Industrial Real Estate Brokerage and Investing with Chad Griffiths and Host Stephen Simpson - Ep.6

On this episode Stephen welcomes Chad Griffiths; Chad has worked in the industrial real estate industry since 2005. As a member of a global commercial real estate company and a partner with his local firm, Chad has completed over 1,000 deals with clients ranging from small companies to large institutional owners. As an active investor since 2014, Chad is co-owner of +150,000 sq ft of industrial properties.

In addition to being the host of the Industrial Real Estate Show, Chad has been a guest on over 40 other podcasts as well as being interviewed numerous times by national media. He's earned both SIOR & CCIM designations and an MBA and is proud to have been named an Industrial Influencer by GlobeSt.com.

For more info on Chad check out his links below:

Youtube: https://www.youtube.com/@industrialize
Website: https://industrialize.com

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Listen on your favorite Podcast Player: www.buzzsprout.com/2358487

Web: focuscapital.ca

Transcript

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Transcribed by https: otter. ai

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Welcome to the Focus Capital podcast, an ongoing conversation about real estate, entrepreneurship, and personal development. I'm your host, Stephen Simpson. If you haven't already, you can get access to our investing guides and newsletters on our website, focuscapital. ca. That's focuscapital. ca. And on this episode, I sit down with Chad Griffiths. Chad is a very successful commercial real estate broker based in Edmonton, Alberta, and the host of the Industrial Real Estate Show. Since 2005, Chad has completed thousands of deals for his clients and has personally invested in over 150, 000 square feet of industrial properties. We talk about getting started in brokerage, the industrial real estate market here in Canada.

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And Chad's social media presence where he's been providing a ton of value to investors across North America. Chad and I have a great conversation that I think you will get a lot out of. So with that, I hope you enjoy the show.

