The Thursday Show: An owner's rep speaks. Plus: Are boomers the best clients?

21:47This is like, let's just keep everybody close and let's build these giant places where the family can come and stay. There's a lot of this that I'm sort of in favor of.

22:00Fred Nicolaus:Yeah, it's really interesting, right? I feel like when you talk about the home industry, you have to kind of hold two things in your head at the same time. One is that millennials are the biggest demographic. There's a lot of millennials. and people have been talking in this industry about how millennials are gonna take over and become the default customer for furniture and designers and for everybody who's in the home world for a long time. That's been a discussion point for almost 10 years, certainly, if not longer. On the other hand, baby boomers account for 42 % of buyers in the overall housing market.

22:29Fred Nicolaus:Like think about that in comparison to where they are in their lives and how many of them there are. That's an enormous percentage. And so for a lot of people out there, whether it's in a designer or a furniture brand or whatever, yeah, great millennials, but my buyer is a boomer. Like my customer is a boomer. And, you know, based on this data, it certainly will be, it will continue to be a boomer, like as time goes by, because they're going up and not down. And it's really interesting, because I think both of those things are true. You know, this idea that millennials are, they will be the customers of the future, but they're not necessarily the customers of right now.

23:00Fred Nicolaus:And that's kind of fascinating. It is fascinating. And I think that we made the mistake, and I say we collectively, the industry for a time, thought that millennials didn't want homes or that they weren't going to create the same kind of lifestyle that the previous generation had. And we found out and honestly, in some states, we slow rolled home building as a result of this notion that there wasn't going to be the demand. And that turned out to be a terrible mistake. And we're short a great many houses as a result. I think the risk that we run with all of these giant homes being built is that they may not be wanted and or needed in 10 years, to your point.

23:47And so I worry about just these giant homes being built. I look at the town of Bronxville, which in a way was saved by COVID coming because just prior to COVID, there were some enormous houses that were on the market that were just frankly too big for people's lifestyles at the time. And they sat there for a long time. I fear that happening again at the end of this cycle. But for right now, I love the thought of building these compounds and bringing the family over.

24:16Fred Nicolaus:Yeah, I mean, I think this whole situation kind of creates an interesting challenge for anyone in our industry, because on the one hand, you know, baby boomers are a very lucrative customer to market to, to cater to. They're building these bigger homes. They're building these resorts. Why not fill them with furniture? That's been a reliable play for a long time. Why not keep doing it? But I do think that, like, on the other hand, at some point, millennials will kind of be the de facto customer for interior design, for high-end furniture. and I do think people need to think about that and I don't necessarily think that that means changing everything that they do you know like oh we got to get on TikTok yesterday or whatever it is that you know the presumed strategy is for millennials but you know when I think about like a brand like I'm going to say it restoration hardware and there's you know their policy of never posting to socials and I think there's a lot of validity to that strategy and it probably plays out and it probably it clearly works for them but I do wonder when like you know the de customer is millennial and younger, like a generation that grew up on social media, are you just kind of invisible if you're not there?

25:16Fred Nicolaus:I'm sure RH is going to be fine, but it makes me sort of think like what companies out there are assuming too much that their customer is going to think one way forever? Well, I think it's a great point. But I also think that the point that's so important to realize in the midst of all of this is just how much money baby boomers have relative to every other cohort and how they are feeling about how long they might live and the kinds of experiences and the kinds of lifestyles that they want to lead. And so I feel like on the very high end, the housing industry on that end is really booming as a result of this.

26:03No pun intended. Well, exactly. But I also feel like much of the furniture industry, the fabric industry, this is where a lot of that business is going. And so if you're on that side of it, long may it continue. Agreed. Go to where the money is. All right. That's it for the news, but there's plenty more to check out on businessofhome.com, including the latest showroom openings and the debut of BOH's Ask an Expert column. We'll be back in a minute, but first, a quick break.

