Why Value Engineering is Critical to Self-Storage Construction

[00:00:00] Ashley Harper: Today on the podcast, we have Heath and Tony from SteelBlue joining us. Heath, welcome. Can you start by giving our listeners a brief overview of your role at NorCo and your journey into the construction industry?

Yeah absolutely. First of all, I want to say thank y'all for having me today. I'm really looking forward to this. So right now with Norco, I'm like a hybrid role. We're a smaller company, so I got to take different reigns from what I'm used to with my used to work with a bigger company.

[00:00:25] Heath O'Reilly: And just kind of set my role, but with Norco, I've taken on pre con, worked with project management day to day, but also it's a different animal because we deal with a lot of permitting and we have, smaller projects going, we do multiple municipalities, dealing with those guys.

And so with that it takes a different turn because I used to just sit on one project and now that I'm working on, two, three, sometimes four, depending on what's going on, because of the size of them, you can't be on just one project and be efficient in a smaller company.

So with that, I definitely take on a lot more responsibility trying to get permitting through and dealing with the day to day stuff from what I was used to being on site all the time.

[00:01:03] Tony Domicolo: Yeah, I know for us or with our relationship it's interesting because in most, when I'm dealing with general contractors. Typically, I got this guy in pre con and I got that guy in estimating, and then I got another guy, but with most of the NorCo projects, it's, Heath sends me the drawing and we're working on it start to finish, which means he's involved way more intimately than a lot of the other Gcs or project managers might be he gets into the process much earlier and then it's always harder to get him on the phone when he's trying to get his CEO at the end of the project.

[00:01:35] Heath O'Reilly: That's right. Very true. Very true. And most of our stuff is design build. We about 90 percent of it in some form or fashion, we're involved in the design build side of it. So some of the guys we work with, they'll go ahead and have the architecturals done. And then most of the time we don't touch the civil side of it, but and then we'll still have our input and everything.

But then one developer we specifically work with, we do all the drawings, excluding civil. So that makes a big difference on my end too, because I got to get involved in the design part of it as well. And it's an ever evolving role for me especially on that side, because a lot of the bigger things I used to do in multifamily, here's your drawings, you know, we'll evolve them, but this is the permit set and then we'll get to where we need to go and, you get on site, build it, and then you're done.

But this one, I'm fighting municipalities, getting permitting done and going all the way through from A to Z to the finish and getting a CO, it's just a different role for this smaller company and it just may be the industry as well.

[00:02:36] Ashley Harper: Yeah, for sure. Thank you for that. Tony, can you also give us a little bit of background from yourself and maybe how you got connected with Norco?

[00:02:44] Tony Domicolo: Yeah, it's a funny story. Or it's an interesting story I'll say. The week before I started at SteelBlue, I talked to a friend of mine who knew that I was coming to work at SteelBlue almost 2 years ago now. And, they're like, man, you got to get ahold of this guy, Dustin and these two guys, Dustin and Heath out in Alabama.

They're doing a bunch of work. So literally the week before I started working, it was the first sales call I made was to the guys at Norco set up a conference call. It was the first job I sold and everything since then has, I mean it's gone reasonably well, right?

[00:03:17] Heath O'Reilly: Oh yeah, absolutely. We've been just top down. It's just been, it's been a smooth ride for us and especially just having a partner I should say in the industry to help things go smoothly. Because it's made my job a lot easier to say the least,

[00:03:31] Tony Domicolo: Yeah and it's not perfect.

[00:03:33] Heath O'Reilly: But being new to the industry too, like learning the nuances of self storage cause I've been in there for, I'm coming up a little over two years now in the self storage side.

Coming from like a multifamily background to this is I would say it's a simpler, a little bit simpler to build because you're not as like detailed and finishes and everything else that you've got to deal with in a multifamily side of it. But the overall billing and everything, y'all are a big part of that.

SteelBlue's you're the main interior of a building for us. So getting. somebody that you trust and understand that they can get your stuff there when you need it and you're not fighting tooth and nail trying to get it there and get done has made a big difference in my jobs for sure.

[00:04:11] Tony Domicolo: Yeah, definitely. I'm thankful for BJ and Jake in the office. They take good care of you and and Jonathan as best they can. Like I said, it's not always perfect, but man, we try and respond as best we can to your guys. You guys have been a great partner for us since the time I came on to work over here.