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Chad, welcome to the podcast. Hey, Steven. Thanks so much for having me. Excited to chat with you. So you know, you're someone I've, I've seen a lot of on social media. You seem to keep coming up on my feed quite a bit. I think, you know, you've got a certain presence. Going on on, on LinkedIn and YouTube, and obviously you've got a few things going on, which is kind of promoting your, your initiative of, of industrial real estate and, and kind of talking about that you know, in in social media these days. So, you know, just as a start for the podcast, I'd love to hear about your background and just sort of how you got started in real estate and maybe just some of the things which led you to kind of choose industrial real estate as the asset class for you. Yeah, that's a great spot to tee it up. So I, I originally got into residential real estate and this goes back 20 years now, and I was buying and selling some hoses with, with a couple of friends and partners, and we didn't really make any money. We didn't lose any money, but it wasn't good. Going all that well, and I decided I really liked real estate. So it seemed like a natural extension and just try residential real estate as a, as an agent. So I did that for a year in 2004 and just grew tired of that very quickly. It's, it's a grind, it's a hard schedule. You're working evenings, you're working weekends, there didn't seem to be a whole lot of loyalty there. So the next extension was to look into commercial real estate. And I knew a few people in the industry. My uncle was an architect. I had a few contacts who worked in different areas of commercial real estate. So started going down that road, really had no idea where I was going to fall, except. I, I, I was appealed by that sexy commercial real estate image of office towers or big shopping centers or selling a golf course. Like that was what really stood out to me at the time. And it just so happened that the company that I ended up joining in 2005. So just 19 years, I believe it is now in that company in 2005 that I joined happened to be. primarily focused on industrial real estate. And I had very little knowledge on what industrial real estate was at the time. And much like most of the people that are in my life right now, like my family, my friends, they still don't have very much of an idea what industrial real estate is. That was me back in 2005. And it was purely accidental or serendipitous as I like to say, because it turned out to just be the best. The best thing that happened to me, because I went from having no idea what it was to really just becoming a passion of mine and 19 years later, I'm a partner at the company. I've started investing in properties 10 years ago, so I've got a portfolio of properties myself now, all industrial. I moved away from residential entirely. So I've got a portfolio of it. My career is still actively in brokerage. And then I talk about it extensively on social media, and that's probably why some people are for better or worse, probably see me too much sometimes that I imagine some people get a little tired of seeing me talk about industrial real estate so much, but it really has come from me having no idea what it was to just being an absolute passion of mine where I live, breathe and sleep industrial real estate. Yeah, well, I think it's fairly obvious. I mean, for guys like me who are, you know, involved in industrial real estate and have an engineering background as well, I mean, I think what you're doing is making industrial real estate cool, right? Like, I mean, you're, you're out there, you're talking about it. You're, you're having a podcast. You're going into some of the, you know, the technology behind some of these buildings and why they're important in today's market. So yeah, I, I think it's I think it's. The platform that you have now on social media is really allowing people who are in that niche to kind of come together and that's what I'm seeing. Definitely. And you know, probably how you and I got linked up in the, in the first place, a few years back where, you know, you were posting and I was commenting on something and, and that's just sort of is how we got connected. And so you know, just with respect to the social media front, I'd, I'd love to hear a bit more about how that. Has sort of enhanced what you're doing and maybe some of the things that you wouldn't have otherwise gotten into and, and sort of how has that sort of helped your, your career and, and regressed it over the past few years. Yeah, it's such an important topic and one that. That I enjoy talking about because I've learned a lot on social media, so I've been on Twitter or X. I guess I'm still going to call it Twitter, but I've been on that for 15 years. I've been on linked in for 15 years. I've had my YouTube channel and podcast for 4 years, and I would say I didn't really understand. What social media was capable of, or understanding how to leverage it and benefit from it until probably two years ago. And that was through studying a lot on what works and what doesn't work. And I was a prime example of what didn't work. I had a few things that, that went well, but it wasn't until I started changing my perspective on On what to post and how to interact with people in there that I, that I started to gain more momentum and that was moving from posting anything that didn't add value to trying to everything that I post now. I'm consciously thinking if somebody is reading this, whether they know me or they don't know me, and they probably don't care to know me, well, they at least get some value from it. And I think if someone reads a post and they were like, Oh, that was interesting, or I hadn't thought about that, or that's just an interesting tidbit, then they're more likely to And then once you start having a library of good quality posts, it has a compounding effect because then people are like, okay, well, this, this is actually a resource, not just somebody talking about themselves and a, an example of that is most people on social media have no idea where I live, I think by the, by my accent, a lot of people can pinpoint it down to Canada. That's when I get called on all the time, but I don't even talk about where I live. I don't talk about what company I work for. I, I don't talk about myself much at all, unless I have an opportunity like this, where, where we get to have this conversation, but on social media, I don't talk about myself. I'm always just trying to put value out there so that if somebody sees it, it's something it's, it's. The equivalent of you, so you're an engineer, I'm in brokerages, it's equivalent to being client facing as opposed to you being an engineer and somebody asking you, Hey, well how can you help me on this project? And you go into a 30 minute speech on how great you are and your background when really they just want to know, how can you help them? That's, that was the shift that I took in social media, where everything that I put out there is. Just free content on my career and what I've learned mistakes that I've made observations that I've had and continue to have and that's that's what really accelerated my growth and I don't keep up. pretty good track of, of what the numbers are like, I'm not following it on a monthly basis. I'm, I'm guessing my curve would look somewhat like that hockey stick, using another Canadian cliche around that time though, because then, then you're, you know, Providing something to someone instead of just expecting them to be interested in you. And I just learned a long time ago that most people, they just have too much on their plate. They have too many things to do. They're worried about too many things. They're not cared about. They don't care about somebody on social media on what they had for lunch or what deal they just did or what property they just listed. Nobody cares about that. But if you can provide something to them where they walk away and they're They're perhaps they walk away feeling somewhat fulfilled that they learned something or they're entertained about something that I just think you increase your chances of more success. So in a long winded answer, summed up really shortly, I just, I changed my social media to be all about the, the person who might be reading that post or watching the video. Yeah, well, and I, I think there's a lot of there's a lot of power in that because what you're doing is really becoming a resource to people. And, and so that resource and that value that you provide can pay off in a lot of ways and, and it might pay off directly. It might pay off indirectly, but even if it doesn't. You've helped other people learn a bit, right. And you've, you've kind of, you know given somebody some information, which maybe saves them some money and maybe saves them some time, you know, maybe gets them out of a bind or whatever they're kind of you know, involved with at the time. So, yeah, I, I think that's, that's sort of a great strategy to have that you push that content out there, be valuable be a thought leader in the industry. And then, you know, you're, you're increasing your brand as you go, right. Yeah, and it's led to some awesome opportunities from speaking of, I've given presentations to a number of universities, I've spoken at national conferences. It's, it's led to some really cool things over the last couple of years. All of that came when I started changing from that inward focus on, look how great I am when nobody cares to all of a sudden being, here's how, here's some information and here's some value. And there, there, it was clear, like there is a complete delineation on how the first 12 to 13 years of social media went for me to how the last couple of gone. Yeah. Yeah. Yeah. Yeah. So I'd be interested to know, like, you're one of the only guys that I see out there who are really, who's an industrial broker, who's really I guess active in terms of their social media, their podcasts, that sort of thing. And maybe, you know, a lot more than I do, and maybe you have other connections, but from sort of the feed that I get, you know, you're one of the guys that I see a lot of. So I'd like, I just like to kind of get your thoughts on, you know, what you're seeing in terms of, other real estate professionals in the industry and how they're using social media. And, and me talk, talk a bit about you know, the industry now, and I, I've sort of found industrial real estate because that's what I'm involved with. There's a lot of old school people. I mean, it's, there's still guys that are just cold calling all day and. You know I'm sure there's the odd fax machine kicking around there somewhere, you know, but it's, it's really becoming a lot more modern. And I find the residential guys, like they've been doing, they've been using technology for a lot longer, whereas industrial real estate, maybe commercial real estate as a whole is, is, is a bit bigger animal. It's taken a bit longer to change and that sort of thing. So I'd just like to get your thoughts on. On how, you know, industrial real estate professionals are, are kind of adapting to, to technology and using social media. Contrasting it to residential real estate is a great way of doing it because you're, you're right. I I'm very in awe of how good some, some, not all, but some of the residential agents are at personally branding themselves and the information they put out there. I think that they're light years ahead of the commercial and industrial industry. I think that there's a couple reasons on why. industrial specifically has been slow to adapt. One, a lot of these brokers work for large publicly traded companies and there's handcuffs for lack of a better term that get put on them in terms of what they can say and what they can post. The, the PR and, and the compliance rules that they have to go through are significant. even if they are able to dance through those, and they have the appetite to go through that process. Do they want to risk saying something that could get them in trouble if they responded to a comment the wrong way? Anything that just was perhaps a little bit too impulsive. So I think that there's a Rightfully so. There's a fear that a lot of brokers have that they just, they don't want to say something offside. It could reflect poorly on the company. It could reflect poorly on their clients themselves. So I think that that's, that's a main one. In light of that, though, there still are some brokers out there. I'm seeing, I'm seeing more and more get, get into it and dip their toes in the water. I think beyond the compliance rule, I think that there's a lot of brokers that just. Perhaps they're busy. A top producing broker is busy. They don't necessarily need to be going out and trying to get business development from social media. And they might not even be convinced that there is business to be earned from social media, or that it could be a two five, in my case, 15 year grind of doing it, there's, there's That is a very compelling reason. It does take a lot of time. Nobody can just go on to social media, start a LinkedIn account, start posting their for sale listings, and all of a sudden get a lead off of it. The next day, it is a long process. So I think when you stack up the risk, reputational risk, whether you guys feel that there's any. I say guys collectively, including men and women, there's some awesome women brokers out there to say guys probably too often, but I, I think they'll, they'll look at and say, we run the risk of seeing something embarrassing or upsetting a client or a, or a company. There's no immediate benefit for it. I'm busy already. And it also takes a certain type of personality to do. It's putting yourself out online comes with risk of just being shamed. And I've heard comments from it. I've heard comments from other brokers in the industry that say, why is he doing this? Why does he have a YouTube channel? Why is he talking about this? And. Most people would probably say you know what, that, that hurts. That's a, that's an arrow in the back. I just don't care. And, but that, that's something that you either have to have that naturally, or you just have to build up a thick skin for it. And I was probably more building up a thick skin side of it, but also with just some confidence coming into it. It's so it's this very unique set of skills and circumstances that you Avoidance, avoiding any compliance issues. It almost takes like the right circumstance. So, but it wasn't easy and it wasn't quick. So I think that that's again, a long winded answer, but there's, it's a Complicated scenario that doesn't have a simple answer on why more people are doing it. But personally, I'd love to see more people get into it. I'd love to see some developers get into it. Engineering like yourself, there's so much that still needs to be taught in that public forum. And

