 I think there's always been a bad stigma put on construction trades that, you know, it's an industry for the uneducated, which is completely untrue. Welcome to the Smarter Building Materials Marketing Podcast, helping you find better ways to grow leads, sales, and outperform your competition. Alright everybody, welcome to Smarter Building Materials Marketing, where we believe your online presence should be your best salesperson. I am Zach Williams, alongside my co-host Beth Pompnyglov. We've got a great show lined up for you today. We do. We are really excited to welcome Eric Toon. He is the VP of Land Development of Brookfield. He's got a ton of information and insights to share with us today. Eric, welcome to the show. Thank you for having me. Eric, would you mind taking a couple minutes to introduce yourself and tell us a bit about who you are and who Brookfield is and let our audience get to know you a little bit. Sure. So Eric Toon, VP of Land Development for our Phoenix Division in Brookfield Properties. Brookfield is a global organization. Our parent company Brookfield Asset Management has their hands in all kinds of different things. What we focus on here locally in Phoenix is the land development market and building master plan communities. I like to say that I get to build cities, cities within cities. We have a few very highly rated master plan communities here in Phoenix, Eastmark being our kind of staple community grand opened in 2013. And we're kind of on the tail end of the project now. It's a 3200 acre master plan. What we typically like to search for our projects that are 500 acres or more so that we can then sell to builder partners finished lots. And along with that we we developed some of the mixed use in our communities haven't done anything here locally in Phoenix yet but all across North America, we do develop mixed use developments as well. So a little bit of background on me. I'm a civil engineer by education. I did it for about five years and got bored and then seven years in said, you know, tired of looking at stuff just go put on get put on paper. These things actually get built and kind of jumped into the land development world in 2006 to 2012 the market was pretty horrible. So I got to get a lot of experience in different aspects of our business and actually became a general contractor. So I'm licensed civil engineer licensed general contractor and I like to build cities and I have a passion for building cities. It's fascinating. So are you gosh you've seen the the market tank in 0607 08 and you've seen this slow climb. If you you said it was, you know, a mess up until about 2012. What have you seen if you just course like the last eight nine 10 years what if you had to summarize it what would you say has happened in the market. From a land development master plan perspective. It's been a, you know, cautious optimism and has been a very gradual increase until just recently. You know, I think we all thought that COVID was going to create this monster downturn in our market and it actually did the opposite. We have huge influx, especially here in Phoenix of population. I think it's somewhere in the range of around 6000 people per month moving in. And we kind of had like about a three month lull from March of 20 three months in everyone said, you know, it's not really as bad as it looks like it's going to be so let's just keep going and we kind of sped up all of our development supply has been a huge issue for us. But, you know, between 2012 and 2020. There were a couple of little blips early on. I think we had a little downturn in like 2014 that kind of slowed down sales right after we had grand opened our big master plan Eastmark it was the first master plan to open and grand open in a decade. Essentially. And then in October of 2020 we actually opened our second large master plan here in Phoenix, which was Alomar. It was a very interesting opening because we had to do it sort of virtually but not virtually everyone stayed in their cars. You know, it was spanned over several weekends. So kind of a unique way to approach opening a large scale master plan. Eric, you just mentioned they're getting pinched by supply, which I mean is the name of the game right now. Are you getting pinched by supply on both the land itself or just the materials or is it coming at different angles on top of that? I would say it's all of the above. One of the things that's a big issue for us in Phoenix is majority of the vacant land large tracked vacant land that's available is state land. So it's held within the Arizona State Land Trust. And in order for that to be able to be purchased, it has to be petitioned to come to auction and it's a fairly long drawn out process to try to get it to come to auction. We recently acquired through one of those auctions and a partnership with DR Horton a project that's 2800 acres to be developed by us and Horton. And then it's entitlements of an additional 8000 acres outside of that 2800 acres. So it's difficult to find vacant land unless you're looking for small infill and we don't typically look for the small infill pieces of property. From a development perspective supply has been constrained by lots of large development happening all around North America. More specifically here in Phoenix there have been some very large tech user manufacturer. Large big business is coming to the Phoenix metro area and labor pool as well as materials are going to start getting swallowed up pretty quickly. Which means there's going to be less for those of us who are already here because there'll be a lot of focus on these multi-billion dollar facilities that are being constructed. You said it's going to get swallowed up quickly. I mean hasn't already gotten swallowed up? Like if you look at gosh the cost of lumber, it's absurd. And also I mean there's been a pinch for labor shortage for growing on 5 to 10 years now. I'm curious to get your take. What are you all trying to do and what are you seeing other companies do to try to solve that problem? One of the big focuses has been on trying to entice the younger generation to want to come into our industry. From a land development perspective we're a little bit different than your vertical builders. Our trades are not the most pretty trades that are out there. You're in the hot sun all day long out in the field getting dirty. There is some very