So it's greatly appreciated. Hey, real quick. You had mentioned earlier about how you guys do design and build. One of the things we wanted to talk about was value engineering and the situation where you're at. In a lot of cases, you're getting a set of drawings, like you said, and you're providing a number and three other guys are providing a number and you're all looking at the same thing, and then it turns into a discussion with the developer, right?

Where you're deciding on, Hey, if we go to burglar bar versus mesh, or in your guy's case, maybe it's over engineered on the AC end or whatever, but you've, with the design build, you get a kind of a relationship and a comfortability with the developer. And now they know what you're going to bring to the table.

And then if they come back and say, man, those numbers don't work. Now you can start to do some stuff. So what are some ideas for the door and hallway side, as well as maybe some of the building side and other things that that you're looking at value engineering on projects.

[00:05:19] Heath O'Reilly: A lot of stuff for us right out of the gate, it just depends on your municipality location, but a lot of it, the exterior can drive the cost of a building really fast. We've noticed, you can go, all brick, if you want to, and that's a lot of that stuff, it's driven by the municipality.

So with that if we can cut, if we can do metal panels all the way around the building, we try to just because of the cost that helps bring down some of the cost of the building, and then, make sure that the owner's obviously happy with the whole design.

We've gone round and round. And like I said, it varies per municipality because we're dealing with one in a Cumming area right now. And they're forcing their hand on what they want. The guy, it seems like one guy's up there just designing the whole thing for the owner. And it's like, how are you driving this so much?

But that's going to make the cost, not make or break the project, but it makes a big variance. And especially the size of the building you've got a lot more you get a lot of, if we have to do more brick or, more stucco, or if they're stuck on something specific, it can drive the price up really quickly.

So that's one of the things that we really look at. And then one thing that we, if we don't design build, but the civil package on a job, raising or lowering grade can make a huge swing because if you're not having to get rid of a bunch of dirt or bring in a bunch of dirt, doing a half basement or, a walkout basement or something like that can make a big difference in a job site.

Yeah, the earlier we get put into a job, the sooner we can look at things like that and just the utilities can drive you home too. And y'all side like you said, using burglar bar or mesh or, can we get rid of some of the diamond plate? Do you have to have eight foot tall corners or four foot tall enough? Because how often is somebody gonna come around the corner and hit something at eight foot tall? It just varies. How nice of a facility they really want, and that varies on what class we're doing.

Most of these urban ones that we're trying to get into where we're having really tight sites, like the Holly Springs project we've done recently, it was a really nice, it had to be a really nice project. Majority of that one was all brick, and so they want the interior, that thing pristine.

So they want, kick plate everywhere, they want it to be like top notch, but then you also get into some more, out in the country areas to some extent. And, you can scale some of that stuff back. Especially like the one we did at Beaufort Dam, we could, we definitely scaled that one back to help, the overall cost of that project because it just couldn't handle it.

So anything like that, on the other hand this municipality made us to use stucco on that job. Which is way more expensive than anything else is either masonry or stucco. And those are about neck and neck. But if you can get away with EIFS, you're doing even better. Cost wise, they wouldn't let us do any EIFS, so you're just like stuck.

So you just, you find ways to cut. And then like you said, even ACs, you're not trying to live in there. So for an AC unit, you don't have to be way over designed. You're not trying to heat and cool to a degree where you're happy where you're sleeping. Great. People aren't going to be in there sleeping.

They're going to be in and out. They keep temperatures 4 to 76 degrees in there and it's fine. But then we have some owners that want to have it at 72. I've walked in a facility and we walked a facility with an owner that we're building for now. And he was like, Oh, I like it at 72. And I'm like, man, you would think, cost of your electricity bill's got to be pretty high because that's like heating and cooling a hundred thousand square foot house at that point, if you're trying to keep it at 72 consistently, so it depends on who it is and you just got to get a feel for your developer and see what they're open to.

And, if it comes down to numbers, sometimes they'll crunch, not that we're trying to do a lesser product, you're not trying to cheapen up everything, but, there are some places that some people get stuck on it. Some people don't, they don't have as much of a care for,

[00:09:00] Tony Domicolo: They're looking at a budget, right?

[00:09:02] Heath O'Reilly: Yeah. They're looking at a budget that you want the project to go. Obviously it's still going to make money. You're not going to, somebody is not going to not rent a unit because they don't have diamond plate kick plates right next to their, I want the door to work, which we did it. We get, and I want a clean unit.

Okay. We got that. They're happy.

