Ground-Up Flex Industrial: How We Build It, Pre-Lease It, and Drive Returns

Join us for a behind-the-scenes look at how execution drives returns in industrial real estate development. Paul Bennett sits down with Shawn Beichler, AAA Storage’s Director of Development and Construction, to break down the project lifecycle—from land acquisition and permitting to custom tenant build-outs.

Discover how AAA Storage’s hands-on approach, local expertise, and focus on flexibility create lasting value for both tenants and investors. If you’re curious about how real results are built from the ground up, this episode is packed with practical insights you won’t want to miss.

Ready to talk about your investment strategy? Reach out at aaastorageinvestments.com

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Chapters
(00:00) Development Leadership and Experience
(03:00) Project Lifecycle and Key Processes
(06:00) Unique Construction and Integration Approach
(10:00) Custom Tenant Finish-Outs
(12:00) Execution and Risk Management
(17:00) Permitting and Civil Engineering Challenges
(27:00) Flexibility, Market Experience, and Investor Advantages

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Creators and Guests

Host

Paul Bennett

Managing Director at AAA Storage

What is The AAA Storage Podcast?

Investing in self storage gives you the fundamentals and growth you need to grow your portfolio. But skip the opportunities from golf buddies and gurus—invest in a real track record. Started by John Muhich in 1993, AAA Storage has delivered 19% IRR across 90 deals, totaling $450M in exits. Listen to our expert insights on investing from the AAA Storage team. See more at aaastorageinvestments.com.

Welcome to the AAA storage podcast,
your integrated real estate and

development partner, exploring all
things, self storage investing to

bring you diversified success.

Let's dive in.

Paul Bennett: Hello everybody.

Welcome back to the AAA Storage Podcast.

Really glad to have you today.

In our last episode, we talked about
Office Industrial Flex Real Estate,

or Small Bay Industrial real estate.

It kind of broke down what it is,
uh, why we're focused on it here at

AAA Storage and, and why it makes
an excellent investment opportunity.

Today, we're gonna go behind the
curtain and talk about the how.

Not the why and what's really important
if, if you're developing office

industrial flex real estate, what
really drives returns and, and what

does the construction process look like?

It really is all about execution.

And today we've got Sean Beaker, AAA
Storage's, director of Development

and Construction, and the, the, the
man with the plan who drives all that

activity in the field with us as a guest.

We're gonna have a great time today.

And hopefully we'll walk away
with a better understanding of the

critical nature of execution and
how we execute at AAA storage, uh,

to drive returns for our investors.

Um, Sean, uh, I I want to take a minute
as we get started, give everybody a little

bit of your background and, and what you
did before you got here, and, uh, sort

of introduce yourself to our audience.

Shawn Beichler: Yeah, thanks Paul.

Um, I've been in the development world
for 30 plus years, um, both doing real

estate and construction primarily.

Most recently construction.

That's been anything from, uh, building,
shopping, center development, uh, out

parcel development, storage facilities,
warehouse facilities, et cetera.

Just a, a broad range of development when
it comes to, to the development world.

Paul Bennett: Yeah.

Who were you with before you joined AAA?

Storage.

Shawn Beichler: I was with the most
recently, uh, Lowe's Foods, which is a,

a grocery chain out of the Carolinas.

Um, prior to that I was with, uh, Del
Hayes ahold, which was a grocery chain

out of also outta the Carolinas, but
bigger than that, uh, that they're,

they're, uh, also across, across the
pond in the, uh, in a bigger role.

And then, uh, prior to that I was with,
uh, McDonald's corporation doing a lot

of, uh, development for them as well.

Paul Bennett: Yeah, so a really varied
background both on the retail side

and, and on the restaurant side.

With McDonald's, you brought a,
a great depth of knowledge and

breadth of knowledge to AAA storage.

You've been a huge asset for
us, and as we kinda get started

here, walk everybody through.

A project and what parts of that project
you own and drive and direct when

we're developing a small bay industrial
or office, flex industrial project.

Shawn Beichler: Sure.

So there's, I'll, I'll name the, the
bigger buckets of what, what, uh, I

oversee, and then we, we can get into
some of the detail of some of those.