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And

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And there is a healthy appetite for it. So I would personally love to to see more. I've offered to help people. I've offered to help my competitors. You know, if they want to get onto the, into this space, I'll be more than willing to share what's worked and what hasn't worked because I know that there's an appetite and there just isn't a whole lot of people talking about it. Yeah, fair enough. There's a lot of, a lot of very valid points you just brought up. And I think yeah, to your, to your point about you know, some brokers, Really don't need to, you know, and, and so it's, it's sort of, they got a good thing going and, and they've got their network of of contacts and they know the players in town and, you know, they may not see the need to do it. I just find it that more and more brokers are getting out there again, just, just working on their brand and then leveraging technology. So it is interesting to see. I did want to ask you about. Your, your current role and, and sort of maybe the evolution of that role. And you mentioned getting into brokerage initially and commercial real estate. Maybe talk a bit about how your role has evolved over the years to what it is now. You're obviously a partner in in your current role and, and, you know, obviously doing bigger deals, but maybe talk a little bit about how that evolution has rolled out in terms of first getting into to brokerage to, to what you're doing now. Yeah, I started as just a. I was an entry level, no, nothing agent that at the time didn't even know what industrial real estate was. I was that green and I had to slowly learn everything from scratch and the office was very helpful. There was a lot of older guys at the time who were great mentors and helped me along on that. And you're right. It did start doing a lot of small deals. I was. Yeah. 2005 to 2008, a lot of small deals, but learning, learning the craft, learning what worked, learning what didn't work. 2008, we hit the financial crisis. I'd say we were fortunate in Canada and in my market specifically where we, we didn't have the same devastation as certain areas of the U. S. did. So we, I don't want to say we coasted through it because it's still, Impacted a lot of people, but we didn't have the same pain. So I, and I was so new it, I was only by that time that came around, I was only in the business for three or four years. So it didn't impact me the same way. But it was, I just kept cruising along and 2014, after getting more involved in industry and having some more deals and some more success, I was able to buy a small investment property with my partner. So him and I are business partners in the brokerage and we're partners in some real estate. Him and I bought a property, a small warehouse property in 2014, and then just kept Trying to add one a year type of thing ever since, and still continuing to do brokerage to this day, became a partner around the same time and bought the first investment property. So life has changed considerably from being a brand new agent very green to now partner at the brokerage and, 3 other partners we actually bought our building in 2019. So it's funny when I go into the office that I've been going to for almost 20 years. Starting where I had no idea