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27:30And we're back. I'm joined now by Grant Bowen, who is the CEO of Peak Projects. Grant, welcome to the show. Thanks, Dennis. Excited to be here with you. Glad to have you here. We've been talking about owners' reps for so long. And finally, we have one in our midst, and we're going to find out so many things from you about how the whole operation works. But before we jump into that conversation, tell me a little bit about your early career. I know that you worked in Silicon Valley for a particular client, and I want to hear about that. Tell me a bit of your background before we jump into your business today.

28:10Yes. So I grew up in southwest Michigan, went to school out east at Brown, studied economics, took a lot of art and architecture classes at Brown, as well as Rhode Island School of Design, which was right down the hill. So through college, moved out to San Francisco in 2007 to work for a large commercial contractor. Great firm, but I wasn't building anything sustainable, modern or interesting. and read Architectural Digest and Dwell and those magazines. And I wanted to be more involved in those type of projects. And so I leveraged my network, got put in touch with an amazing woman at a family office and ended up working there for eight years managing amazing private residential projects.

29:03Well, and when you work for a family office, tell us a little bit about that dynamic and what that's like. What really goes on? Yes. Well, there's a saying, if you worked for one family office, you've worked for one family office. They are all very different. I was lucky to work for one that had great leadership, a good structure, and many departments. So I sat in the real estate department and managed the acquisition and team selection and overall design and construction management of homes predominantly in the Bay Area, San Francisco and Silicon Valley. We also did some projects in New York, and we also did some pretty interesting boat and plane and kind of miscellaneous projects as well.

29:49Okay. So any snow rooms, any big elaborate spaces that you can tell us about? I'm under NDA, but we did some - I feared you might be. But we can talk generally about them, yes. Okay. A lot of the stuff you're seeing today, we did way back when. We actually did one of the first LEED certified homes in the Bay Area. Clients were very sustainably minded. And so we did geothermal systems, gray water systems, a lot of large PV and battery systems, sustainable materials, rainwater catchment, all of that jazz, which was awesome. We also did a lot of safe rooms. We actually did a slide from the master bedroom, primary bedroom, down to the garage.

30:38That was funner and easier to get to their car instead of walking down the stairs. Why not have a slide? Exactly. So some fun stuff like that. Love it. Okay. Well, I appreciate that insight. And I want to come back to that subject. But so, okay, so you worked for a family office. Sounds like they had a bunch of homes. Sounds like you had a lot of experience in perhaps the real estate acquisition and then the development thereof. And what made you feel like it was time to go out on your own? And what was that process like for you? Yeah, at the end of my tenure there, it was starting to turn more into a property management role instead of a development management role.

31:20And I was excited to build beautiful, tangible, livable works of art in different places. And I love the clients, but they had reduced the amount of real estate that they were going to do. And I was approached by architects, designers, and general contractors. And they were like, Grant, we really like you and your approach and what you do. And we have these other clients out there. and so them talking to me about that as well as you know really seeing what was happening in the Bay Area at that time the explosion and wealth through technology companies I had just you know heard about other exciting projects in the Bay Area and across the country and I just really like to be in service and help people have a positive experience with real estate and so I wanted to work for different types of people on different projects in different places so that all gave me the energy and courage to kind of go off on my own.

32:20I left on good terms. I still consult back to the family office to this day. And it was, you know, a little nervous at first, you know, leaving a stable paycheck, etc. But I saw that there was a lot of demand out there and people liked my approach. And so I thought it could be successful. And what was it about your approach that people had come to recognize that made them want to do business with you? I think it was primarily how I approached people and how I approach projects. I was lucky at the family office. They wanted me to hire the best and brightest, compensate them fairly, and allow them to do their best work.

33:03You know, I knew that, you know, an owner's rep, you know, was a premier service or was a luxury, and a lot of folks couldn't have it. And so I wanted to make sure that I delivered value in every interaction, was extremely supportive. Yes, I'm hired by the client to advocate on their behalf, but that also requires advocating for the project team to make sure they have what they need to be successful. I think taking a collaborative, empathetic, high EQ approach is what the industry partners that I mentioned really liked and what was lacking in the market. And explain to people what you mean by a high EQ approach.