But first really big bucket would
probably be the due diligence process.

After we put a, uh, piece of
property under contract, we wanna

find out if it's developable or not.

We wanna find out all the issues with it.

Uh, what, what, what things
work, what things don't work.

We want to talk to as many, uh,
jurisdictional people as we can.

Uh, and, and really find
out more about the project.

And then the next bucket kind
of gets into, once we decide

we're gonna purchase a property,
we get into design development.

That has all to do with, uh,
laying out site plans, uh, whether

it be for storage or warehouse.

Sometimes it's for both.

Uh, some of, a lot of those
are on complicated sites that

have a lot of grade issues.

Uh, and then that gets into the, uh, CDs
that we produce to go in for the third

major bucket, which is kind of permitting.

And permitting can be a very short
process in some jurisdictions and

a very cumbersome process in other
jurisdictions depending on, on what

part of the area you're looking at
in the states, uh, relative to most

recently being, most of it in Texas.

And after the permitting process.

And, and while we're finishing up
the permit permitting process, we

go through a bidding process with
GCs where we'll bring in one of the

GCs that we've used for 20 years.

He's usually bidding against two or three
other GCs that we're looking at to, to

see who, who's got the best numbers from
a subcontractor standpoint and, and how,

how are we getting the best value for
the, the least amount of, uh, dollars.

And then once we, uh, award
that gc, then we're into the

bigger bucket of construction.

And that can range anywhere from a start
time of, we've done storage units as

quick as four or five months, business
parks as quick as seven or eight months.

Uh, it just depends on how big
the project is and a lot of those

have multi phasing projects.

So we may be doing a phase one of
both pieces at once or one or the

other, that so on and so forth.

And then that kind of leads into once
construction is finished, the final cer

certificate of occupancy, which is a point
in time where we kind of hand it over

to the operating side of things and let
them take the, uh, ball and run with it,

uh, getting into the operating matters.

Paul Bennett: Yeah, we're,
we're gonna talk about this a

little bit later in the podcast.

There's a couple things I
wanna pull out right there.

One is we do something that's
pretty unique, uh, in that, that

first part of the process that you
talked about, the due diligence,

uh, and then the initial permitting.

That's actually done.

We actually buy the
land at, at AAA storage.

And we take care of that part of
the process before it ever goes

into one of our investment vehicles.

So projects are generally completely
designed and permitted before

they go into one of our funds.

Uh, and the fund is able to pick
it up from there and actually

drives the construction.

You, you're driving the construction,
but from a financial standpoint, the

fund doesn't really get involved until
you're past or really at the very end.

It may not be past everything you're
waiting on some comments, but, but, uh.

But you really, really sort of completed
that first part of the process before, uh,

an investment vehicle, um, gets involved.

I think the other thing to point out is
that we do something, uh, that's a couple

things that are a little bit unique.

Uh, you, you referenced a, a GC
that's been working for us for

20 years, basically that's really
an extension of AAA storage.

They're, they only bill for us.

And, uh, although the legal
structure, uh, is, is.

Doesn't wouldn qualify
as vertically integrated?

Essentially, they're a vertically
integrated contract and resource,

um, that that only does bills for us.

And then the last piece of it, and maybe
you can talk about this for a minute,

is we do all the tenant finish out.

So we build a shell.

We, it's a unique process.

We build a shell, a 20,000 square
foot slab on grade metal building

with 25 foot clear span ceilings.

And then as we lease it up.

Uh, we actually divide that shell to match
the tenant space needs and finish it out.

Talk for a minute about that last
step in the process where we've got

the building built, the shell's been
coed, but we now have a tenant and

your guys are gonna go in and, and
finish out that space for the tenant.

Shawn Beichler: Yeah, Paul, to, to your
point, a lot of the, uh, re uh, the

biggest reason we buy build shells just
to start with is we don't have all the

tenants lined up at that point in time.

So it's, it's future tenants coming
in and, and that shell can be one

tenant that ends up being, uh, where
we've done pickleball courts and

it, they take up the entire shell.

That one, shell can be four or five
users that are individually divided up

with firewalls and that sort of thing.