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what it what

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real estate, industrial real estate even was to now owning that building is, is a pretty cool feeling. So it's definitely evolved, but I still help a lot of small clients out. I have a team, my business partner and myself, we've got a team of five of us. So it, depending on who's, Who's working on what I might step in and help somebody out with a small deal. But yeah, generally speaking, I, I do chase larger deals when possible, but I, I'm not too proud to, to work on anything. I've, I still do small deals I don't want to say regularly, but occasionally. Yeah, well, there's just a lot more of them, right? So I think just the sheer quantity of those smaller deals, you can't you can't ignore them completely. So, okay. So what I wanted to do was just sort of bring it up to the, to the current date and talk a little bit about You know, what we're seeing in the market these days, obviously the last couple of years has been a challenging environment, challenging market for lots of different real estate asset classes, just due to the interest rates and different things going on with the economy. So I'd love to get your thoughts on. You know, sort of the current state of affairs of, of industrial real estate, maybe here in Canada and more broadly, if you want to, to, you know, offer your thoughts on that. You know, as I, as I mentioned before, I think, you know, real estate is you know, is one of those asset classes that's been Pretty resilient over the last couple of years. It's been something that along with with residential real estate is just a sheer necessity in the in the market today. So I like to think it's weathered the storm pretty, pretty well over the last couple of years, but love to get your thoughts and sort of, you know, what you're seeing in the market these days and maybe some of the, some of the factors that are making industrial real estate, what it is. Yeah, I'd say the overarching theme of the last 20 years has just been a massive run up in warehouse space to accommodate e commerce and that accelerated greatly in 2020 for two, two years, almost three years, but that trend had been on an upward trajectory for decades. That's, that has been the storyline that's. Captured most of the headlines that we see, it's captured a tremendous amount of investment money as industrial was almost seen as the ugly stepchild of commercial real estate investing much to my, even how I looked at it when I got in the industry, people think. Trophy assets, so they want that office building, they want the golf course. Nobody's thinking, I want a hundred thousand square foot warehouse in an industrial park. That changed over the last 20 years, where all of a sudden a ton of institutional money flocked into industrial. And that's in addition to all the people who are the family office level or just large individual owners or JVs, all the people that had already bought into the industrial real estate story. Now all of a sudden there's that much more money chasing it. And then if you add in retail, which