[00:09:18] Ashley Harper: How often are you faced with some of these challenges, every day?

[00:09:21] Heath O'Reilly: Every project. It varies per project because, cost of interest right now, interest rates going up through the roof. We're constantly trying to figure out and, adapt to where we can save money on jobs and, anywhere we can and help that, it's just

hey, can we get there? We throw a budget out, but, especially doing our stuff so preliminary, we have it reined into a point, but when stuff changes drastically or, something, the municipality forces our hand with something, or, there's even energy code stuff nowadays can jump your price up because not every municipality requires it, but we've been having to deal with com checks on a couple of jobs.

And those com checks are basically how energy efficient you're building is. And it's putting regular insulation in your walls and then, oh, you're doing brick. We want this extra insulation outside and it just keeps driving and driving the cost of everything.

[00:10:13] Tony Domicolo: Go back. You mentioned one of the big words that everybody's been talking about for three or four months now, and that's interest rates. Okay, bid activity on our side. And I'm wondering about yours. Is it the same? We're bidding jobs like it's going out of style still, but getting them across the finish line and jobs getting financed.

And the number obviously goes back to the value engineering. All of a sudden, some of these developers are bringing in seven GCs instead of two or three that they were always comfortable with, because now they're looking for somebody who looks like they can do it a little bit cheaper, potentially. So what's the activity that you're seeing industry wide and you're part of the world down here? As far as bidding plus, getting things across the finish line and getting these projects started.

[00:10:55] Heath O'Reilly: We're seeing a lot more tighter, like really trying to screw down the budget as tight as we can get it. And we're seeing some of it's just we pencil up early, especially with the boardwalk development group. We pencil in early with them. That's one of our bigger clients.

So we'll pencil something really early on. Like he'll give us a rough matrix and we'll throw some numbers at it. But it's hard to get like really tight down when you don't have a civil drawing or anything to that extent. All you have is the size of the building and how it's going to shape.

So you can throw, it's going to need a concrete wall. You understand, like we understand like the basics, but you never know, because they need that to even be able to purchase land at this point. Because it doesn't make sense. If we think it's going to cost X and they need it to cost X, they don't even go after the land to some degree.

We were looking at a conversion in Tucker not that long ago. And we throw some numbers together and walked it. We went and spent the time to walk it and everything like that. And I think the guy that owned it, so one half of it, it was like an office complex tower. One half of it, they wanted to do like multifamily.

They wanted to build like little units in there. And then the other half, they were thinking about selling off to do storage. Our owner got involved. We started looking through everything went through a number at it and those guys, they've just fell off because I think that they thought, I don't know what they purchased the property at because there's an existing, 6 or 7 story office complex, but they didn't know how much it would cost to convert it to storage because your pounds per square foot is so much higher in that compared to a standard office. So you got to beef up the structure or anything like that. It might happen. You got to go ahead and do that. And they just didn't, contemplate that cost. And when the owner told them, they've definitely backed off.

I think that project may be dead at this point. But you're just like, you get that feeling of you got to get to a number that makes sense and pencils for them. Just never know, if you're going to, if you're going to be able to get there. Especially, cost of materials just keep rising every day and it's not just, steel prices.

You got electrical, everything just keeps going and going.

[00:12:59] Tony Domicolo: So what's it look like going forward?

[00:13:02] Heath O'Reilly: So going forward, for us, it seems like our guys have been saying, like you said, you're still bidding a lot of things we think we feel like we've got a healthy background or at least a backlog for, I don't know, the next two years or so pretty healthy. So we're doing good.

And like you said, if we have to, I know one of the main things is what do we do? Because we only do self storage. So it's like, what do you do if anything slips off to that point, we'll pivot. We have guys from every industry. I'm from multifamily, Dustin's from, he did casino hotel work and I did a little bit of commercial, during my time as well, just standard commercial. I built a music facility for a school, I've done a little bit of everything. I've built a small actually pre engineered metal building school before I even got into storage.

We did down in Atlanta. So we've got a little bit of everything from our guys. Cause we have guys from almost every background. You don't have to specialize. It's hard to specialize in storage. Unless you just started your career in it and which is not the case for me. But we'll just, we'll make a pivot, we'll do what we got to do.

Everybody's got to feed their family, right? Construction. It can be a little squirrely because when I got into it in college when I started into my degree we actually had half the number of people that were supposed to be in that program because of everybody's scared around, because I graduated 2008.