And we really handle all of
the tenant improvement for

the, uh, tenants themselves.

We sit down and we help them design
what they want to get out of the space.

They're, they're involved in that
process, so they have ownership in it.

Um, and once we have a design down,
then we will take that and we w uh,

work with the architect that we have
in-house and, and get that permitted.

Um, that can take, as I've s.

I talked about before, usually the
tenant upfit does not take as long

as some of the, the permitting
for the site and other things.

And then once we get the permit
for it, we get in there and we

build the shell out relative to
whatever the tenant might need.

Uh, that, that a range of stuff.

It can be as simple as a bookstore, which
is just kind of a white box, not a lot

in there to a very complicated, uh, like
I said before, a pickleball location

where we had a mezzanine, all kinds of
courts, special flooring, et cetera.

Uh, we like to be involved in that
process throughout the process.

Um, it, it, we, we take that all into
account and the tenant's rent, and that

allows the tenants sometimes to get
in there without a lot of cash out of

their pocket where they don't have it,
especially if they're a startup business.

Paul Bennett: Yeah, we, we talked
about that in the prior episode.

One of the things that we do at
AAA storage, it makes us unique.

It's very typical in a tenant
finish out, um, type of environment.

Whether it's a a, a retail shopping
center or an office building or whatever,

the, the, the owner of the building
would actually provide an allowance.

For the tenant finish out.

The tenant then hires
their own architects.

Their own general contractor actually
pays for all that work and then

gets reimbursed by, uh, the amount
of the allowance from the landlord

once the space cos and is completed.

We do something really different at at
AAA in that we fund all of that cost.

We do all of the design work.

We actually do the construction
work, and we work that additional

cost into the tenant's lease.

So instead of having to write a hundred
or $200,000 check to move in their space.

To pay for their, their finish out.

We actually finance that for 'em and
embedded it in their lease, and it really

gives us a competitive advantage when
we're talking to the types of tenants that

typically use small bay industrial space.

Give everybody a, we will move off
this here in a second, but give

everybody a quick sort of summary.

Our typical space is
probably 4,000 square feet.

With a

Shawn Beichler: Yes, four
to 5,000 square feet.

Paul Bennett: of office in the, yeah.

Uh, talk.

Just talk through that.

That's, that.

The pickleball stuff is really fun.

We've got volleyball clubs,
we've got a gymnastics school.

We've got some really
interesting, uh, tenants in our,

in our small bay facilities.

Uh, but the typical tenant
is A-H-V-A-C contractor.

What does airspace look like?

Shawn Beichler: Yeah, it's just usually
typically four to 5,000 square feet,

um, restrooms or restroom, depending
on what, what their needs are.

Uh, may, may or may not have an office.

Uh, they usually have an upfront space
for, uh, people walking in the front door.

A lot of the space is used for
storage, for whatever they're using

on their, uh, jobs when they're
taking it out to different locations.

So a lot of storage area, so not,
not necessarily very complicated, uh,

locations to build out some plumbings.

Uh, more so electrical.

Uh, probably the biggest investment
costs are just the firewalls, HVAC and

electrical that go into these spaces.

Paul Bennett: Yeah.

Yeah, pretty, pretty
straightforward in most cases.

Um, I'm, we'll switch gears.

I want to talk for just a second.

Um, about the realities
of ground up development.

One of the reasons we focused on
development is that it offers.

Uh, what we believe are outsize risk
adjusted returns, the value creation

that occurs, the difference in the
value of, of showing what it takes

you to build a facility and what
the cash flow stream that facility

creates, uh, and how it's valued in the
capital markets is pretty significant.

Um, in, in the range that we
get yields at, at particularly

in small bay, around 10.5%

and, and all the financial
underwriting and all of the.

The, the underwriting that's done is
critical to that process, but I think one

of the things that, that people often miss
is that execution really drives returns.

At the end of the day, a lot of developers
fail, not because they got the market

wrong, but because they fail to execute.

Um, and if, if we blow a cost budget,
it affects our yield on cost, which

affects our return at the end of the day.

Um, and what we're gonna walk through now.

Uh, is just a little bit of, of having
you take people through what it looks

like to execute on these projects.