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which

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retail I think is a stabilized and might even be seen a little bit of uptick, but there was a period there where retail didn't look great at all. It was the retail apocalypse, the end of retail, all the stories there were that retail was going down. So. People didn't look favorably on retail. Then we went into the office crash starting in 2020, which I think we're still in the early chapters of that. So now office doesn't look great. Then you could look at multifamily. There's pressure on rents right now. There's upward pressure on expenses. I think multifamily is still a really good play. And that, if I were to invest in another asset class, I would look at multifamily but there's still factors at play there where as an industrial, a lot of the companies are still projecting upward growth in rental rates Prologis as an example, the largest industrial property owner in the world, they're projecting 4 percent annual growth rates for the next three years. So if the largest industrial owner is projecting that, whether it trickles down to, you know, Exactly the same way to everybody else or not, that's still a great sign that the bellwether of the industry is still predicting growth and rent, and they're all net leases. So you pass any expenses through, so if property taxes go up, it's not, it doesn't erode the net income the same way that it would on multifamily. So teeing all that up, warehousing has been the main story of the last 20 years. We're actually starting to see a shift in that, and it's partly driven by just a slowdown in the economy, which is affecting retail sales, online sales, just sales in general, and that industry was also probably overbuilt. I think most analysts would say, looking broadly, the inventory has been overbuilt in the last decade. Two years, and that's not everywhere. There's some markets that are still very hot and have very low vacancy rates, but there was a lot of inventory that got added and that these developers were anticipating that that growth that we saw in 2020, 21, 22, they kept thinking that that was just going to go on forever. And of course it hasn't. So I, I think we're, we're going to see. Softening on that warehouse side where it's just going to take a while for all this new space. I got added to be absorbed. But what is interesting in this? This is something that I'm following very closely. Is that the other side of industrial real estate? So warehousing is 1 side manufacturing side is another element of it all together. That's seen a considerable uptick in growth right now. And all you need to do is look across major markets in North America right now and see all the multi billion dollar manufacturing properties that are being built, partly from all the financial incentives and tax incentives and stimulus and different levels of government really want to have. That manufacturing on short or reassured back to North America. So there's, there's a considerable amount of manufacturing demand right now. And that inventory hasn't caught up to the same level as warehousing did. So. My, my bet, and this is actually my portfolio is manufacturing properties and flex properties. I like the manufacturing side of it. I think that that is going to be a very appealing part of the business going forward, because I don't see that trend of on shoring, reshoring, slowing down, there's just too much geopolitical pressure. Pressure right now. There's so many things going on in the world and supply chain bottlenecks and issues getting product that I think that there's going to be a really concerted effort to onshore reshore more stuff, which is just going to need mean that we need more plant space and in North America. So I know I've given you a lot of long answers. I'm sorry for talking so much on this. I'll try to shorten those down. But on the, the warehousing side, I think that that will be probably flat, perhaps some downward downward pressure in the, in the next few months. But I still am bullish on that as well. I, we're just, that e commerce trend is, is still going to look upward. So I'm still bullish on that long term, but where I'm quite excited right now is on that manufacturing side. That's interesting. So I guess when I'm hearing manufacturing and maybe other people are thinking the same thing too, it's not necessarily heavy industrial, but it could be. Like you said, plant space where there's some assembly, or there's some kind of more clean space production that's going on versus the more traditional sort of heavy industrial that you, you know, many people might think about with like you know, auto plants and things like that, where it's, it's just more of a complicated process, but maybe talk a little bit more about that. Because I think I'm seeing that as well, the, the sort of onshoring trends. So maybe talk a little bit more about but that asset class specifically within industrial. Yeah, and it goes back to just industrial is a very broad category. Yeah. And I've asked some people recently what they think of when they hear industrial and the responses are actually very broad as well. So I think at some point we might even have to delineate industrial even further. Yeah. Because when you're talking about it, but on the manufacturing side, I like to say that a manufacturing building is anything where, where things are made. So that can be as simple as a semiconductor, a TSCM, a building that 40 billion facility in Arizona. Semiconductor very clean done in, in a lab, essentially, all the way up to a Boeing airplane being made and Everett is the one that I always reference and just outside of Seattle, 4 million square foot building, everything, all the raw materials come in, they spit out an airplane. They probably cut a few corners as of recently, cause some of those airplanes that came out, I don't think are as in good a shape as they were a few years ago. But it's essentially the same thing. Just something where, where things are made. So whether, no matter what it is, as simple as it is, it could be a one step process all the way up to a multi step process, but it's just things things are made. So you're right. Heavy industrials probably would. A lot of people would conjure up when they think of, of a manufacturing facility or a factory, but it can be something very clean. It can be a, a car manufacturer. So there's a ton of EV properties that are, that are being built right now to accommodate ev demand the gigafactories, the buildings that are being made just to make batteries for these things. All the way up to semiconductors. Very intricate, specialized. Things these, these aren't made in office buildings. They're not made in retail centers. They're made in industrial properties. So that's where a considerable amount of demand is happening, but there's also all the ancillary requirements that come from that. So if a Big factory goes up in Arizona, a 40 billion factory, all the components of that, all the robotics need to be serviced. Everything in there is going to have HVAC requirements and electrical requirements and the maintenance of all the components in that building. The offshoot of that is going to be considerable just for all the businesses that will be Required to keep that building operational, so that that's that's where I get excited. It's not necessarily on a 40 billion facility. That's obviously way, way out of my capacity to ever invest in, but. I could invest in a 20, 000 square foot building that might have four companies that are servicing and attending to what that building needs. So that, that's where I get pretty excited about it. But manufacturing very broad, like all the way down from making a pen to making an airplane. Yeah. And everything in between. Yeah. And everything in between. Yeah. So maybe stemming from that, we can, You know, maybe two industrial guys here can geek out a little bit and talk about some of the guests that you've had on your, on your podcast. I know you've, you know, I listened to your podcast quite regularly. I like the kind of guests that you're bringing on, maybe talk a little bit about. Some of the highlights that you've had on the podcast, who are some of the influencers and maybe some of the topics that you found most in most interesting that that have come on recently. Yeah. There's a few that jumped mine right away. First Walt Rakovich he used to be the CEO of Prologis. So the company that I mentioned earlier, largest industrial property owner in the world. He was the CEO, I believe until 2000 and. 15 might have my dates off a little bit there, but he was fascinating to just have an hour talking to a former CEO of a fortune 500 company where I could only imagine how busy his day was when he was in full swing. And he was just such a humble, giving person. Very happy to talk. I didn't feel once that I was being rushed or had to move on quickly. He was just very generous with his time and he just added a ton of value. So that, that one was, that's probably my favorite one just from how, how awesome it was to talk to him. I interviewed a guy last week. Aaron Halfacre, great real estate name too, by the way, Aaron Halfacre he's the CEO of Motive Industrial. So, whereas Prologis is focused just on the warehousing side, he's focused on the manufacturing side, which I, I talk about both quite often, but I'm, I love the manufacturing side more sort of geek out with him for an hour was also really cool. And then there's just, there, there's been one thing I try to do is just cover every topic imaginable. So I had, one guest on where you just talked about warehouse racking and to think, how could you talk for an hour about warehouse racking? Well, we did it. And I had fun with it. But I've had architects on, I've had electrical engineers on developers, anything like anything to do with industrial real estate, no matter how. Out of the box it might be, I'm interested in having that conversation. So that's, I think we're 150 some episodes that we've done now. And in my mind, I could go forever just because there's. Some of those guests that can have back on to just get their thoughts on what they see going forward. There's so many topics I haven't explored that it's even if nobody, even if it's just me and you that listen to it. That that's enough for me because I just legitimately love talking about this stuff. So I'm glad to hear when, when other people get some value from it, because then it vindicates the time and energy it takes to put these on. Yeah, well, like you said, I mean, there's so many different things you can get into. I was talking to somebody the other day just about due diligence when you're