Eric Gilbert, Principal, Scott + Reid General Contractors
Eric Gilbert, principal of Scott + Reid General Contractors, talked to Invest: about the ongoing challenges in the real estate sector due to increased interest rates and capital funding constraints. He discussed how he and the Scott + Reid team are dedicated to delivering tailored solutions, nurturing relationships, and elevating branded environments to foster growth in today’s market.
What trends are you seeing in the current state of the market?
I commented in my interview in 2023 that we were forecasting and making adjustments for 2024. Increased interest rates and declining starts have impacted our current work and backlog. Are we going to put up 2023 numbers this year now, but we are not that far off, and the year is not over.
We have been through these cycles before so we have readied ourselves and have been transparent with our younger employees of what this year could look like. We understand the current market conditions and underwrite all potential opportunities closely to make sure they are the right fit and will have positive returns for our company. Not every deal is a fit for our platform. We are not going to be reactive in an extremely tight and competitive market.
We are sticking with our gameplan, and panic is not part of our gameplan. Instead, we are using this market as an opportunity to make wise investments in the talent of our team and strengthen our operations.
What were the most important highlights for Scott + Reid General Contractors in the past year?
This past year was our best year ever, and we were proud of that accomplishment. We knew that 2024 would be a bit of a challenge, but Scott + Reid has positioned itself well. We have leveraged this time to make investments in our people, our platforms, and our service lines, capitalizing on areas of the market that are growing. Over the last 10 years, we have expanded our service lines beyond commercial interiors. We have created a successful New Construction and Pre-Construction Division. We have offices in Houston and Tulsa Oklahoma that have established themselves as trusted market leaders. This growth has always been part of our corporate plan. As we encounter challenges this year, we are executing on the plan. Our expansion has allowed us to not only be seen as a leader in office interiors, but also expand our presence in healthcare, industrial, retail and mixed-use, banking / finance, and value office.
Our New Construction Division entered into an agreement with a major private equity group to build 30-plus retail restaurants a year from 2022. This has proven to be successful.
We are grateful for the relationships we have built over the last 30 years. These relationships have enabled us to weather the current market and entrusted us to serve our valued clients as we expand our footprint in a controlled manner that enables us to deliver the quality craftmanship our customers expect.
What challenges and opportunities have you identified in the North Texas real estate market and how are you navigating these?
There is pent-up demand because of the growth that North Texas is experiencing. There is so much opportunity in the mixed-use area in locations like The Colony, Little Elm, Princeton, and Prosper. Additionally, there is an ongoing repositioning of assets going on in Dallas to create the work-life-play balance. We have been doing that for years, and the uptown market has found its niche on how to create that. About 25 years ago, the synergies needed to have people live and work in the same area were foreign to the metroplex. With the redevelopment and the development of mixed-use, people are now working in the same area where they live, and they hold firm because they have all the amenities that they need.
While there is growth in North Texas, the financial market is having an impact. Money is not cheap which greatly impacts all business but most importantly commercial real estate. There is a tremendous amount of pressure on budgets and borrowing costs. Companies that are moving forward with construction projects are becoming more reliant on pre-construction pricing and building the project out on paper before they go vertical. We have a talented Preconstruction group that monitors the commodities market and effectively delivers price certainty to our clients that gives them real-time assurance that the cost of their projects will not creep up as they move forward.
A slowing private sector start has kept supply chain pressure manageable. An increase in public funded projects could create a disruption in availability and pricing. Other threats that can impact the commodities market are frequent natural disasters, trade conflicts, and geopolitical conflict. On top of this, limited labor availability is expected to persist for the long term.
So how do we navigate all of this? We have a 30-year history that positions us well. We know our markets. We know our people. We know our projects.
What technologies has Scott + Reid implemented to improve safety in construction?
In terms of safety, we have a tenured safety director who goes on-site and ensures that we handle our quality control appropriately and that the subcontractors we partner with are following the safety procedures. There are also a lot of Life360 cameras that project managers or superintendents wear that allow us to see a lot in real time. Additionally, the number of security cameras on project sites has eliminated a lot of questionable safety problems.
We have a good safety record, but this is construction, and things happen. Nevertheless, being organized and having the right leadership mitigates those risks. We have strong superintendents and project managers who lead their teams regarding safety protocols.
How do you expect the construction industry in North Texas to embrace an increasingly diverse workforce?
There has been an increased level of competition in our market as there are several new general contractors that have entered the North Texas market. That is partly due to migration where East and West Coast companies are relocating consistently, which has brought a swath of people down here. With that growth and more people arriving, we are seeing new talent coming in. That might not have the local feel it once had as we see more of a global talent base. That brings a completely different lens to the construction world.
When it comes to diversity in the workforce, we do not want to play catch-up. Our company looks a lot different today than it did 25 to 30 years ago. We take pride in the fact that we are a growing, privately held construction company that recognizes the importance of making changes to capture talent. We do not want everybody to be Eric Gilbert, but to be an individual who brings real talent to the table.
We have made prudent investments in our corporate platform and brought in some of the best talent with experience in multiple verticals, knowledge, and backgrounds. Proven leaders from global construction companies as well as Fortune 500, architecture, legal, electrical, esteemed universities. They have melded well with our current tenured talent. This diversification of our talent and our lines of business have put us in a position to capitalize on the areas of the market that are growing.
What is your outlook for both Scott + Reid General Contractors and for the North Texas economy in general?
Bullish. North Texas is a great region and Texas is a great state. We are pro-business, and the number of people who are expected to live here in the future is huge. We are blessed to be in North Texas and to pursue business here. I see nothing but tremendous upside regarding what this region will look like.
We have a 30-year history and a reputation for delivering high quality projects for our partners and we expect that to continue. We are investing heavily into our employees, brand, and platform. Scott + Reid will always continue to be privately held with the understanding that our clients are our shareholders. In my opinion you cannot be in our business and be effective if you must answer to a stock price. We always have and always will answer to our clients and pivot and serve as we see necessary to help them be successful.
