From Design to Operations: Why Commercial Real Estate Projects Fail Before They Open

Introduction to Nolan Austin and Rovo Industries

Drew: Welcome back to the Peak Property Performance Podcast. I am your co-host, Drew Hall. Welcome back, everybody. Today's episode is going to be themed around the following, from design to operations, why commercial real estate projects fail before they open. Before we get started, let me just remind our listeners to like, subscribe, share the podcast. This is how we are spreading the word on the PPP movement and how we're changing the industry. So please take a moment just to do that. And importantly as well, if you think you would provide value here as a guest, then we welcome CRE thought leaders from all stages, ownership and operation, just reach out to us via email or LinkedIn. And we would love to have that conversation with you and potentially get you on the podcast because we enjoy these conversations. We find that they're really beneficial and we're getting great feedback from the audience that it's helping them as well. So without further ado, it's not a one man show. Let me first welcome our co-host, Bill Douglas. Bill, welcome.

Bill: Thanks, Drew. Always a pleasure to be here, even though here is virtual. Today I'm going to introduce you to Nolan Austin. And before I read his credentials, I'll actually let Nolan say hello.

Nolan Austin: Hello, everybody. Thanks for having me. Nolan Austin is the president of Rovo Industries Group. It comes from a unique background. It's construction, manufacturing and technology. So I think that's unique and is now focused on rethinking how buildings are actually designed and built. His work centers on bringing a more system-driven, scalable approach to construction, particularly in multi-tenant and multi-family environments. Most operational problems in real estate don't start after a building opens. They're created during design and construction when systems are siloed, requirements aren't aligned and no one is thinking about how a building will actually operate. That problem doesn't exist, does it? This conversation is about how better upfront decisions lead to better long-term performance. So again, Nolan, welcome to the show. Happy to have you.

Nolan Austin: Thank you so much for having me. I look forward to the conversation today. Yeah.

Challenges in CRE: Lack of Integrated Data Models

Drew: All right. Well, Nolan, let's start with, I mean, I guess you could argue there's a few roots of the problem, but certainly one that is easy to argue is the whole notion of construction without an all-encompassing data model. This idea of isolated phases rather than a continuous data system for the property. So from your experience, when you look at how projects are designed and built today, where would you say that the data actually breaks between phases?

Nolan Austin: Yeah, it's a remarkable to me that we live in this digital age and there is such a siloed approach between the different dichotomy of people throughout the entire process, right? When you look at the pre-construction process, you know, we go, hey, we found this piece of land. Now, you know, what are we going to do with it? Right. You know, we got to go through the feasibility analysis of that process. So you hire an architect, you pay them, you know, sometimes hundreds of thousands of dollars, sometimes millions of dollars to design a concept of the building design, or may not even be the final design. And then, you know, you guys spend hours and time and resources with the civil engineers and all these different resources. And you got to kind of go back and forth with the city municipalities, depending on the municipality governance from a zoning standpoint, right? And it's this very siloed approach, and it's a very expensive, timely process. And you spend all this time and money just to find out if the job is even possible, right? And it may not even be possible, right? And then you take it from the step further is, okay, now I go from pre-construction into, you know, the development phase, and then in turn into the construction phase, right? And, you know, you're going to be working with, you know, manufacturers and suppliers for the building system, right? And every single stage, there is a generally a different piece of software, or a different, you know, data, you know, silo that is actually being leveraged to do that, right? So there's really no handoff between each of these users. So it's, you know, as you can imagine, there's constant chain news and ad news and changes that take place throughout the course of the project. And so you're kind of starting over at every stage, right? It's this, you know, you run, you sprint to get to the, you know, to this next step. But then all of a sudden, oh, something changes, there's a, oh, we didn't know about this zoning requirement or this, you know, limitation that was there that we didn't know about at the front end of the project, right? So then you got to kind of start the process over. And so it's just amazing to me that that is how we generally operate most construction projects from a ground up perspective.

Drew: Yeah, that's good. What do you think is the reason or I mean, maybe there's a plethora of reasons at this point why there's no persistent data model that carries, you know, all the way from that beginning through that from that concept all the way through operations, what do you think are the big hurdles to having an overarching and persistent data model?