33:43Yes. I think, you know, owner's reps have historically had mixed reputations, right? So I've heard. We're going to get into that. And I understand where this skepticism comes from. In some cases, I think, you know, the owner's reps that came before me wanted to prove their value in not the best ways. they wanted to potentially create friction to add value or be the solutions oriented person or grind different people down on their fees to prove value. And some came in with a heavy fist, more of a, you know, a hammer approach instead of a carrot. And that was just, that was challenging for people.

34:29You know, these projects are hard enough. They don't need another person making their lives harder to do complex projects. And so they liked it. I took a fair approach when hiring people. We would go out to three to five people, do a RFP process so clients could evaluate them objectively. I wanted clients to have relationships with these people and not create a veil between them, right? When you're doing a creative process, the person you're doing that for needs to engage with architects, designers, and the team so they can build a relationship so the team can better serve that client. And I facilitated space for that to happen.

35:09And I think the clients or sorry, the industry partners really appreciated that. They also wanted to engage with a professional entity, right? That's why teams like to work with a family office or our family office, because we responded very quickly. We got them compensated very quickly. We made sure administratively we were dialed in every aspect. And when some teams work with clients who travel a lot, aren't responsive, sometimes are very emotional, that can be challenging. So we wanted to, I would always try to mitigate that for the team and they appreciated that. Life is too short and these projects are too complex.

35:47We want to make the process fun and enjoyable for everyone there so we can hopefully all do more projects for that same client in the future or other projects for different clients in the future. And I think a lot of owners reps take a short-sighted per project mentality and they're not thinking about the larger picture, larger life, and what's going to go on many years after that project. Another concern that particularly designers raise with me is that they rely so heavily on a deeply intimate and personal relationship with the client so that they can really get to know the client and the classic, I figure out who they are and what they're all about, and then I give them this home that is uniquely their own.

36:41their concern is that sometimes the owner's rep suddenly comes in between that intimate relationship that I want to have with my client. Yeah, and I think, you know, it's something that I've fostered at the family office and that we foster at Peak is like that relationship is important and we understand that. And we try to support that relationship while creating good process and everything you need to get a good project executed. It's becoming harder nowadays. These clients are busier. They're getting wealth at a younger age. So they have young kids. They're running businesses. They're busy, right?

37:17And so we're not there to stand between the client and the creative team. We're there to create clarity around the client's goals, how decisions get made, who owns what, what the client's priorities are, how design intent is protected through budget, schedule, and construction. You know, we work hard to be the translator between design, construction, finance, and the client, not, you know, a hall monitor. The goal is to reduce confusion and allow architects and designers to stay focused on their highest value work. And I think the trade or the skill or the profession is definitely growing because I think clients need someone on their side to help organize these projects and act in a professional way on their behalf, given how busy they are and what they expect.

38:11And to the point about acting in a professional way and the client's ever-increasing expectations, to your point, what do the clients want? I mean, I assume they want an incredibly high level of privacy and discretion, but what else do they really prioritize above everything else? They want peace of mind. And they want to be able to execute these projects as swiftly as possible because time is their most valuable asset when you get to this wealth level. And they want it to be streamlined, stress-free, and fun. They want to engage in the process in a way that is easy for them and that they enjoy.

39:02And I think a lot of folks, when they think about taking on a 10, 20, 50, 100 million dollar real estate project, they immediately get overwhelmed or they feel a sense of responsibility that's significant and stress. And that can be challenging, especially for busy people with young kids, businesses, sometimes multiple businesses to take on at that stage in life. But when we get involved early, we can help set the stage correctly and help set expectations properly, get the right team involved and help ensure the best possible outcome for these clients. And when you're talking about wild scopes, you know, we've done wild underground bunkers.

