market. You see a lot more projects fragmented that way, which actually serves our approach to the industry quite well.
Q: Overall, how has the pandemic affected your business? It looks like you’ve stayed busy with plans here in 2021.
A: We’ve grown up over the past year, which is incredibly stressful at the same time. Some of your customers come to you and say, “Our business is just not working right now, we need to brake. And others have come to us and said, grocery stores for example, “We’ve just been put on the front line of everything, we need to speed up what we’re capable of and we need your help.” “
And so, this push-pull got more people asking us for more help with their real estate platforms, their portfolios and our own development doing the same, than it resulted in the other side of it, which is a slow-down.
Q: Talk about some of your current projects, like Highland Bridge, which will eventually bring 4,000 new housing units and other uses to the former Ford plant site. It seems to be moving fast.
A: Highland Bridge is really fun. I don’t think there is a project that the team is currently more proud to work on. Forty-two blocks. Most roads, sidewalks are; several of the parks are almost done, there are a ton of trees planted. You can walk on the central water feature. We have the first buildings under construction and a few more are starting soon.
Overall, exciting. But it’s 42 blocks. We have a lot of work ahead of us. The rent control measure is something that really seems like the only bug that could really slow us down and that worries us, quite frankly.
Q: Can you expand on the issue of rent control a bit?
A: From our point of view, new projects are much more difficult to bring to market when you have this constraint of a rent control policy. So what happens is that this will slow down the delivery of new [construction], it will increase the rents of the new construction at launch, as they are going to be checked in the future. And this is all an effort where you have an intentional policy to control the rent and keep it low. And in fact, in my opinion, based on our professional position has the opposite relationship. In fact, it increases rents. In macro, this is the result.
I’m a bigger supporter of what we have on the Ford site. The tax base of all new multi-family dwellings at market rates pays for the affordable and helps subsidize the affordable. You always pay rent in an affordable housing project. But you have to have subsidized construction. And so he subsidizes this construction. We are therefore able to deliver the two in a symbiotic manner and accelerate the delivery of the units. The more supply we bring to the market, the better the long-term rent; the more you force it, the worse it gets, even with the rent control measure.
This is an important question. No one denies that affordability is more difficult today than it has been for a long time. Some call it a crisis and it’s hard to say. But this particular policy is not something that I approve of.
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