Cultural and Technological Barriers in Construction

Nolan Austin: Yeah, I think it's, you know, one part of it is culture. The other part of this is lack of cohesiveness from a technology standpoint. I mean, I think we've kind of got this way that this is the way it's always been done. Right. And so they just kind of continue with that. There's some middle, like very mighty process improvements that take place. So obviously, with the advent of AI, that's, you know, you know, starting to make a little bit of a shift, but it's not as a big as a shift as you might think. Right. There's still very disparate and siloed between all the different systems. So it's a lack of, you know, being able to have a single source system or at least a kind of like an umbrella system, so to speak, that kind of like overlays all of this. And that's so that we haven't really seen that yet. And that's one of the things that we're trying to change within Robo.

Drew: Yeah, it definitely takes a collaboration. And I mean, I always use that. I feel like I always come back to that word overarching, just kind of acknowledging that this is this is a life cycle. This is a living it's almost like a living being, this property. And it has an identity that starts with, like you said, it starts with a piece of land and then it becomes completely occupied with people, of course. But for the purpose of this conversation with systems that are generating data, et cetera, et cetera. So, you know, in the same way that starting out with we use the word architecture, you know, you're hiring architecture teams to do a thing. You wouldn't say, well, we're going to hire 15 different architecture teams and each one is going to do their thing. You know, that's absurd. So in a sense, that's the same thing that is being done on the data side of the house. So it's just not that overarching. Can you think of an actual example or like a project where you've seen this yourself, where you've seen this lack of data governance, but data consistency across, especially if it's across multiple systems where it wreaks havoc and maybe even causes some extra work to have to be done?

Nolan Austin: Yeah, I mean, I kind of go back to kind of my some of my early days or at least in my my second go around in construction. I grew up in construction with my dad, right, just helping him run his business. But then when it came time to start operate, you know, my business. Right. So I started out as a custom home builder and remodeling company. And, you know, one of the frustrations that I dealt with in terms of like when I was communicating to, say, a drafter to draw, you know, this house. Right. I would give them, you know, very specific practices. I give them specifics of what I was looking for. And I found it actually easier and more time effective and even cost effective for me to just go draw, sit down and draw the house and make the changes myself, because I felt like all I was doing was like getting multiple revisions from, you know, these drafters and architects and engineers. And and honestly, it was like the amount of time spent in just communicating the changes, the initial request, plus the changes. I could have just drawn it and made those changes myself or gotten it a lot further along, just doing that initial work myself. And so I think that's a fundamental shift that needs to take, you know, take changes. You've got to be able to, you know, go, you know, what we're trying to do is, you know, use an agentic solution so that you're taking, you know, taking an input of very specific questions of what you're trying to build, what's that location, what is the project, what type of project is, what type of construction it is. Right. And then use an AI model to at least generalize that initial concept and then, you know, take it and use that as a single source solution to be able to allow the users that come in and refine it and provide their touch to that project in a single source system versus what is the exact opposite of today, where everybody is kind of like coming up with their own version and they're kind of meeting at the end. Right. And that needs to be completely flipped on its head. And so I've experienced that through it through multiple occasions in my career. But I look at that as kind of that first, you know, first example of many that I've dealt with.

Bill: Well, no, I've been nodding my head because I'm itching to say something. But you two are on a roll. And I agreed with everything you said. Like owners hire building architects, right? Then they hire engineers and then they hire GCs and then they hire operators. But nobody owns the digital layer of the building. I mean, they're not hiring a digital architect. They're not hiring a digital engineer. They're not hiring digital operators. And I mean, why do you think owners still don't assign responsibility for this digital infrastructure early in a project? Why is it left till late in the project when another team has to deal with a problem that they didn't know was coming and they're not skilled to do?

Nolan Austin: I think it's really a simple two things. It's a lack of availability from a technology standpoint. And culturally, they're not aware of a better way. Right. Unless you're a more progressive company, there are some, but very, very, very few that are thinking in the means of like, how do we create this? You know, I call it the digital.

Nolan Austin: Track that can, you know, continues throughout the course of a project, right? That really doesn't really exist in today's world. You've got a different system for construction management, a different system for civil engineering, a different system for construction design, and you got additive systems that come in from the BIM modeling standpoint. So you've got to slowly merge all this stuff through a lot of very manual processes from a technology standpoint, and these are what is the best available technologies in today's world, and it just hasn't quite caught up.

Nolan Austin: Now there's certainly a lot of companies that are doing bits and parts of things from an AI standpoint. I haven't seen one yet that's really stands out as like a true up and coming leader. I think it's still siloed in the standpoint of like, you know, Hey, we're, you know, I've got this new AI side that really focused on the civil side of it, I got this new AI side that really working on the building side of it. Oh, they're really got this new AI side that's focused on the project management side. But at the end of the day, there's still three different systems. I mean, that's better than maybe the 12 that we use now, but it's still a different language, it's a different technology, and they're not really communicating with each other.