going in and acquiring a new property. You could write a book just on all the different stages of due diligence and all the little things you got to need, you know, you're going to need to look at when you're investigating an industrial building and environmental issues might come up and, you know, electrical distribution systems and parking lot. Like, I mean, there's just so many different things and you're right. You, you'd like each one could get its own series of podcast episodes. So But again, I think going back to the whole concept of, of finding your brand and your niche, I think these topics are resonating with, with people, because, you know, for those of us who are in the industry, it is providing a lot of value. There's a lot of interesting stuff in there. And, you know, I'm just thinking, you know, a couple of the the guests that you had on, which which really resonated with me. One was Chris Powers when you had him on. Yes. Really, really. I agreed. He was fantastic too. He's doing big things down in in Texas and and really just completely focused on Class B industrial. So he was one that I got a lot out of Gary Chesson, which is, I believe that's a, yeah. So he was the other guy and yeah, yeah. With that Trinity book. And so he was excellent as well. So I think, you know, you've got a good variety of, of, of guests. They're talking everything from. You know, the real hardcore sort of technical concepts to the more, you know, overall sort of business strategy things which, which I find really interesting. So, yeah, so I don't know, kudos to you. Cause it's a, it's, it's a really good podcast. I get, I personally appreciate a lot out of it. Yeah. Yeah. And the cool thing about it too is that I've just got to know so many people across North America. I've even interviewed people in London, China somewhere else in Europe. I interviewed someone. So having conversations with people all over the world. And to me, that's cool in itself, whether, whether even recorded it or not, just having a conversation with somebody like that is so fun to me that yeah, I love it. So thank you. I'm glad to hear your feedback on that too. Yeah. Awesome. Awesome. No worries. Sort of switching gears here. I wanted to talk a bit about you know, those people who may be interested in investing in industrial real estate. So obviously that's a very broad topic. There's different ways to invest, but maybe talk a little bit about what you're seeing in terms of, you know, Investors coming to the table, investors reaching out to you who maybe want to dip their toe in the water, who are looking at industrial real estate, what are some of the things that they should be thinking about? And I'm not talking about an institutional investor, you know, thinking about it, but maybe someone, you know, who's had some experience investing in multifamily or in, you know maybe sort of high end sort of residential properties and wants to have a look at industrial as an asset class. So maybe what are some of the things that you would talk to them about? Yeah, and it's, it's topical because I have conversations like that regularly, just be someone that owns 10 houses and they want to invest in an industrial instead all the way up to someone that might own a few shopping centers and they just want to diversify. I'm a bit probably original on this is that I don't think the average person should invest in industrial real estate, which is probably a confusing statement to to make from someone that spends so much time in and I'm such a Big ambassador for it, but I don't think the average investor should do it unless they're prepared to spend a considerable amount of time really understanding the industry, becoming, getting a master's degree, figuratively speaking, in industrial real estate, because it is the asset class that has the most potential for wealth destruction. Notwithstanding the upside on it and there, there is upside, but there's no other asset class in my mind where there were a mistake can be amplified as greatly as it can be an industrial. So, as an example, if you bought a, an apartment building, and it's in a major city, and it's in a decent area. You're always going to be able to keep those rented. You might have to lower your rents 100 a month or whatever it is. But worst case scenario, you could always keep that thing rented. In industrial, if you buy the wrong building, you might sit on that asset for years. It might never get leased again. And that's not common. That's not going to happen in like a major market. If you're buying a good quality industrial building in a mature area where there's no functional obsolescence or no major issues. Very unlikely to happen there, but I have a friend of mine who bought a an industrial property outside of our major city, but 45 minutes away, which is material in the size of our market. And he bought it 4 years left on the lease. There's a large company that was leasing it. They'd been there for a long time. After 2 years, the company vacated the building, continued to pay rent that honor their lease. Five or six years ago now, and it's been vacant ever since they haven't been able to find another tenant for it because it's a, a old unique industrial property in a small town where there's just no demand that, that in my mind is a risk that the average investor shouldn't take on. It's just too much of a risk. They, I don't even know what the value of that real estate is right now. Not to mention the opportunity cost and the lost. So that's where I would say industrial investing just isn't for most people. If it's a doctor or just a wealthy business owner that has money that they want to deploy and they want to invest, there's just safer ways to do it without having that risk. If however, it's someone that does want to spend a year, two years, however long it takes fully understanding exactly what industrial real estate is. Fully understanding the market. And this isn't. There's no central database where you can just go and get all this comparable information. And it's, it takes a lot of work. It's like, I do it daily. I'm daily. I'm talking to other investors or brokers or appraisers. It's an ongoing thing, right? I, I still, I do this now as much as I did when I first started. So it's, it takes a lot of work. And for the average investor. I just don't think that it's worth their time to, for a doctor, for example, if that doctor is 300, 400 an hour. A bill rate, is it worth his time to go and now spend that working on industrial real estate? I guess that's a question he'd have to answer for himself. I, there's such a steep learning curve with industrial that I don't think it's the right vehicle for a lot of investors. I do think it's the right vehicle for people that want to get to learn it because it's a very exciting industry and just. Getting to see all the different types of businesses and, and how they, how they work within the economy and the contribution that they make and seeing how people's business evolve. It's, it's one of the reasons that I get so excited about it. And if that is what somebody wants to do, and if they're not willing to spend the time, then I would say, look for somebody that you can partner with either on a JV basis, someone that's done it in your market specifically, or where you want to invest, not somebody in a different market, because the industrial. Curve on just learning about properties is one thing, but you also need to be an expert on that market that you're investing in. So you need to bring someone to the table that is very competent in industrial real estate, as well as very educated on their local market. JV could work, you could do a syndication, you could be a limited partner in a GP fund where the GP is the general manager and you're just the financial contribution, or you can invest in a REIT. We, Broad Lodge is a good example. There's A few in Canada as well. And I'm, I'm in all three. I own properties. I, I'm an LP in a couple properties and I own some industrial REITs. So I, there's not a right or wrong way on how to do it. Someone, if they are going to go the direct investment way, they've got to be Eyes wide open, exactly what your downside risk is, and until you can fully identify what that downside risk is, I, I just wouldn't recommend it for the average investor. Yeah, I would tend to agree. I think there's such a steep learning curve that it really speaks to the fact that. You know, you want to partner with someone or you want to look for, you know, a competent operator or read or some other sort of vehicle that you can use to leverage this this asset class, because obviously there's, there's there's a huge upside to industrial real estate, but, but you're right. The downside is pretty big as well. So you really need to make sure that you're investing with someone who knows what they're doing. He's got experience and who can understand and sort of navigate all those. Those potential pitfalls. So yeah, yeah, all very, very valid points there. Okay. So maybe just looking ahead a bit, Chad, I was, I wanted to get your thoughts on, you know, what you see is coming down the pipe. We talked a little bit about some of the, the sort of trends on shoring and different things like that. And we, we mentioned technology, but I'd love to get your thoughts on, you know, the future and, and what you see coming down the pipe with with industrial real estate, obviously technology is going to have an influence on things. You know, the different sort of factors in the market with you know, where. Manufacturing is happening and taking place. That's obviously going to drive some of the demand, but we'd love to get your sort of thoughts on, on sort of what you see coming down the pipe and, and maybe some of the things that are going to impact the industrial market as a whole. It's funny. We haven't talked about interest rates yet. And it's a natural point to bring it up because I think interest rates will be the driving force for the foreseeable future. And it's not talked about enough, but it's Interest rates have had a devastating impact on real estate across the board, especially investment real estate. Self properties that are designed for owner operators and even in the residential market that, that hasn't been impacted because people still need a place to live. Companies still want to own real estate if they're owner operators. But on the investment side, interest rates have had a pretty big impact on values and We haven't seen a whole lot of sales on the investment side to really pinpoint where the market has landed, and even saying landed is a bit of a misnomer because it's always changing and evolving. But where is the market right now? And I think that that.