So that was when the big dip was, and everybody was scared to get into construction. I just plowed through it and when I got through things were starting to look up at that point. So lucky enough for me, I got a job and no issues and everything was moving forward.

[00:14:33] Ashley Harper: That's awesome. This has been a really good conversation, but I want to take a turn and talk about the relationship that NorCo has with SteelBlue and maybe some of the projects you've worked on with Tony.

[00:14:42] Heath O'Reilly: I've been with Norco about two, two and a half years now coming up working through, multiple projects. I got on and I did a couple of smaller, we did like a small open RV parking near, actually near where I was born and finished that one.

And then I did a small project in Spring Lake, North Carolina. It was a conversion. And then I think the first one I did with Tony was down in Perry, Georgia. It was a small.

[00:15:06] Tony Domicolo: That's where it was. Yes,

[00:15:07] Heath O'Reilly: Existing facility that we tore down. So the guy had a bigger office building in the front, not really made for storage and the owner had purchased it to like value add and then so they tore down the little, the bigger office that wasn't really needed and put a small office in with climate controlled.

And then kept all the non climate in the back as is, and we made a few, adjustments around the building. But that was the first one me and Tony did together. I think that had already, but Ben, like you said, one of your buddies he had started on, I guess we were in the talks with him about that Jefferson job that we're actually on.

[00:15:41] Tony Domicolo: That's right.

[00:15:42] Heath O'Reilly: And so we started that job. And then from there we've been, it's been about every, just about every project I've been working on with y'all just about everything, just one of the ones that really sticks out to me is that Alston Road project we just finished

October of last year.

It was used to be like an old Piggly wiggly

[00:15:59] Tony Domicolo: Yeah. That's what I thought. Yeah. remember that.

[00:16:02] Heath O'Reilly: Down in Warner Robins, Georgia. And it had been gutted. The people had been through there and stripped out all the copper. It was crazy. That thing had been sitting for a long time. The owner took a chance on it. Still had and it was a very challenging project because they still had a Chinese restaurant in there.

They have a dollar general or dollar. Yeah, dollar general in the end of it. So it was like a little strip mall and now we converted the big portion of it and then expanded it as well. So I got to see, the kind of the self standing system that y'all provided. And then I also got to see, just the regular system going in the expansion area.

Was a really nice, neat project. Turned out great. Owner's been very happy. They're even talking about cutting into the cause it's such a big parking lot cause you generally get a huge parking lot for a grocery store cutting into that and actually expanding it already.

And then they're even looking at some of the leases are ending on some of their tenants and we're going to convert some more of the strip mall into storage and it's been doing great. That's another one we did with boardwalk and they've been very happy. It's been a great facility for them. And they have extra space down there managing that one now. So that was a, one of the big ones. And then, like I said the Jefferson one where we're I think we got introduced. We're closing up some of those right now.

It's almost done. We're waiting on a couple of little things, but that job turned out great. Owner's very happy. We actually just got final paving down early this week and it's closing up, but that's a highline storage partners one, and they were very happy with that one as well.

They've been posting all over LinkedIn, very happy with that project.

[00:17:30] Tony Domicolo: Yeah, that one's good. And you've been with us now since my beginning. And so you've been through Gen 1, Gen 2, Gen 3, you've seen them all. So we appreciate you hanging with us while we get all the kinks worked out and keep everything moving in a positive direction, man.

[00:17:45] Heath O'Reilly: That's right.

[00:17:46] Ashley Harper: No kidding. What would you say is the benefit of our products for customer service.

[00:17:50] Heath O'Reilly: Customer service, like I said that's the biggest thing we see in a lot of vendors just getting Tony on the phone is not a problem. We talked through problems. If we have any issues, BJ is the same way. Jake I know he's newer, but we've been talking with him, talking with BJ, talking with Tony, anything that I need, I know I can pick up the phone.

I'll get somebody. And usually, most of the time, it's not a problem. It's just stuff, things get damaged. I need materials and y'all really push it out like really quickly when I need it. If it comes down to it, if I really need something that it gets pushed out when I need it.

And like I said, just the customer service there, it's just fantastic to have.

[00:18:29] Tony Domicolo: Thanks buddy. So how about the product? Like, how are you feeling now with the gen three door? Now that you have that and all the new ones going in are you seeing with that? What are your, how are the installer? I knew, you, you actually get your own installation. So how are they feeling about it? How are you feeling about it?