Nolan Austin: So until we get to that cohesive environment, I don't think there's a real, I don't think there's a single bullet solution, so to speak. Well, at the risk of being overly redundant, I mean, we talk about it a lot on the show, but I know you know this, but I'll say it anyway, we talk a lot about AI, like you've brought it up several times and I led off with digital, but data is part of that digital and without data, AI is useless. You really can't do anything if you don't have the data. And the core of that starts with digital infrastructure control. Like if you don't digitally design a network system or networks and systems, then who knows where the data is? We talk about that problem all the time.

Bill: But let's, let's go back half a step. What typically happens when systems and networks are decided late in the game, like right before go live? I mean, Drew and I keep a list of things that we see clients or prospects do that are avoidable nightmares, we call them, but I don't want to give you any of those, I want you to share a story when that was all avoidable, that could have been dealt with early and saved a ton of money, a ton of headache, and maybe even a ton of time on the TCO.

Modular Construction: Benefits and Pitfalls

Nolan Austin: Yeah. I mean, here's a, here's another good story. So, when I pivoted from being a custom home builder to working in the modular offsite building. So we were ordering building systems through modular manufacturers, various modular manufacturers, and I would, you know, I was, I'm a very systems and documentation is very important, right. And following that documentation to the letter throughout that process. I always had to kind of take ownership of that. What I found was funny is, okay, now I'm ordering this house for say, from this modular manufacturer. And lo and behold, when the house shows up, it doesn't even match their own documentation. I'm like, this is a manufacturing center. Like how has this happened?

Nolan Austin: I mean, the whole idea of working with the modular offsite industry is that you get a repeatable process. And even from like one house to the next house, like their practices wouldn't even follow their own standard procedures. It was like, okay, I think they're like, they're looking at these shop drawings and they're just kind of haphazardly putting it together. Like they don't have a standard way of doing this. And then they weren't even following the documentation that they in turn gave to me from an engineer, an engineer documentation standpoint. You know, this is insane, right? Because, you know, we're, when you're doing a modular offsite building, okay, you're setting up to say a foundation, like it's not, it's 60 foot, you know, let's say you've got a 60 foot house. That's 60 foot on the nose. It's not 60 foot and a quarter. It's not 60 foot one, not 60 foot two. It's 60 feet.

Nolan Austin: And you know, if that house shows up over under that, because of their lack of controls from a manufacturing standpoint, that's a problem because now everything isn't going to line up from how we're going to secure that house, the foundation. So, you know, you're making in-place upgrade, you know, in-place changes that should not ever happen in that space. And, you know, that's just, and that happens when you're doing a modular solution, or if you're doing a traditional to build standpoint, you know, you've got things that you got to adjust it on the field. But again, if all of that was decided on the front end that we're going to follow this exact practice and we're going to hit the exact dimensions as we should, then you would never run into that, but that doesn't, that generally doesn't, there's always something that happens throughout the course of a project where if that always leads to that. Again, there's no digital ownership throughout the process.

Drew: That sounds like a very expensive problem to have your wall not match your foundation. So exactly. Oh man. Yeah. And it's that garbage in garbage out concept, because if, if step B of the process results in no good, no bueno, then step next, the next, the next, next, no good, it just snowballs.

Version Control and Siloed Systems in CRE

Nolan Austin: Yeah. I think the biggest thing is version control, right? Because you've got multiple revisions and versions, right? And to me, there should always be one version, the live version, no other version, the live version, every other previous version that doesn't matter, it's a live version and that's not how it works because when you have all these siloed systems and processes that are happening within different groups, you know, everybody is fulfilling their role and they're handing it off to the next, you know, the next team in line and they may be operating on a completely different set of tools.

Drew: Well, yeah, definitely. What, what version got handed off? Was it, you know, version 15.1 or version 15.3? It should never be that. It should be one version and that still does not, does not take place yet today.

Bill: Absolutely. Yeah. Well, okay. Yeah. So in that spirit of siloed design leading to broken operations, how's this for a rhetorical question? How often do you see design decisions made with no consideration for how the building will actually be operated? I mean, we've, we've in a sense really touched on this, but it's really common, right?