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And the other. Cliche term that I've

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many times is price discovery. We're

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trying to figure out where

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where the market is. And there's truth to that because it's very hard to say that the, the investment market, whether it's office, retail, multifamily, or industrial hasn't had a significant drop in

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no other reason.

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The cap rates have gone up as interest rates have gone up. My best guess is that we're probably, 15 to 20 percent down from where we were spring 2022, two years now, I guess, I, I think we're 15 to 20 percent down now that might be offset if there's some escalations in lease rates, if you could perhaps find other ways of, of raising your NOI to offset the the increase in cap rates, but all things being equal. If the leases haven't changed, nothing else has changed, a property right now is 15 to 20 percent down from where it was in 2022. There's factors there. Some people might want to place money anyways. They might, they might be cash buyers. They might think that there's future upside. So there's, there's variables there. I, I always caution making blanket statements because there might be someone you and I both know a property is only worth what someone's willing to pay for it. So if someone's willing to pay more, that then all the power to them, but me evaluating properties right now, I'm, I'm a 15 to 20 percent less than I would be willing to pay 2022 and that pains me because I still have a lot of properties that now have faced a similar erosion of value. I think, you know, I think And my crystal ball is super murky. Like I, I don't even know what's going to happen once we get off this call. I don't, I can't even predict that far into the future, but I think we'll see some relief on interest rates at some point. I don't know if it's going to be 2024. I, I, in the fall, I thought it was inevitable that we'd see some, if for no other reason than there'd be political pressure to lower interest rates, to show everyone what we're doing for the economy and. In Canada, we just tend to do what the U. S. does. So if the U. S. had to lower interest rates for political pressure that we probably would right after, and that hasn't happened. So it's fun. Like, I'd love to get your thoughts on this. So the cynic in me says that. The inflation numbers are all manipulated. Anyways, it's what you decide to include in the basket of goods. It's what you assign the waiting for the basket of goods. You can engineer almost any number that you want for inflation. And if. The feds are pulling the interest rate lever to try and counteract a number that's already being manipulated. How accurate is this system and who actually knows? I don't even think Powell in the U. S. knows where interest rates are going to go because there's no sense of Of what the market is. It's propped up all by all this financial stimulus, so much money that got printed, hasn't worked its way through the system yet. I still see a ton of inflation on, on everything that I do. Food, travel, everything seems to be more expensive, but we get told this 2 percent or we're getting close to this 2 percent inflation target. I, I just think the whole system is, Rigged, but what do you think on this? I would say what to think. I would tend to agree. I mean, it's, it's so complicated, right? There's so many factors and you know, there's levers that the bank of Canada is trying to pull with setting their overnight lending rate, but then that rate has an impact on inflation itself in terms of the cost of housing. And that is part of the basket of of what goes into that inflation number as well. So it's like, everything is linked together. And I think the one variable that. I mean, it's a big unknown across the board is, is just sentiment, sentiment plays such a big factor into this as well. If people are feeling good, they're going to spend more, right? And if people are worried, they're going to tend to spend less, be a little bit more conservative, tighten up. And so that whole sort of idea of sentiment is, is something I find fascinating because it really plays a factor in, in a lot of what lot of the decisions that are being made out there as well. Right. And then that can swing one way or the other. But I mean, fundamentally, you know, the things that I keep an eye on are, are immigration, obviously, and, and, and interest rates. Cause like, you know, one is control controlling the cost of, of that housing and those purchasing decisions. And then the other one is, is obviously driving a lot of the demand. Right. And so here in Canada, you know, there's been a lot of talk recently about, you know the levels of immigration that we're having and not being able to respond correspondingly with providing housing and just. of

