This is Bloomberg Business Week with Carol Messer and Tim Stenebeck on Bloomberg Radio. I think this is really exciting. Cheryl McKissick Daniel joins us right now. She is president and chief executive officer at Makissik.
It is the.
Oldest minority owned professional design and construction firm in the US. It's, as Carol was saying before the breakup, family owned business for more than one hundred years. And I think it is incredibly interesting now, especially because of all the problems we're having regional banks, the jump in interest rates, the tightening of credit markets. So I'm very pleased to welcome Cheryl to the program. Thanks so much for joining us. Cheryl, Hi,
how you doing? We're doing I'll speak for both of us. Fantastic. I love it because we have a whole week ahead of us and I'm just getting settled in here. Let me get first your take on being the oldest minority owned business, the oldest minoritady know, design and construction business in the US, and a family owned business for one hundred years. How much does it mean to you? How important is that to you?
Wow?
I stand on the shoulders of four other generations, and so you know, I feel like I'm winning before I get started.
For them to navigate.
This country of ours, this great country of hours for five generations is.
An amazing thing.
And so I feel honored, I feel blessed, and I feel as though I have a mission to keep this company going, especially in New York City.
So how are you doing in that mission right now? How is business at Meckissick?
Business is booming.
New York just passed a three hundred and twenty two billion dollar budget and a lot of that is capital work throughout the state. And then of course we have a significantly large buzz for the City of New York, so there is plenty of work for Mechisic corporations are are working or have large capital programs. I think the only area where we're seeing some slippage is with our
developers with respect to residential and office space. I think the interest rates are affecting their ability to make these deals work. And then we also need to deal with our affordable housing. We need to get something in place where we can get some assistance from our government for affordable housing so we can make those projects work as well.
Cheryl take a step back let's go to office because we certainly are just trying to figure out if that's the next shoe to drop. And we've been speaking a lot about, you know, the nervousness that continue, certainly among the regional banks. They rallied a bunch of them today, But nonetheless there's still questions. So office space specifically, how would you describe it? And you guys really work within the state of New York.
Correct, we're in New York, We're in Philadelphia, Orlando, and down Nashville, and you know, office space right now has dwindled, as we know as a result of COVID. You know, if we just take my hometown Nashville, Tennessee, where Amazon just finished a beautiful, you know, mid rise building, there's nobody in it. People do not want to come to work the way they used to. Most people want to well, I wouldn't say most, but a lot.
Of people want to work remotely.
We in Nashville, we're trying to renovate or develop a building that my building, my grandfather built in nineteen twenty four. And I was just on the phone with a prominent developer on Saturday saying, okay, can we make it office space and the answer is absolutely not.
You can't get a loan from banks for office space.
For my understanding, a lot of the banks that are failing are the bank that you know, let money on you know, office space construction, and so you know, it is in a crisis right now, and you know, I don't see, uh.
And from what I can tell, how we're.
Going to recover with the office space without doing maybe some conversions. Yeah, we know, the conversions, Yeah, conversions. Housing is a big issue in New York. As we know, we need over eight hundred thousand units of affordable housing. Housing is an issue in most urban cities, and so you know, maybe that's the answer.
But a bunch of developers I talked with at Milkin last week, they said, how do you take those buildings that are in midtown old buildings like they're just not the idea of converting them into housing. It just doesn't make sense. You really need to knock them down. But then there's the problems and issues where the exteriors you know, are old and wonderful and nobody wants to mess them up. So it's it's complicated and converting isn't so easy, or you know, creating conversions.
Is this good news?
Form chistic?
I mean, can you guys do conversions or can you go to places where we knock down buildings and put up new ones?
Is this great news? We absolutely can.
I mean any construction project that's vertical, we are happy to participate it on in I can't say it's great news for the private industry because we still need our developers to be able to borrow money at a good interest rate, so the deal makes sense for them, and so that's a concern for our industry.
So how much has it slowed down? Like, does it is a crisis situation in terms of what you've seen slow down in terms of development? And what tier of the market are you talking? You know, is it top level top tier properties?
Is it like?
What is it?
So?
So at mchisick the majority of our work is with large institutions and government. So you work for the higher ed K through twelve.
You know, it's like the Columbia Business School right uptown.
Columbia Business School, Lehman College, hospitals, you know, Coney Allen, So those projects are moving along. You know, the MTA looks like you know, their their capital program is going to be whole.
And so that is the bulk of of mckiswick's work.
We're not really working for private developers building residential or office space. But I can only talk to you about what my colleagues are telling me that are in that area, and they're telling me that their projects are slipping out to the point that, you know, they're carrying staff in hopes that a project's gonna start in six months.
But what if it.
Doesn't, what if it gets you know, trashed completely because the interest rates are still a problem.
You know, their companies in New York who have.
Gone out of business in the last two months just around that issue.
Yeah, so they call staff.
You know you basically, I mean kissing you have the dream product mix. Then you want to be in hospitals, you want to be in universities, you want to be in you know, federal government projects because they get credit cards exactly. But your colleagues that are in uh, other sectors, they're not able to get loans, or if they are, the loans are just unaffordably expensive, is what you're saying.
Well, yes, right, And as a result, the builders for those developers, you know, what do they do with their staff because the way we went our work is by having confident staff to you know, implement you know, whatever project that we're going after. And you know, staff again is hard to find, so you can't let us a key staff person go. You have to hold onto them
in hopes that the project is going to start. And so I'm seeing that across the board with these construction firms that work for private developers that are in the office space or residential space.
Yeah, we've heard that a lot in terms of the labor market, that builders just don't have the people that they need.
As a result.
What is that?
Still is that still putting pressure on costs, the development costs and just unfortunately Shara only have about thirty forty seconds left.
Yeah, well development costs, everything's going up because the supply
chain is a problem. Still so still yes, still, yes, you know there are contractors who have contingencies just based on supply chain issues and the cost that might you know result as the you know, because you can't get switch gear or any other kind of product in a you know, reasonable amount of time, and as we know, time is money, and so you want to make sure, you know, you cover yourself if you have to wait on a supply chain, so yeah, those issues are still out there.
Wow yeah that listen. What a great vantage point and just very real in terms of what's going on and.
What a great company. I want to come over and check out the buildings you're putting up. It sounds awesome. I want to go to Nashville and see that building your grandfather put up.
Let's go on the road, Cheryl, come back soon.
We would love it.
Cheryl McKissick Daniels. She's president at McKissick, joining us via Zoom in New York City,