Nolan Austin: Oh, every project almost. I mean, unless you have, I have a little bit unique perspective, right? Because I've been the builder, right. But I've also worked in technology. I've worked in manufacturing and I've worked in construction. I have half of my career, at least in construction. And you know, so I look at it from the standpoint of like, I know how this building is going to be put together. But the unfortunate thing is that not all architects, you know, architects don't have that, not always very rarely have that real world physics, you know, experience of how a building is actually assembled, right. They're just thinking of like, what's the appearance, what's the structural makeup of the building, right. They're not really getting into the nuances of like, how is this building actually going to be assembled? And there's, that's the disconnect is everybody is siloed from their approach of understanding the bigger picture.

Drew: Yeah. You know, I mean, right here, it, it reminds me of, this is something that we're on a Tuesday of the week and already this week, here's an example of something that we've seen in a commercial multi-tenant space where an existing tenant, long-term tenant is subleasing to another commercial tenant. And the questions that come up in your, so management is on these calls, right? The, the existing tenant is there and the new tenant is there and we're there kind of helping consult. And so questions come along about door access. Like, oh man, this sounds like we have our, there's actually a subsystem for this particular, whatever it is, 10,000 square feet in this mid-rise in Denver is what it is. And the question was, how do we do that as a sub tenant? How do we do that?

Drew: And so it was just this interesting banter with the longstanding tenant about what's in place also with the whole building in mind too, because the whole building uses the same system. So it reminds, the reason why this bubbles up to my mind is because this is a great example of where there's not a siloed design, new tenant steps in and says, I would love to be able to operate this intelligently. Is that possible? And the answer is yes. So long as, as there is, like you said, there's a, there's a version designed, the current version is boom. And here's how we're going to do this. Oh, well, can I manage the system remotely? Cause I'm never going to be there, but I'm the manager. The answer is yes. And here's how, and here's the documents to do it.

Drew: So it's really rewarding when that happens, but I will say that is not, that is not the majority of times that we see that happen, but it's nice because I do think that there's more of an awareness that there's a gap here and that there's more that can be experienced in the same way that this new tenant wouldn't come in and say, you know what, I think I'm going to run new HVAC here. I'm not even going to look up and see if there's existing HVAC in this 10,000 square foot. I'm going to assume it's not there. Let's bring in the sheet metal guys. Not 10, it's 5% of the building. It's not like they are 80% of the building. It's 5% of the building, right?

Digital Infrastructure as a CRE Asset

Drew: Yeah. So it's nice. It's nice when there is like this honoring of the digital infrastructure as a true asset. Not just to avoid the follies that we've just gone through, but also to ultimately drive revenue for ownership, right? I mean, that's where it's at. Ownership is in it for the investment side, for sure. So that just, it draws up in my mind because even though the silo designs leading to broken operations are in the majority, it does, it is refreshing when we see more kind of high level, longer term, full life cycle types of decisions being made and you watch it hand off from old tenant to, or, you know, longstanding tenant to subleasing type of situation and it can work. It can definitely work because processes work and it's not that hard. You just kind of have to have that bigger vision and see it as a true life cycle.

Bill: Well, the scale of construction, I guess, and get better outcomes, right? No one, this is warrior world in mind. The process, I'm a big process guy, has a shift from siloed steps to integrated systems. Do you agree with that? I siloed anything is bad. We talked about siloed data all the time, but you mentioned siloed steps and construction being off. Walls don't sit on a foundation. So what would a fully integrated process look like from concept to operations if it were built around data and systems instead of phases with multiple disparate?

Standardized Processes and AI in Construction

Nolan Austin: The common analogy I like to use, or the example I like to use, is we need to build buildings like we build cars. We need to have a somewhat standardized kit of parts. It's a little bit different in the sense that when you program a robot to put a door on or some part on in a car in a factory, it's doing the same job over and over again. It's the exact same size, same dimension, same movement, all of it's the same. In the world of construction, it needs to be a little bit more dynamic. You've got walls that are going to be two feet long, and walls are going to be 60 feet long, or whatever combination that is. You need to have a dynamic environment, but you also need, in order to drive that dynamic environment, you've got to be able to set those standards so that it also works for manufacturing, as we say, built for manufacturing, and designed for manufacturing.