What can we do different, better or whatever? How is it?

[00:18:48] Heath O'Reilly: Everybody's been pretty happy with everything on the gen three door. I think the biggest challenge that I've had was the rubber seal on the jams themselves had been moving a little bit. I know that was the biggest problem that they had over there at the Holly Springs facility. It wasn't anything major.

They didn't have any issues with those It just for some reason it wouldn't stay down and it would move or get removed. And I don't know how that like sticks in there. My site guys probably see it a lot more day to day because they roll a lot more doors than I get to roll, obviously staying in my office as much as I can.

Cause I just, that's where I'm most productive. I got a lot to get done and off my plate every day. Like I said, it's a little different for me when I used to be in the field all the time. Just trying to make sure I'm being as efficient as I can be on the homefront.

[00:19:31] Tony Domicolo: Feedback like that from you guys that whenever something's, happening is great because, that just helps us go back into engineering and take a look and see what we got to do. We've actually worked on that problem already to get a new retainer on the side of the guides. So that it clips on there and it's not moving at all. I've been doing it for 25 years and no matter which manufacturer I was with at the time, that was always one of those things that always needs a little bit of tweaking and no different with ours. It's a daily fight to make sure we're giving you guys what you want.

[00:19:58] Heath O'Reilly: And with the doors too, there's been no, no major issues. Some doors, they just got to be adjusted and people need to understand that. And you just get some people in there that, just never know. Cause you've got how many customers that are going to touch those doors and you can have people come in there and just slam them.

And even some of the bigger doors, we've had a couple of people almost just, the chain pull ones that we've used, RV storage that we have several chain pull ones and people just don't understand to like, take it easy, treat it like it's your own almost, because you're going to be the one that has to deal with it.

But we've had people just yank them off the chain almost and stuff like that. And it's just take it easy. There's no reason to yank stuff like that, and that's not y'all by any stretch, it's just people not understanding how to be a little easier, gentler with stuff, but, you're going to get those calls and you're just like, come on, guys. ,

[00:20:47] Ashley Harper: Next, let's talk about some industry trends. Urbanization and population growth have significantly increased the demand for self storage facilities. How has this impacted projects at NorCo?

[00:20:58] Heath O'Reilly: With the urbanization of projects, we've like I said before, you're fighting municipalities cause you're building on such a small site, you'll do a four story and you I think the, I don't know if it's the nature of self storage, they don't want it to look like a single story, little metal buildings sitting out there, you want to hide yourself within the area because you don't want to stick out like a sore thumb.

To some degree, that's great marketing, oh, there's a self storage facility,

Same time, you have municipalities that don't want that. We're building class a facilities in the middle of, little bitty, tiny Holly Springs is a perfect example,

You're down in a hole.

I don't think anybody would have ever bought that property for anything else. Cause there's really nothing else you could do there. There's just not much. It was such a small site. You can't get a bunch of parking there. If you've got a building in there, you're eating up all your parking.

And that's the good thing about self storage. It doesn't require a lot of parking spots. So that is the only way that I think that property ever would have worked for anything other than. Maybe somebody's house or something because we didn't have that parking, but it was down in a hole. You've got, you're fighting grades.

Like we've got a big hill coming off from the road. You're coming down a big hill. And then the backside comes off of a hill from a multifamily project. And then you're down low is like a swampy slash, stream. So you're fighting that and that's what you get when you get self storage. You literally, people buy the worst properties to put self storage on because.

They don't require a lot to,

build em. So that's what you get.

[00:22:28] Tony Domicolo: Good visibility on a bad place right?

[00:22:30] Heath O'Reilly: Exactly. And you get great visibility from the road because they built it up, four stories. That's what they had to do to make it work. But at the end of the day, like the property is, it's just not great. We end up having to put geo peers in that property so it drove the cost of the project up.

But, you're hiding. in plain sight, almost is the best way to put put it with urbanization because you're you don't want to stick out. Even the like I said, municipality makes those calls. They had display doors and storefront in like windows up really high so they could get some visibility.

And the lady's you're going to have to tent those to where you can't even see into it. And you're just like, why would we do that? Might as well just brick the whole thing. So we just, we cut them out and bricked it at the end of the day. That was just a change that they decided to make on the fly because it's like, why would we put storefront?

You can't see through it. You might as well just put, class there for no reason. Yeah, it defeats the purpose of your advertisement and you're

Right completely pointless. So we end up cutting out the glass and just putting brick in over it because it was just like, there's no point. They want you to hide in plain sight, at the end of the day.