And, and actually hit the cost numbers,
hit the being on time and on budget

is what ultimately drives returns.

Um, and I wanna walk through, and some
of it will move through pretty quickly,

uh, because it's not as critical,
but I wanna walk through each phase

that you just talked about that you
really drive and control and, and give

everybody an idea of, of what it cost
in terms of time, uh, financial cost.

And, and how critical is to,
uh, to the timelines and the

cost budgets on the project.

The first area is zoning and
entitlements that permitting.

Uh, we bought the land, now we've
gotta get it zoned correctly.

Um, if, if that's a problem, in most
cases, in our case, it really isn't.

But you've also gotta go through the
design and permitting process and maybe

break down what the civil permits look
like and how complex they are versus

the building permits, which tend to
be a little more, uh, straightforward.

Shawn Beichler: Sure.

I would say that the most.

Complicated process in all of that.

And the design, development and
permitting is the civil phase of it.

That's the biggest thick of pages
in our, our, uh, repertoire towards

our drawing development documents.

Um, that probably takes the longest
going through the permitting process.

There's usually multiple jurisdictions
they've gotta go through.

Um, that process can take
anywhere from three months up to.

Uh, a lot longer than that.

We've had 'em take a year if we've got
platting involved, where it takes a,

uh, nine months to get a plat in place.

Very complicated project processes.

Um, it's helpful that we're using a
lot of local civil, civil engineers

and our local GC that really know
these areas and know that, that

know the people in these offices.

They have a little bit of an
advantage to know who to talk to

if they can't get something done.

Um, they, they tend to get an, uh, an
advantage when it comes to getting our

projects reviewed because they know
our designers and, and, and they've

worked with them over the years.

And so they give us a little
special treatment here and there.

Plus we know what we're getting into.

I mean, the biggest piece in any one
of these buckets that can delay you is

turning in something to a jurisdiction
and sitting there two months later and.

Not hearing anything and finally getting
up with them and they're like, oh,

you turned this in, kind of scenario.

So we're constantly on the phone
with, uh, fire marshals, uh, civil

engineer inspectors, et cetera.

Just making sure, did
you get our information?

Do you have any questions?

You know, and just making sure that
we're staying top of mind for them so

that we can get through the process.

Uh, processes, if you don't know what
you're doing, can drag on indefinitely.

Uh, and sometimes it's for piddly little
things that you didn't even know it

existed and, oh, I had to pay this.

Design fee that I never got emailed
on, but I, I, I wasn't, didn't know

I needed to go check the website to
see where, what was still outstanding.

So just a lot of processes in, in the
design development of that, uh, civil

being, the biggest piece of that.

We also have an architectural
piece is a, typically is a

lot, uh, easier to get through.

Most of the jurisdictions we deal
with, uh, are outside of major

city limits, sometimes out of etj.

Um, and, and those.

Uh, design processes for the,
the building permits sometimes

can happen as quick as a week.

Uh, now if you're in the middle of
Austin, that's a different story because

there's, there's different departments
and things you've gotta go through.

So a lot longer process.

But, uh, those are probably the two
biggest pieces with civil and, and

building design that, um, that we
deal with in a design development

for per phase and permitting.

Paul Bennett: Yeah, go back for our
listeners, go back real quick and

define what civil engineering is.

'cause I think a lot of
people probably don't know.

It's really the site plan,
the site layout, all the

grading, all the drainage talk.

Talk about that for just a second so
folks know what you're referring to.

Shawn Beichler: Yeah, I would, I would
say it's, it's really everything to do

with the horizontal work, so anything
to do with grading plans, drainage

plans, um, ponds that have to be there
for retention or detention ponds,

septic fields, if we're doing those.

Uh, tying into, uh, state roads where
we've gotta do road winding with tdot or,

or different dots that exist out there.

Um, landscaping plans if they're required.

Some, some jurisdictions that are more,
um, cumbersome through their process

require a complete sled of landscaping
plans where we're dealing with, uh,

a sticking a architect to help us
with that through the civil process.

But civil by far is the
most complicated of it.

Uh, it takes the most amount of time.