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all types of real

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estate. So, I mean, I just see a huge disconnect there in terms of the supply and demand, because the federal government for the most part is controlling the, the, the supply side, you know, they're, they're sorry, the the demand side, cause they're bringing, they're allowing certain levels of, of immigration whereas it's left up for

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the

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most part to the municipalities and the provinces to provide that. To take care of the supply side in terms of how much they're building and how long it takes. And so again, that's just another huge disconnect for me. Like it's just, I don't know how you fix that really. Well, when it underscores just how complex and nebulous the process is, and it, It's infinitely complex because that doesn't even take into account all the geopolitical issues and everything coming at us in every direction and civil unrest and the bipartisanship and, and there's so much going on that, that's why economists have a very difficult job is they're trying to make predictions in a vacuum when we're in anything but a vacuum. So it's, it's, it's, Anyone's guess, I'm in this, in this kind of short summary, I'm very bullish on industrial long term. But I have no idea, like, just anything could derail it at any given time. But I'm also not a, I'm not a short term thinker by nature. So if something catastrophic happens in the economy, I hope that I'm just, my balance sheet and reserves, I hope that I'm just in a position to weather anything in the short term because I still am very bullish on the long term trajectory still just continuing to go up. Yeah, for sure. And I think industrial and, and to a larger extent, commercial is a nice asset class to be in when there is inflation because of the nature of, of the leases, if you've set them up properly with triple net leases and things like that. So you are covered to a certain extent. But it does make it more expensive all around. So that impact is going to be felt no matter what, by your tenants at the end of the day. So, yeah, agreed. So maybe just just kind of wrapping up here, Chad any other thoughts on, you know, the future love to hear about maybe what, what your plans are with, with the podcast or any and other initiatives that you got going on maybe talk a little bit about your plans. And, and I know, obviously we're not Talking about predictions here, but you know, what, what sort of plans that you have for, for your podcasts and, and, and your brokerage and things like that. Yeah. Podcasts have got still a number of good guests lined up. And we'd love to talk to you after actually as well and see if you'd be interested in being a guest. One thing that I'm really exploring this year on the YouTube channel is I, I've started become reading a lot more on industrial heritage. For older industrial properties and the history behind them. So, the one that I just did a video on not too long ago was a warehouse that Frank Lloyd Wright designed, and, so he's known for many buildings, Falling Water, and the Guggenheim Museum, and I think he's done over a thousand buildings. I found out that he did one warehouse so I was just intrigued. So I just had to research it and study it and found out some cool facts about it and made a short video about it. I don't know if those are popular or not. I don't know if anybody really cares about a warehouse that Frank Lloyd Wright designed. I liked it and I just liked the process of. Researching it and finding out the history behind it. And we're one of the world's greatest architects designed a warehouse. The nerd in me just says, that's, that's cool. So I've, I've started making a list of, I think I'm about 20 buildings right now that, that I want to do something similar with all over the world. Vegas factory in Germany's one, the A. G. building in Berlin's one the Ford factory in just outside of San Francisco that was converted into more upscale adaptive reuse. There's, yeah, I got about 20 on that list and I want to try and do one every couple weeks. But that to me is just interesting. I just that, that's the obsessed and passionate side of me that I'd make these videos even if nobody watches, just because I, I like it so much. So that's, that's one of the things I'm just excited about on the video front. And it's very similar status quo on the industrial side for investing I'm still looking for deals. It's harder to get something to make sense these days, but I'm still actively looking and just continuing to work in brokerage as well. It's it's, it's a pretty good situation where I get to spend so much time in something that I just. Thoroughly enjoy so much. Yeah, that's awesome. That's awesome. Okay. So as we're finishing up here, Chad if people want to find out more about you or to connect with you, where's, where's the best place to do that? YouTube is, is a great one where I, I'm pretty active on YouTube. I usually make a video a week or at least have a podcast episode out there once a week. LinkedIn and Twitter, I'm also somewhat active on probably Twitter more than LinkedIn right now or email. You have my email, so you're more than welcome to put that in the show notes too. Yeah, definitely. We'll put all that in the show. Okay. All right. Well, this has been a great conversation, Chad. I really enjoyed it with the fellow industrial real estate guy. It's, I think it's it's been a good conversation and yeah, I think as I mentioned before, I think you're providing a lot of value out there. So so really well done. And I want to kind of encourage you with what you're doing. I think it's providing a lot of value. So, so yeah, way to go. Well, I greatly appreciate that and love this conversation as well. So thanks again for having me on. All right, Chad. Thanks a lot. Thanks Steven.

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So, hope you got some value out of this podcast episode. I invite you to like and subscribe to the podcast, leave a review, leave a comment. Let us know what you think. And for any other information about us, what we're doing and the types of investments we're into, please visit focuscapital. ca focuscapital. ca. And on there, you can find a ton of information, additional podcasts and a lot of free resources. So that's it for this podcast episode. Bye for now.