39:46We've built multi-acre lakes stocked with trout and rivers, streams, private golf courses, hangars for aviation. We've built pretty wild kid-related facilities, art barns, sports barns, play barns, rock climbing, skate parks. We even built a synthetic ski and snowboard hill and jump with airbags so people could train in the fall, spring, and summer months. Kids were very into action sports. we've done gun ranges indoors and outdoors archery you know you you name it we probably have a specialty consultant that can help make it a reality so we're not exaggerating when we talk about all the health and wellness that people are spending money on and we were i mean we were joking about the snow rooms recently but i mean the the cold plunges and all all of that it it's very real.

40:49And it sounds as if the security concerns are very real and very deep and people trying to have very private entrances where they can't be seen and cameras can't detect and all of that. Tell me a little bit about that. Yeah, we see that often with clients. And when we're helping them do proper responsible due diligence on properties, we're offering helping them get security assessments to understand the strengths and weaknesses of that property given, and before that, just their security profile. Some clients think they need more than they really do. They think they're more important than they really are, or they have more risks than they really do.

41:32Some really have those risks. Are you able to say that to them, Grant? Are you able to say, really? I'm not sure they're coming after you at the level you think they are. Yeah. We need to be open and honest with them. This report from this trusted advisor says this about you, right? So you can choose to invest in that or not, right? And, you know, some do have much higher security profiles than others, right? And, you know, CEOs of some of these AI companies, et cetera, you know, political donations can tie into that and family ties, business ties, et cetera. But we want to just arm our clients with as much information as possible and let them make responsible decisions with the advice of us and the project teams, but it's becoming standard.

42:19And when you get in that situation with a client and you thought they were great and you thought they're going to be responsive or kind and they turn out not to be, what do you do? How do you handle that? I think we do have really open and honest direct conversations, right? Like we signed up for this scope. We need this from you on a daily basis and we're not getting it. So we need to see improvement on this. Otherwise we need to, you know, make other arrangements. I think we've gotten very good at that. And, um, you know, we have a high success rate with clients. Sometimes you do have to course correct, right?

42:59And maybe they, their stock has dropped 80%. They have three young kids and And it's understandable why they're acting a certain way that time of year, right? So, yeah, external forces can affect a client's mood and how they engage. But I think it's our job as the owner's rep to also protect the team from that because that can negatively affect a design team if a client is acting out. The design team is no longer incentivized, excited, or eager to help that person achieve their goals, right? And we want to create a culture and a vibe on each project where they feel safe, they're excited, and they do do the best work because that makes our job as an owner's rep easier and it helps produce a better outcome.

43:43So I think when things happen, you need to address them swiftly, quickly, with empathy, but also directness. directness. It sounds as if it's certainly helpful to keep an eye on your client's stock price if they have a publicly traded vehicle like that, because that often, to your point, may have a lot to do with whatever else is going on. Yeah, I think it's important to be strategic about how and when you present information to them based on those things, right? And that's being a strategic advisor while delivering things in a timely fashion with which to achieve the client's goals, So you can't sit on certain things too long or that creates other issues, but don't have a budget meeting an hour or two after a bad earnings call.

44:28To that point, and in trying to help designers learn some things about what you have seen great designers do and what you've learned about some of the mistakes that you've seen designers make on big projects, what do you tend to look for? What should designers be mindful of in working with these big clients like this? clients' expectations are ever-increasing, and they expect every person on the team to run a great process, run a great business, and be exceptionally communicative and professional. You know, some designers in the past have gotten away with, you know, having great ideas but not being able to execute those into proper drawings or schedules or budgets and whatnot.

45:26And I think now clients expect everyone on the team to operate as if they worked at that client's firm. You need to communicate correctly, swiftly, and be very organized and present things well and be convicting about why you want to do something. And so I think for designers who are very creative, it's important to build and flex a business muscle and be very organized and run your firm professionally and make sure you show up to meetings organized with everything you need with which to get the proper decisions, good documentation, and run a professional process. That's something that we see designers be more successful with clients when they operate that way than when they show up and they're a little too creative, a little too hand wavy, and with a couple sketches.