Um, that's why we like dealing with
the, the folks that we deal with,

that we've used over and over 'cause
they know how to, to cut corners

where we want to value engineer stuff.

We try to do a lot of surface
drainage and stuff where we don't

have to use a lot of underground
piping for, for cost and et cetera.

But, uh, civil by far is the,
the, the biggest process in that.

Paul Bennett: Yeah, and as you
said, it's the most complicated

and, uh, and, and can impact cost.

Probably the design could impact
cost, uh, more than anything.

You, you mentioned the design portion.

We typically use our own internal
architects and our own design

resources, but we use, as you
said, outside civil engineers.

Because their relationships in the local
jurisdiction are a real key to be able

to move a project through at pace without
getting, you know, any unnecessary

delays and their relationships with those
local folks really make a difference.

So we use outside civil engineers.

We don't have that
capability, uh, in house.

Okay, now you've got all your permits,
um, or at least you've got your civil

permits and you're ready to start grading.

Talk for a minute about the first
two steps in construction, which

are getting that site graded.

Uh, and, and then, um,
getting the shell built.

What's the value of, of the experience
we have and the sort of the repeatability

and the similarity of all the shells
that we build across all the projects

that we've done over all the years.

Talk about that whole front end
of the process for just a minute.

Shawn Beichler: Yeah, so for
the Shell buildings, I mean,

we use different size buildings
depending on how big the site is.

Uh, they, and they vary somewhat
in square footage, but for the

most part, a shell is a shell.

And we have on, uh, our, our GC has,
uh, crews that, uh, only deal with us,

uh, and, and just move from job to job.

And we will order a pre-engineered,
uh, warehouse building.

Once we get it in, they can erect it.

They've done it so many times.

Um, they, they put it up a lot faster than
most when we're bidding to outside GCs

and we tell 'em how fast we put up shells.

They're kind of shocked that we can do it
that fast, but it's because our internal

folks have been doing it for a long time.

Uh, I say internal, but it's internal
to our gc uh, relative to that.

Um, but just, uh, and I, I forgot
the other piece of that, that

you asked me the question on.

Paul Bennett: Yeah, just the, the shell
buildings, the repeatability of that.

Um, and, and obviously the first thing
that happens is we get the site graded.

The second thing that happens is we
get the slabs poured and, and maybe

some of the driveways, usually the
driveways are left until the end, so

we don't tear 'em up with trucks in
and off the, in and out of the site.

And then once you get the
pads built, obviously the old

buildings have been ordered.

They come in, they get erected.

Um, and that, that's really that sort
of first step in the construction.

Process.

Do the shells have to have a
separate certificate of occupancy?

Shawn Beichler: Typically they don't
because they're not gonna be occupied

until there's a user in there.

Uh, a lot of our shells require firewalls.

But we don't have to put up the
firewalls in the shells because we,

we, at that point in time, we may not
know what size the tenant's gonna be.

So we're kind of waiting to place
that wall based on what the tenant

needs in terms of square footage.

But as long as we don't occupy
'em, there's no certificate

of occupancy required.

And then af after we bring in the first
tenant and we build the first firewall,

uh, and, and that we will go and get a
CO for them and that'll automatically,

uh, just generate into the shell and, uh,
into a permanent certificate of occupancy.

Paul Bennett: Okay.

Okay.

So the, the, the next step, now that
you've got the site graded, you've got

the pads down, you've got the building,
the first set of buildings erected.

Uh, the next, the next phase is
really that custom tenant finish out.

Um, in some cases, uh, we have a
project that we talked about on

last episode, uh, located at f on
FM 34 0 5 in Georgetown, Texas.

We had about 70% of that site
pre-lease, uh, before you

actually got the shelves finished.

It's not always the case, but it's
certainly something we try to do.

But, but at that point,
the shells finished.

Give us a real example.

Um, and you can use
the tenant name or not.

It, I don't think it really matters,
but that, that, that came to us

with a, a special set of needs.

And because we, we start with a
cold, dark shell, we've got a lot

of flexibility to meet those needs,
which allows us to attract tennis.

Can you give us an example that may
be an unfair question off the hip,

but can you give us a, an example of
a tenant, um, that had some unique

needs that we were able to meet?