And it was one lady at the municipality making that call. And it's just, I don't want to see those. Okay, great. I guess we're not going to put them in then, are we?

[00:23:41] Tony Domicolo: Yeah.

[00:23:42] Heath O'Reilly: And you've got to adapt. It's the biggest thing in the industry. Everybody, we're trying to find new ways to do stuff every day, like I said, getting us in early, we can help with the value engineering and everything helps tremendously, we'll try to, make the best of a site, even if it is a crappy one, it is what it is, but, end of the day, we're going to help any way we can to build it. And hopefully just give great customer service to our clients and make sure they're happy at the end of the day.

[00:24:08] Ashley Harper: For sure, so modular and prefabricated construction is becoming more popular. Why do you see that with self storage? Like, why do you think that could be the reason the market is going.

[00:24:18] Heath O'Reilly: Personally, when I've actually talked about it too, so coming from a multifamily side, I saw where we tried to build a apartment complex with almost prefab and numbers didn't work out at that time. And it doesn't mean it can't work out now. And I'm sure there's more and more people doing it.

I've been away from the industry. So seeing that, but as far as like self storage, at least on the multi story side, we've looked at it and we're going to continue looking for it and see if it's going to work out, but number wise, it just doesn't make sense right now. You can't make it work.

It's great on quality control, you get the best project and it makes it a lot easier to build and especially on a tight site that can help tremendously, but it's just not as cost effective right now. To do compared to what we can do a pre engineered metal building for we did recently see, and I didn't go walk it, but I had been talking with some of my colleagues and they went and walked one out somewhere in Georgia that they did.

100 percent did modular. Prefab, they poured little slabs, they set them on there and then they did rock as their driveways and it was just almost like a little box, but then they would gable at the top, they'd gabled it together, just like they back them up to each other and then they gabled the center.

To make a make a drive up, but, those are just standard non climate drive up units that don't have a lot of intricacy to them. They're not too deep. You probably didn't even put a light in, I might imagine. So you've got non climate, no electrical through there.

That's probably about the easiest thing you could build modularly and make sense to bring on and just set. But as far as when you get into climate control. I just see it being a lot more challenging to one to make the numbers work and to just to get it on site and just timing. I don't see that it would work out for some of our stuff.

And 1 thing we did look at recently, we saw they're building modular elevators now. We've found somebody out of Georgia and South Carolina and North Carolina. I think they're in North Carolina and South Carolina now, but they're working the way into Georgia. And we actually called them about a job in South Carolina just to try to get a feel for it to see.

And it's like top down elevator from start to finish. And you just bring a crane in and it's in its own little box and you just set it down and it's done. And obviously you got to tie electrical and everything to it at the end of the day. But we were trying to think, okay, does it save us that much time?

Because we're usually blocked. We use block and everything like that too. So you got to get your Block Mason in there, stand up our, get all that done. And then you also have to get in there and do all the stuff that you have to do with the, every little checklist and then pass inspection and everything like that.

And it's Oh my gosh, it seems like it can take forever, but you've got everything else going on along with the project going along with an elevator going, so it doesn't exactly kill you to have that going on during the same time. But just, we looked at the cost of it and we were like maybe eventually makes sense, but not right now.

It was definitely a premium. And even if we say it saved us time just at the end of the day, by the time you need to put it in a building and drop it, cause you're not going to have your roof on and everything. And by the time you put your roof on, you still got everything else to do coming up.

So why not bring the elevator guy in and let him do his job too? For that difference of cost.

[00:27:33] Ashley Harper: For sure, it's just showing you how the industry is continuing to evolve.

[00:27:37] Heath O'Reilly: Yeah, I never thought I would see a modular elevator.

[00:27:39] Tony Domicolo: That's interesting.

[00:27:40] Heath O'Reilly: chance on that. Cause it just, it blows me away that they actually have gotten anybody to okay them at the end of the day. really?

[00:27:47] Ashley Harper: So piggybacking off of that, what do you see is like the future of the self storage industry?

[00:27:52] Heath O'Reilly: You're just going to have to adapt. Like I said before you really got to be able to, just because of, like we talked about earlier, the interest rates and everything, how they are. We've got to be able to figure out ways to make, cost effective projects. And then, any way we can value engineer something, like I said, not to cheapen something, but, make the client happy and then find different ways and maybe faster.