Nolan Austin: That's kind of what we're trying to do with Robo. We're trying to create an environment that is a digital environment with an AI copilot that allows us to use that standard kit of parts to a wide variety of building construction. You've got enough flexibility to design and build most buildings that are out there. Whether you're building a single-family house with our solution, or a high rise, you've got the ability to apply that building methodology to a wide range of building construction. You're just kind of changing out the componentry on the fly, and then allowing that to be built from a manufacturing standpoint, with that digital contract that starts from the pre-construction phase and carries all the way through all of the engineering steps, through the manufacturing, and then into the construction and post-construction phase as well, of how you operate, build, and operate these buildings.

Drew: If an owner wanted to fix this problem today, I mean, you talked about a lot of fixes right there. What's the first decision they should make differently?

Ownership and Responsibility in Project Management

Nolan Austin: I think you've got to look at it from the standpoint of taking ownership. Somebody somewhere in the sphere of things, there has to be a top-line owner, from a people and process standpoint. Somebody has to take complete ownership of that, and they've got to be the tip of the spear. They've got to carry that through the entire process and take ownership of it so that as things are handed off between different people, even that in today's world, you don't really have an option to use a unified system with what we're trying to create with Frogo. But what you need to see is have somebody that can be the tip of the spear, like an owner rep, so to speak, that manages that and is following through that entire process to make sure that the standards are being set, the documentation matches from one user type to the next user type, whether it's an architect, engineer, the general contractor, the civil engineer, all the different economies of people. There has to be one person that controls that process. It can't be this handoff that just magically happens. Somebody has to take ownership of that.

Bill: Drew and I are both nodding our heads because the most successful client implementations, particularly on new builds, but not even new builds, a lot of times there's infusions when properties are refinanced or traded. The smoothest ones are when there was a strong owner's rep or equivalent. If there's a vertically integrated firm, it is just somebody who's taking command. But I like to use the analogy of my parents set rules for all three of us to get along when we were growing up and communicate and we had to do our chores. But if we ever disagreed, we had to go ask mom, she was the rule breaker. So every one of those firms that does well has a mom because there's no malice and forethought by these partners or vendors or employees or teams, but they're so myopically focused on their deliverable so they can get paid and move to the next job. But a lot of times the big picture gets lost. The continuity is lost, not to mention speed or cost, but continuity of the project. So that really wasn't a question. That was me rambling for a minute. So sorry about that.

Nolan Austin: All good.

Personal Insights and Closing Thoughts

Drew: Well, so Nolan, if you've heard any one of our podcasts, you know that what we like to do here toward the end is what we call the extra floor. So we always take our guests up to this extra floor of questions and answers. It's just a quick set of questions to help our listeners get to know the human side of the leader that we're interviewing here today to help to get to know you. So just gut level responses, short answers. It's not really a conversation. It's first thing that comes to your mind. So first question, what's the best piece of advice, career or life advice that you've received that comes to the top of your mind anyway?

Nolan Austin: You know, just stay humble. I think you gotta take things in stride. Don't let things distract you too much and stay focused on the end goal. For me, it's about building a legacy for me and my son and my family. That's really what I'm ultimately trying to do is like, how do we leave this place a better place than the one that we were born into? That's a mantra that I live by.

Drew: Wow. Love that. Well, what's one habit or practice that consistently makes you more effective?

Nolan Austin: I think time management is probably the most important thing. I value time more than I probably value anything at this point in my life. So, trying to be a little more intentional about where I spend my time and who I'm spending time with as well.

Drew: Yeah, that's a very good one. Last one. Are you an early bird or a night owl?

Nolan Austin: I would say probably more of a night owl. It kind of depends on the situation. I'm not opposed to, I've had plenty of times where I've had to get up at four o'clock in the morning to catch an early flight. And I've had late nights where I'm grinding through a project and I'm just trying to get things done. So it's wherever my time is truly needed and trying to be, but also trying to be present in my son's life as well.

Bill: You're talking to two men that completely agree with that, who have sons. So interesting that that's all of us here. So Nolan, how can our listeners contact you? Your contact info will be in the show notes, but tell them anyway, for the ones that aren't looking at a screen.

Nolan Austin: Yeah, I'm big on LinkedIn. So you're welcome to reach out to me through LinkedIn. I'm pretty easy to find Nolan Austin. Can't miss me. I have more of a face for radio, but you can't miss me in terms of when you find me. So my name is spelled A-U-S-A-N.

Drew: Awesome. Correct. Okay. Very nice. Well, Nolan, thank you so much for joining us today. And as always to our listeners, we thank you as well for joining us in just a quick reminder to follow, like, subscribe, and we'll see you on the next episode of Peak Property Performance. Thanks everyone.