hard manual labor that's involved in digging trenches and laying pipe and putting concrete on the ground and so on. So it's not the prettiest job. Many of our aging population within our industry are aging out of the business and we don't have enough to backfill it. So we're trying to work with local organizations such as the community colleges, any of the different trade organizations like the AGC and so on to come up with a way to create programs that will be engaging with the younger generation in order to make them want to come into what we do. Pretty recent in trying to do that as again land development is a little bit different than the vertical side. Vertical has been experiencing this labor shortage and material constraint for quite some time now. On the land development side it's pretty recent within the last two years is when we've seen that big crunch on we just don't have enough labor. And part of that has to do with the fact that there's so much demand for lot development within our industry that we've created this huge influx of projects that need to be completed and there's just not enough people now to do the work. Do you see that changing anytime soon? Do you see a light in a tunnel or is this like this is just the nature of the beast? I'm hopeful. I'm hopeful that the fact that we had the COVID situation last year and many people lost their jobs, there was a huge unemployment influx between March and the end of the year and our industry didn't see that. So I'm kind of hopeful that people will look at that and they'll say, oh, you know what, if I go into that industry it's a little bit more stable for me and I'll be able to not have to worry as much. Now, granted, then you take back in 2012 when the market was finally coming back to land development that whole time between 2006 and 2012, a lot of people could look at that and go, well, but the industry is not really impenetrable. There is still the opportunity that you could experience a downturn and there wouldn't be enough work. The time being it feels good to be on this side of that equation. Absolutely. I'd like to hear what you guys are thinking about or what you're talking about for what's next because there's a lot of response to the current supply and demand issues. You're talking just now about the labor shortage, but even how you're responding to that but that's a fairly new development. As your teams are talking about your master plan communities that you're thinking about creating in five years, what conversations are involved there or what concepts are being included that perhaps weren't included in the previous five years? So I would say a lot of it has stemmed around the sustainability efforts and it's always been top of mind to create sustainable communities, but it's becoming even more focused now. There's a hypersensitivity to it within all the different demographics that we target. And so I think that helps to kind of draw in that younger generation to want to be part of something that's a little bit bigger than them. So really that's what our goal is with our master plans is it's bigger than one person, it's bigger than one company. Like I said, creating cities and so to be able to be part of that, that's kind of our focus is look, you can be part of something that's much bigger than just your local community. What does that look like in a practical format? You say you want to be sustainable. Does that get down to the materials? Does that get down to how the communities are structured and developed? Can I ask what does that look like in practical terms? I would say all of the above. I can use Eastmark as one of our examples. It has been a staple community for us. It was the former GM Proving Ground so facility 3200 acres that was utilized for testing the capabilities of GM's prototype vehicles in the desert. And so when we acquired the site there were roughly 60 buildings on the site that were built anywhere between 1950 and 2005-ish. There was 85 miles worth of asphalt roadway for tracks where they were testing tons of copper and so on. And so GM was being encroached by Suburbia, for lack of better term, and they decided they wanted to move their facility. They moved it to Yuma, Arizona out in the middle of nowhere, which is where they like to be. And they left behind everything that was on the proving grounds. And when we purchased the site, one of our objectives was to try to recycle as much as we could of that facility. So in redevelopment really is one of the key things there. And we were successful in tearing down all of the buildings, recycling all the asphalt in the track area, recycling all the block and concrete from the buildings to be able to utilize it as base course under our roadways. So it kind of hit us twofold. We saved money on materials, didn't have to go to a local pit that was mining material to create this base course. We used what we had locally on the site. We lost some money. It also created a sustainable environment. On the more fun side of it, in the actual communities themselves, we try to without creating programs specifically designed for sustainability. We push our residents through our community life program to be more environmentally conscious. We promote builders who are using materials that are more sustainable, low flow fixtures, better sear rating on the AC units, you know, low e windows, things like that. And it's a requirement for the homes within the community, not not a suggestion. You actually have to build that way. And Energy Star used to be one of those programs. I think this is a little different than the Energy Star program. It's more just about doing the right thing. And with our community life programs, our residents who come and live in our communities typically get engaged in cleanup opportunities. Alomar is another one of our projects that has a great opportunity brand new community. I think we only have three or four residents today that have actually closed on homes within the community as it grand opened back in October. But we had an event with cleaning up the Rio Salado area. There's a bunch of littering and trash that was in the area and the city of Avondale promotes a group that will go out and do the cleanup. So it's about creating that environment for everyone to feel like they are doing their part in being part of that bigger than me. I like that. Eric, you brought up a