46:22So you really need to bring operational rigor to how you execute. And that's how you can build and earn this type of client's trust. And do you find that for your clients, do these lists, the AD100 list, the the L decor a list to all the, do all those lists matter to the, to the clients? Is that a, is that a filtering process that they're mindful of? Some are interested in it. Some could care less. Okay. I think a lot of times, uh, designers are, are, are getting found by clients through friends, through media, a myriad of, of, of ways. Um, but I don't think clients are specifically hiring people because they're on a certain list.

47:09They're hiring them because they like the aesthetic, they like the person, and they're excited about what that team can deliver for them. And for you, when you see clients making a mistake before the project even begins, we talked earlier about not bringing you on early enough in your mind is one of the key mistakes that people make, but I mean, what mistakes do people make early on in these big projects that you want to try and catch and prevent? They'll hire someone who likely isn't the best fit for them in that project based on kind of a random referral. So we'll come on to projects where they've hired an 8100 architect, an 8100 designer, and a builder who has never built at that level, right?

48:02Or vice versa, right? And because a friend of a friend or whoever referred them without the client taking the proper steps to do their proper homework, the due diligence, an RFP process to understand really who and how this person will execute. Do they have the experience? Do they have the team? Do they have everything they need to execute well. So we've seen clients hire people who could be great, but just might not be great for their project at this time in this place. And I wonder, Grant, as we wrap up, we talk a lot about so many designers dream of the billionaire client, Grant. They think this is the ticket to, I'm going to get this billionaire client and it's going to make my firm and my career.

48:56And after that, I'm just going to have billionaire clients. And my question to you is, what is it that you've learned this billionaire client is really looking for that they should be focused on? Things that they might not even be aware of. Yes. I think it does go back to what we kind of discussed before, like these type of clients want to work with professional world-class consultants. So you need to carry yourself in that way and operate in that way. And whether it's a million dollar project or a$50 million project, you need to execute with the same rigor, passion and professionalism to build your brand, to build your reputation as being second to none and always executing, always delivering value on each and every interaction and every project, no matter how big or small it is.

49:50And I think that will help build your reputation, your brand to give you the at-bats with those larger clients. And then I think it's important to think about relationships in a longer term way, right? I think Peak's been good about partnering with and supporting a myriad of professionals across a myriad of industries. And I think that's really helped us get in touch with those type of clients because we're always trying to be helpful, whether we're working on the project or not, to different players. And I think if you're helpful, you build goodwill and you're top of mind when opportunities do come arise.

50:33So the fact that you have proven yourself and you can do amazing work and that you're helpful to other people in the industry, you're adding thought leadership, you're helping smaller businesses grow, you're introducing an architect who needs a permit consultant on the other side of the coast who doesn't have that. Being helpful in those ways, I think all of that can really help industry professionals build great businesses and get in front of the world's best clients. And often high-end designers will say to me, Dennis, there's always a budget, even though it may from the outside appear as if there's no budget on this wildly enormous project.

51:14There is always a budget. And to your point, clients, regardless of wealth, don't like to be surprised. They don't like to be blindsided. And I wonder, what do clients care about or look at closely? We're often told, oh, mortgage rates don't matter to the high-end client. They're not getting a mortgage. But what does matter to them? What do they look at? Are there any macroeconomic issues that will impact your high-end clients' decisions about things? Yes, I think all of the news cycle, political, macroeconomics, it affects their temperament, right? They have the means to do any type of project at any point in time, but they might not want to because they feel a certain way, right?

52:00And so that's challenging and can be frustrating to project teams, right? Because - So they have the money, they're just in a bad mood, and that can really slow things down. Totally. Or there's life changes like, you know, optically, I don't want to build this massive high alpine house because how it'll look to the company where I may have laid off employees. Right. Or, you know, divorces can can can impact projects. clients when they feel like they have a high level of trust with their team the scope the budget and schedule are fair market rate and sound when the clients have a high trust in what they're doing with their team they're usually willing to execute and it's important to keep them informed of budget and schedule variances on a weekly basis or a very frequent basis.