Shawn Beichler: Yes, sure.

So in this particular case, uh,
at that location, we had one

tenant that was a gymnastics.

Um, uh.

Use and we involved, uh, this lady
early enough in the process that she

actually wanted a, uh, depressed floor
for an area because of the jumping

and, and, and the padding and stuff
that she wanted to put in there.

So we actually had her signed up early
and were able to invest, uh, uh, depressed

slab, or part of it, I should say, when
we were pouring the initial slab so we

didn't have to come back and cut it out.

Lower it waste money to do that.

We just had her involved up front and so
she had some special needs relative to

a, you know, like a three foot deep slab
that was sunken, uh, in parts of the area

that, uh, a lot of special needs with
regards to, uh, HVAC, just based on the

number of people in there and the, uh,
all of the activity that's going on that

required a little bit more of a load.

Um, and then just some special flooring
that, uh, the flooring in itself

itself wasn't that special, but.

The lead time for the
flooring was extremely long.

So we had researched this stuff up front
and told her that, you know, it was gonna

take us this long to get her project
finished because we couldn't get the

flooring any faster than, and this was a
specific type of flooring that she wanted.

She didn't wanna use anything
else, so she understood that.

But, uh, just some of the specifics
that would go onto a one tenant, I mean,

every tenant has their own special needs.

Um, most of them aren't that cumbersome
when it comes to, you know, depressed

slabs and xray HVC and stuff, but.

That, that was probably a
good example to point out.

Paul Bennett: Yeah,
that is a good example.

And in, in that example, um, had
we, you know, had we not had that

tenant pre-lease, we would've had to
go in and cut the slab, dig it out.

Uh, it would've, it would've driven
significant additional costs.

Um, and, and I can think of another one.

I think we have a tenant right now, I
don't know if they're in yet or not,

that is a commercial kitchen operation.

Um, and needed APE had some
special power needs in terms of the

three-phase power that they needed.

So one of the things that our, our
approach, your approach really does

provide some flexibility that broadens
the base of tenants that we can attract.

Um, and, um, do, do you think.

When we co-design their space and we can
customize it, at the level that we do.

This is kind of outta your realm, but do
you think it creates a, a, a more, uh,

sticky relationship with that tenant?

I mean, I, I would think your, your
gymnastic school example would be pretty

hard for her to move somewhere else.

Shawn Beichler: Yeah, I think what
it does is, one, it gives you more

interaction with the tenants you're
getting, you're drawing yourself

into a closer relationship with them.

Two, they have a part in
the design, so they own it.

So they, they're, they're
really into the ownership of it.

Um, I think it's a lot harder to walk away
from something that you've helped create.

Um, and three to your point is you
can't go down the street as in this

particular case of this, um, young lady
with the, uh, gymnastics area and, and

the next warehouse down the street's
not gonna have a depressed slab.

So you we're, she's and we
are trying, creating something

there that it, it helps us.

Keep them invested in the area that we are
in this particular shell, um, and makes

it difficult for them to move anywhere
else, especially the more customization

that, that they have done in the space.

Paul Bennett: Yeah, the, yeah, for sure.

Obviously the tenants that have
very basic spaces, that same dynamic

doesn't necessarily apply in all
cases, but the very specialized spaces.

Um, it, it, it certainly does talk for
just a minute and as I, I said in the

prior episode, and we've talked a little
bit about today, um, pre-lease, it is

certainly something that we try to do,
but it creates some real challenges

for you on the construction side.

Talk for a minute, uh, about, um.

What happens for you guys?

Um, on the construction side when
we have a tenant and a committed

writ commit commencement date?

Um, just how does that not change
your process, but how does it focus

your process when you're trying to
get that build out done for a tenant?

Shawn Beichler: Sure.

I mean, in, in that particular case,
we like to see pre-leasing done as,

as soon as we can of T minus opening.

Uh, it just helps us to get them
involved earlier in the process.

Less changes that have to be
done if, if there's some special.

Element that they want to have
that wasn't in the original

shell, uh, from that perspective.

Um, and then, uh,

most of those tenants though,
do not plan ahead that far.

Um, most of them are looking
for a space immediately.

