South Florida Business Journal Editor-in-Chief Mel Meléndez recently spoke with Stiles President Scott MacLaren for the latest segment of the Florida Business Minds podcast.
Sponsored by TECO Peoples Gas, the audio series features candid conversations with top business leaders from the South Florida, Tampa Bay, Orlando and Jacksonville regions.
MacLaren, who’s been with leading developer Stiles for nearly 25 years, is the latest South Florida executive to share key insights on their sector.
Click on the link above to access the free podcast, during which MacLaren chats about post-pandemic building challenges – including rising insurance rates – and what he considers the next big trends in real estate development.
The following is a brief excerpt from the conversation, edited for clarity and brevity:
Meléndez: As someone who’s been with Stiles for nearly 25 years, how have you seen the company evolve?
MacLaren: Clearly, a lot’s changed at our company over that time. And for those who don’t know everything that we do, we are a full-service developer. And that means that we wear a number of hats in the typical vertical stack of developer responsibilities. So we invest through development and we invest through the acquisition of real estate. We invest our capital and our partners’ capital in those deals. And we focus on three main product types: office, multifamily and retail. And on the other side of the business, we provide services to both to our own properties that we develop and acquire, and also to the marketplace. Those services include construction, property management, architecture, and retail-related leasing and brokerage. And as I think back on our 25 years, we’re actually smaller today than we were 25 years ago. So, from a people perspective, we’re actually a little smaller. But we’ve found ourselves involved in more product types and grown from that suburban office developer into now doing office, multifamily and retail. And that’s been an incredibly important diversification for us.
Meléndez: The global pandemic packed a wallop for most industries, including real estate. So how’s business post-pandemic?
MacLaren: It’s really interesting to kind of put yourself back into that period of time, right? Because [Covid] wasn’t that long ago. But … you’ve got to simply say “Thank God for the good local and state leadership who kept our job sites open and thousands of employees throughout this region working. I remember [everyone], as a company and as an industry, pulling together to keep our job sites open, focus on safety, focus on processes. And we all know what everybody went through. It was really a scary time. But now you understand why there was such a supply/demand imbalance and why the feds had to go to work and start making the [interest rate] hikes they had to make in such a historically quick period of time.
Meléndez: Right now we’re seeing an explosion of apartment construction, a demand for industrial spaces and an office market a little bit in flux as companies try to figure out their workspace needs in a hybrid world. So, what do you see as the next big trend in real estate development?
MacLaren: The biggest issue we’re facing now is this quick hike in insurance rates. In Florida, I’m very scared that our insurance crisis, which has reached that [crisis] level right now, will work against us and negate all the good things that we have going for us now. It is at that level. It doesn’t mean we’re not going to find ways to get deals done. We will. But they’re going to be a little different. They might be less high-rise and more suburban or otherwise. But as far as the next big trends, retail kind of flies under the radar and retail really took a hit during Covid, and that weeded out some of the players. So, I would watch the retail space. I thing, that’s going to be a place that capital will be chasing. I think even institutional capital is coming back and looking for retail. And on the front end of deals, you have plenty of people who are willing to invest and provide equity to retail because they’re smaller and can get financed. Importantly, banks are lending on good retail and specifically grocery-anchored retail. So that’s one that I would definitely say we’re going to continue to stay focused on along with delivering multifamily housing. Again, it might be a little different. It’s certainly going to be a lot more challenging than it was. But we’re big believers that more housing is what creates affordability. There’s all sorts of debates about how to create affordability. But, simply said: The more you build, the more affordable it’s going to be. And that’s a huge challenge facing our industry right now.
Tune into the Florida Business Minds episode above for the full conversation with MacLaren. Then, find more Florida Business Minds podcasts here.