52:58I think that's where we see design teams getting into trouble when we're not involved or what we hear about in other projects is the budget and schedule conversations don't happen often enough. The design will develop, things will change, and then there's a big uh-oh moment, right? These clients, like in their businesses, they're used to looking at their P &L and finances on a very frequent basis. Majority of them want that in their projects. They want to know where we're trending, where we're heading, and why. And keeping them abreast of that is usually good for all of us. And to your earlier point about you used to go to an event and you'd be the only owner's rep there, and now it's a much more crowded room, should we assume that this rise that we've seen in owner's reps will continue and that more and more people will be bringing them on because it just makes so much sense for how they need to run these large-scale operations?

53:57Yes. I think you're going to continue to see more and more players enter the market. You're going to see more and more projects have owner's reps. But I really encourage the teams and the clients out there to do their due diligence, just like we do our due diligence on our project teams. clients and project teams need to do deep due diligence on owners reps, because just like architects and builders, owners reps are not created equal. And teams and clients should vet them to make sure they have the proper team with the proper experience, the proper process and deliverables, and that they will be a great partner for the project.

54:37Well, there's so much more I want to talk to you about. We'll have to have you back, but I really appreciate you making the time and thank you for being here. I really appreciate the conversation. Big fan of BOH and looking forward to chatting more.

54:55And we're back. We're getting to the end of the show here, but before we go, we'd like to take a second to highlight anything going on in the industry that might have caught our eye. Fred McCarturei.

55:03Fred Nicolaus:Well, I wrote an article this week for Business of Home that we didn't talk about in the show, but I urge people to check out about this. I caught my eye. My own article caught my eye. No, it's about this Australian couple who started an antiques business in Provence, this Australian company called Chez Plouille. And it's a really interesting business. Like, I don't want to give too much of it up, but they found a kind of interesting, you know, at a time when a lot of people were selling antiques online, they weren't the only ones, they kind of found some interesting edges to kind of get in there and establish a position for themselves.

55:35Fred Nicolaus:They've done pretty well. So it was fun to talk to them, a very lovely couple, and really interesting to sort of get into how a smaller online antiques business gets out there and competes with the likes of First Dibs and Pomono and Cherish and all those big guys. Yeah, I love it. And I hope to talk to them in the future. That was a fun one. What cut your other thing, Dennis? Former guest of the show Rhonda Kaysen was on The Daily. Rhonda Kaysen writes for The New York Times and often about housing and the home industry. And she was talking about the new housing legislation bill that went forward.

56:08And she was talking about the issue that it's somewhat in conflict with the president's feelings and initiatives about immigration. And she points out that the construction industry actually employs the highest percentage of foreign-born workers of any industry in America. So in order to build a bunch more houses, historically, you've needed an immigrant workforce. And you and I have talked about this in the past. It is a big issue and one that we're going to have to figure out.

56:41Fred Nicolaus:Yeah, it's a big issue. I think what I loved about her appearance on The Daily and the article associated with it is that it's a very, it's a really deep dive into like, well, why is the workforce in America dominated by immigrants for construction? It gets into the whole history of the unions. It's a very nuanced kind of both sides, all sides look that you should expect from Rhonda of the New York Times. So I really enjoyed the listen. And if you want to sort of understand how we got to where we are with the residential construction workforce, listen to the BH podcast and get on over to the Daily and check it out.

57:12Yeah, absolutely. And definitely read her article as well, as you say. Well done, Rhonda. Perhaps we'll catch up with her soon as well. All right. That's all the time we have today. Thanks so much for listening. If you want to keep up with the latest news, browse job listings, or take a workshop, visit us online at businessofhome.com. If you want to get in touch with the show, write to us at podcast at businessofhome.com. This episode was produced by Fred Nikolaus and Caroline Burke and edited by Michael Castaneda. I'm Dennis Scully. Have a great weekend, and we'll be back with you on Monday.