They need to get into
it as quick as they can.

We have a very frank conversation with
them, depending on what jurisdiction

we're, we're in with our leasing agent
and, uh, our tenant upfit, uh, gc and, uh.

Myself.

And we have a conversation that
says, look, we know in this

jurisdiction it's gonna take us x
amount of time to get through the

permitting, so we gotta include that.

And then after it's permitted, we've
gotta have at a minimum this amount

of time to get it built for you.

Uh, and obviously the more, uh,
customized it is typically the

longer it takes to build, but we
pride ourselves in, in cranking

these things out as quick as we can.

So we're very involved with the
pre-leasing side, just making

sure that we're not setting
dates that are too quick.

That we know that when we sign
up them up for a lease, that

we can't get it done that fast.

So we're being realistic
for them up front.

It helps, helps set the expectation
for when we get can get done.

And then there's always a piece that comes
through the permitting process that, um,

you can involve hiccups now and then where
an inspector will come back and say, I

want something specific for this tenant,
depending on what, what the tenant is.

So we just have to adjust as we see
those things coming down the line.

Paul Bennett: Yeah, you
pointed out something that

I've really failed to mention.

There's a real coordination that occurs.

Uh, between Kathy Bayless, who's our
director of Property Management for our

small Bay Industrial Parks, yourself as
the head of construction and development.

And, and, and the gentleman who
heads up the TI crew that actually

goes in and does that building.

And the three of you really work together
with a tenant, uh, to make sure that

the tenant's needs are heard and, and
reflected in the design, but also that we

set reasonable expectations and deliver
on time and on budget for our tenants.

That's a a, a really good point.

Um, as we kind of transition, I've got a
few more questions for you, Sean, but I

wanna point out for our listeners that,
um, our strategy, um, is really to provide

as much flexibility as we can in order
to drive the best result and best return.

So we build shells, which gives us
flexibility in terms of the amount of

space, uh, that we can offer a tenant.

Um, and, and we finish it out
as we sign leases or as we

have, uh, pre space, pre-leased.

And then secondly, our ability to really
customize the interior of that space to

match a specific tenant's need, whether
it be a very complex volleyball or, or

pickleball facility, or something as
simple as a space for an HVAC contractor.

Um.

We've talked about our experience,
how we do something that's very

repeatable, therefore very predictable.

How we try to build in flexibility
to the process to maximize our

ability to attract tenants.

Um, those are all things
that, that we've developed.

Sean, you've developed
over a number of years.

What do you see first time developers
or less experienced teams get

wrong in this whole process?

Shawn Beichler: Yeah, I would say whether
or not it's getting it wrong or just a

lack of experience maybe comes with that.

I mean, there's, when you're going
through the, probably the, as I said

before, say before the longest process
is the, uh, permitting process of design

development per permitting process,
just to get through the permits.

Um.

Many first time investors
don't understand, you know,

codes and how that relates.

Uh, or they'll have an engineer or
an architect that they've, maybe

they've used for other projects.

But, uh, especially with architects,
uh, if you get out there and you

have a architect that likes to design
the Grand Taj Mahal, um, we don't

see that in storage or warehouses.

And so it's, it's really making
sure that they're not adding

too many bells and whistles to
something that's a simple product.

That that then, and in turn, jacks
the price up for whatever the cost per

square foot is, when you really don't
need all those extra bells and whistles.

Same with the engineering.

We see a lot of engineers out
there, first time engineers or,

or first time developers that
are working with engineers that.

Move a lot of their drainage underground
with pipes and catch basins and whatnot,

and just add to the cost of the project
when you really don't need to do that.

So I would say that the biggest two
pieces are probably making sure you

understand the development process
relative to the jurisdictions that

you've gotta go through, uh, and making
sure your architects and, and civil

engineers know that you, you're really
looking for a cost effective, value

added project that doesn't break the
bank, but still gets you through the

process and you're able to build it.

Paul Bennett: Yeah, it's good.

Managing cost from a design and
execution standpoint is a critical

component of producing the kind
of yield on cost and therefore the

returns that we are really after.

Um, last question for you.