Fast track projects, whatever we can do. Cause honestly, that's the biggest thing at the end of the day, we're always fighting something, it comes down to transformers nowadays electrical panels, any of that stuff. We're getting told by Georgia power that it's a year to get a transformer a year and a half.

And most of these projects aren't even that long. So you're always fighting from the beginning of a project to get those guys in line and make sure that, Hey, is there anything we can do to change, even if it's not cost effective, because obviously we can't build a building and then sit there with no power for a half a year or longer.

Cause then what's the purpose. So we'll make changes to the phasing or whatever we can do to try to figure out, do a pole, not a transformer, whatever we can do to help get that moving. But the future is just, we got to overcome and adapt is all you can do just because of, rising interest rates, hopefully the economy gets better, but if it continues the trend that it's going, you're going to struggle more and more deals are going to get tighter and tighter to try and make them happen.

Because it just, it's okay where do we cut? Where can we cut? Is there somewhere we can get margins? But, you're like, all right, raising interest rates or, raising cost of materials. So you're fighting, you're constantly fighting that battle. Is there something that's gonna, maybe we can cheap, lessen something here or anything we can do to make it a cost effective, more efficient job.

And it comes down to just being innovative, trying to figure out ways to do it. And, the industry is not like huge. So everybody's, everybody wants everybody to succeed. So you see, if you need to talk to somebody and, you're not really, it's not like super cutthroat, you're not trying to, take somebody else out.

At the end of the day, we're all here to help each other because we all want this industry to succeed. Obviously, that's why we're in the business.

[00:30:03] Tony Domicolo: Building partnerships.

[00:30:04] Heath O'Reilly: That's right. Exactly.

[00:30:05] Ashley Harper: What about you, Tony? Do you see anything for the future of the self storage industry?

[00:30:09] Tony Domicolo: You go back to the modular thing I was thinking about it while Heath was talking about it, in areas, more rural areas where you got laid down and you can get in there and do like you were saying, you don't need slabs, it doesn't need to be, a ton of infrastructure. It's a situation where you can move them in single story but it's not on a multi story level. Just nothing you can do with it right now. But I think that's, I used to see up in New York when I was working up that way, they would find, every inch, once they maxed out a building, they're looking to do it in the parking lot once they, just trying to get every single square foot they can. I feel like the market's changing a little bit right now. It's an interesting time. Getting a little bit better right now. But I think there's a little ways to go before we get, back to where that positive side where we were. But yeah, building the partnerships keeping innovating, making new products. Products that we can share and save the general contractors some money because they're all fighting, they, like Heath said, they're fighting for every project they can get, just like we are.

[00:31:07] Ashley Harper: Yeah. for sure. Before we wrap up Heath, is there anything that you want to share about NorCo or about your career? Any last words that you want to share with us?

[00:31:15] Heath O'Reilly: Yeah. Sure. Just to wrap things up NorCo construction, we're self storage builders. We're hoping to stay in that aspect of it. Like I said, it's if it comes to it, we'll pivot. We've got guys from every industry. Just hoping to continue to grow in this industry.

It's been really fun building self storage. Definitely a different aspect than what I dealt with before, and we're all big work hard, play hard kind of environment here, and we really just enjoy what we do. I definitely don't know that I would have chosen a different career path at this time, but it had been hard to get out of at this point, but I don't know that I would have chosen anything different.

[00:31:47] Tony Domicolo: I can speak to that. It's hard to get out of thing.

Started back in 99 and we're still floating

around here. So man, Hey Heath, I really appreciate you spending some time with us. Ashley has been killing me to get you in to do this. And I'm really glad we were able to make it happen. I'm glad you could find some time to do that for us man.

[00:32:04] Heath O'Reilly: No, I appreciate y'all. Like I said, it's been a great partnership for us. It's definitely made a big change in how we see things working through everything with y'all. And just makes our, like I said, make my job easier. I appreciate it. I've got my second child that just came a couple of weeks ago and she's needy has she can be at this point, not in a bad way, but easier I have my job sometimes helps. And I get it. From a hundred miles an hour at work to a hundred miles an hour at home, trying to keep a toddler happy, a baby happy and a happy wife. It definitely makes I enjoy the partnership. And everything,

[00:32:38] Tony Domicolo: Cool. I appreciate you both and I thank you so much for your time today.

[00:32:42] Heath O'Reilly: I appreciate it. Thank you, Ashley. Thank y'all.

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