lot of issues or problems. If I can just say bluntly, you know, you're talking about the lack of labor, the lack of supply, the increase in cost, the lack of land and your, you know, what you all do. I feel like everyone listening is just shaking like not. Yes, they're like, yes. Drive down the road or wherever they are. They're like, mm-hmm. But majority of our listeners are in the building product space and you being in your position, also being a civil engineer, also being a general contractor. I'd love to hear your perspective of what you would recommend to manufacturers when it comes to solving some of these problems. Like who do you think is doing it well and what do you also look at and go, ma'am, if manufacturers could do X, Y or Z, I think it would have a really big impact on the problems at hand. That's a good question. No pressure, right? I mean, I think from my industry's perspective, you know, one of the things that has always been an issue and would be great if we could figure out a way to manufacture material that is long lasting and doesn't require as much petroleum to develop would be PVC pipe. You know, we constantly have the issue every year, there's always a shortage in supply and that shortage and supply then creates a cost increase and it never comes back down. It's always going up. Most of that has to do with where the pipe is manufactured and the materials that are used to manufacture it. So, you know, most of our facilities use byproducts of petroleum refineries. And when we get hurricanes in the southeast, it shuts down production and creates a log jam and it's inevitable. It happens every year. So it'd be great to find a better method of creating that material or even a better material that is, you know, still has the same properties and can still last as long, but doesn't necessarily require those refineries to produce. I think that would be great from our perspective. Developers doing their part by reusing materials, you know, we're constantly rebuilding roads. So, for the example that I used with what we did on the GM proving grounds and recycling that material and reusing it, getting our agencies on board with the use or reuse of these materials would be key to helping stop the mining operations that are required to create new material. What are some others? There's a laundry list. Education programs. Well, education I think is really big like I think that's an area where I think you're going to start to see a bit of a swing back hopefully to the industry because the cost of education so high. You know, like I think people are going to start to wonder like, man, is it really worth, you know, me going to get this for your degree? Is it going to pay out the benefit as a trade might, you know, like those are things we don't really know. It'd be nice to fast forward five, eight, 10 years to see if that happens, but there's a lot of talk about how there's a lot of push to get back into the trade for that very reason, you know. Yeah, you know, I think there's always been a bad stigma put on construction trades that, you know, it's an industry for the uneducated, which is completely untrue. Everything that we do requires you to have a significant level of intelligence. You don't necessarily need a degree to be able to do it but you do have to understand logic and you have to understand the use of the materials and you have to understand what happens if I do this instead of this. So I think that educating the public is a big factor and letting everyone know you can make really good money doing these trades. You can make a career out of it. There are many people who have done that and like I said earlier there, the trade population for our industry is aging out. Those people have been working in this industry for 30 plus years and making really great money. I don't think we do a good enough job of promoting how successful you can be because everyone has spent so much time focusing on you need a four year degree to be able to be successful. That's a really great point. Zach, I think you were you the one who posted on LinkedIn about the courses that Google is releasing and actually basically calling for that to happen in the construction and building materials industry that it needs to be the same level of not just acceptance but like commemoration. What's the word I'm looking for? We're to get people an easy path like the thing the thing that a four year degree does the narrative is you go get your four degree and you're going to get a job like to get into the trade. It's like I got to know a guy to get into the trade or maybe there's there might be something through like your local high school or something that our local trade school but it's not as prescripted if you will. Well, I think you also need the name behind it like, you know, so this has this is a certificate certificate from Google that if you brought that to an employer that employer would feel like you knew you were talking about. So if, you know, KB homes or Eric you mentioned DR Horton if they released a set of certifications that you could get in a really reasonable amount of time and then you bring that to a general contractor that general contractors going to feel like you know what you're going to do. I don't have to train you. I can trust that you've been taught by somebody who knows what they're doing. I think that's I mean there's just really a need for that. And I think it's important for us as developers and builders in the industry to push our contractor base to have conversations with local, you know, community colleges, high schools, trade schools, and so on to say look these are the things that we really need. And if you can help us come up with a program that will get our workforce in a position where they can start the job day one and not have to have a whole bunch of extra training that would be phenomenal. Exactly, exactly. That's great. Eric man this has been awesome. Thank you so much for coming on the show. If someone wants to get in contact with you what's the best way for them to do that. The idea email is the best that way I can make sure that I get back to whoever I need to get back to. Great. And we'll make sure we link to that in the show notes as well. And for listeners, if you like this content, make sure you go to venue.com slash podcast until next time I'm Zach Williams alongside Beth. Thanks everybody.