We've been at this for 30 years and we've
done it for 30 years in essentially the

same markets, really Florida, primarily
Texas, Florida, and the Carolinas.

What does that experience in those
specific markets translate to in

practical terms for our investors?

What advantages do we have because of our
experience and because that experience

has really been focused in the same
geography over a long period of time.

Shawn Beichler: Yeah, I would say
that experience leads us to, uh,

a couple things, time and money.

Um, typically we know these jurisdictions
that we're in, we know most of the

inspectors that are working these
things, uh, both for the plan review

and for the, uh, field inspections.

Uh, our GC knows them intimately.

Um, our subcontractors know them
intimately so they, they know what's gonna

be required in certain jurisdictions.

Uh, the, the 30 years of INV is
just invaluable when it comes to,

uh, and then any of that saving
time yields to saving money.

'cause you're getting done faster
and you're getting open faster and

you're getting the lease up faster.

So, uh, the, the faster that you can get
projects to opening, the quicker that

you're able to put them in an operational
MO mode and, uh, bring in some money.

Paul Bennett: Yeah.

Super.

Sean, great job.

I think the thing that we wanna draw
out for listeners today, um, as much

as anything else, and, and I'm sure
there are other folks out there,

uh, that are similar to, to, um,
to, to us, that do a, a great job.

So I don't ever think that we're
the only ones in the world.

To figure this out.

But when you're investing in a, in a
development oriented fund or a fund

that has a development aspect to the
investment opportunity, I think it's

important for people to understand it's
different than buying existing assets.

When you're buying an existing asset,
you're, you're looking at the market

and, and, and how that asset's performing
and what supply and demand looks like.

When you're invested in development,
you add a whole different layer,

which is the ability to execute.

Um, and there are so many sponsors out
there who are really capital allocators.

They really aren't
experienced in development.

They partner with development developers
and, and fund a development, but they

really don't have the internal ability
to manage and control the process.

Uh, and that can be a rep, a, a
recipe for, for disaster because

in a development investment, it's
all about your ability to execute.

And I think one of the things that
we're very proud of is that we've,

we've over 30 sub years, uh, we think
we execute as, as well as anybody out

there in terms of delivering on time
and on budget, uh, the projects that

our investors have, have invested in.

Um, if you're gonna, if you're
looking at a development fund, I

think there's some things that you
want to explore with the sponsor.

Uh, who, who, that you're
considered investing in.

One of 'em is how long have
they been in development?

Um, you know, how well
do they know the market?

Um, who is their construction partner,
uh, and how long have they been working

with that sponsor or development?

I think really understanding,
um, the ability to execute in a

development project is critical to
the end result and the end returns.

Um, you know.

Again, a little bit of a self-serving
comment, but I think we've

built the ability to execute.

Sean is the leader of that execution in
our organization, does a phenomenal job.

Um, and, uh, you can, uh, if you
haven't listened to the prior episode

where we kind of broke down the
investment side of this equation, uh,

I gave an example of a project, uh,
I mentioned it earlier, an FM 34 0 5.

There's been a hugely successful
project in Fund One, and Shawn's

ability to execute was really what
drove the success in that project.

Would think a couple things as we close
out here, number one, if, if you've

enjoyed this, if it's been informative, we
encourage you to subscribe to our podcast.

Uh, we've got, I think 30 or 35, uh,
episodes at this point, so you can even

dig back and, and pick up on some of the
things we've talked about and, and, uh.

Um, in prior episodes, I would
encourage you to visit our website,

which is a, a storage investments.com.

Go to the, uh, information tab,
uh, and, and there's an opportunity

there to, to download a guide to
Flex Industrial Investment, uh, or

small Bay Industrial Investment.

Uh, and it'll give you a little bit more
information than we were able to cover,

uh, in this, uh, in this podcast today.

And if you know an accredit
investor who's looking.

For an opportunity to invest in
Small Bay Industrial, uh, we would

encourage you to send them by way.

Uh, we, we'd love to, we love to
meet new people and we love to

share what we're doing, uh, with,
with people that we hadn't had an

opportunity to talk with before.

So really appreciate, uh,
Sean, you being with us today.

Until next time.

Shawn Beichler: Thank you.