How Owners Use Technology and Operational Intelligence to Drive Asset Performance

Bill Douglas: Welcome to the Peak Property Performance podcast, powered by opticwise. Join hosts Bill Douglas and Drew hall as they explore how AI, data and digital infrastructures are transforming commercial real estate. If you're ready to unlock NOI future, proof your assets and lead with strategy, this show is for you. Let's get to today's episode. This episode is sponsored by opticwise, your partners in digital infrastructure and data strategy for commercial real estate. Your property is talking. Are you listening? Visit opticwise.com to learn more.

Bill Douglas: Foreign and welcome back to Peak Property Performance. Today's episode is operating a modern commercial real estate campus through data, infrastructure and visibility. Before I get into introducing our guest, Chad Stafford, I want to encourage everybody to like, follow, subscribe to this podcast. This is how we're getting the word out about changing this industry. If you know somebody that would be a great guest on the show, please tell them to reach out to me or Drew via LinkedIn or email. Or hit the Peak Property Performance website and just put in an application there. That's how we're getting such great guests to be on the show. So, Chad, say hello to everybody before I read your introduction.

Chad Stafford: Hi everybody. Pleasure to be here.

Bill Douglas: Chad Stafford is the president of Occidental Management. He and his team oversee a diverse portfolio of commercial real estate, including ownership of Esperia in Overland Park, Kansas, which I know firsthand is one of the largest mixed use corporate campuses in the country. So what makes this conversation particularly interesting is that operating a campus at that scale requires far more than traditional property management. It demands visibility into operations, operations, infrastructure, utilities, tenant experience and long term asset performance, as well as, I'm sure, investor management and some other nightmares we won't touch today. How's that, Chad? Today we'll discuss how owners are using data, digital infrastructure and operational intelligence to make better decision, modernize aging assets and create more value across their portfolios. Again, Chad, welcome to the show. I'm glad we're finally getting to make this happen. I know it's been a while.

Bill Douglas: Thanks for being pinched with me, Bill. We've had quite a bit of hurdles

Chad Stafford: and pitfalls to get through to get here, so I appreciate you hanging with me. I'm glad to be on.

Bill Douglas: Well, I know the market has brought challenges, but it's been an interesting ride there on campus for a while, given what the Royals were doing and everything like that. That's no secret. But I'm glad to see you. You survived all that and you're living to fight another, I would say day. But this is going to be decade So I tell our employees we like

Chad Stafford: basically giving them updates. We have quarterly team meetings and things like that. Talk about what's happening, where and when throughout the portfolio. And I said, What a long 40 years the last 5 years has been. Because it just feels like, you know, ever since, you know, we, in our infinite wisdom, we purchased the former Sprint headquarters campus in July, July 9th of 2019. And who knew that a short, what, seven months later you would be in a much different environment than what we had acquired the asset in. So it's been a challenge for sure.

Bill Douglas: Yeah, I didn't make this part of the topic, but you're welcome to go there if you want. It turned into a ghost town for a couple of years, didn't it?

Chad Stafford: It did, yeah. From probably mid, I mean. Yeah, really since the lockdown. I mean, mid, you know, March, April of 2020 through the end of 21. I mean it was eerie to be on, on campus and just walking through a place that right before that had an average daily attendance of almost 11,500 people every day. It was a small city, it is a small city, but it was a ghost town.

Bill Douglas: Well, the 11,000 was when it wasn't even full.

Chad Stafford: Like so that's right.

Bill Douglas: For our audience, there's, there's 4 million square feet, right? There's 15 parking decks roughly. There's a plant. So how big is the campus? How many buildings are there?

Chad Stafford: Sure, it's, it's, it. Look, it's 200 acres and we have 17 office buildings. The average square footage is a little over 200,000ft. We have 14 parking decks with about a thousand parking spaces per garage. We have our own power plant, we have our own warehouse. We have a 70,000 foot fitness center that's as I'm told, is the second largest corporate fitness center in America. Next. I think Microsoft's is larger or maybe it's Apple.

Chad Stafford: One of the tech companies has a bigger one, but 70,000ft on three stories with an elevated indoor track, basketball, pickleball, yoga, you name it. The campus is, it was built for a single user, obviously Sprint Corp, but it's just highly amenitized. And that's what we saw not only from the asset basis was this is something for everybody, indoor, outdoor, other places to work around campus, little nodes, cafeterias, little areas that you can gather as a team, not in your office if you wanted to go outside your office. Walking trails, it had ponds. And then the thing that we really liked about it was not only that asset, but then it came with about 40 acres actually 47 acres of developable land that is in the best demographic hard corner in Kansas City at 119th and all never been developed because the intent was never to develop it. And we looked at it and said, well, not only can we, you know, buy an asset that has good, you know, a good mix of tenants, and when we bought it, There were only 15 tenants, including Sprint. Today we have over 70. But we saw that one, the location, the structured parking, which is a big deal, the indoor outdoor spaces, conference center space on site, and then the development.

Chad Stafford: We said this is if we can get a hold of it, this, this will be, you know, a great long term asset notwithstanding. We no one could see that Covid was around the corner. But yeah, but yeah, 3, 3.8 million feet. It is a, it's a little city and it does, it takes a great team to work at. We probably have and Optiquise obviously is integral to that. As one of our in place vendors that's there every day, all day, you know, there's 75 people every day on that thing helping our tenants and making sure they have the best experience possible.

Bill Douglas: It is a beautiful little city in and of itself. There in Overland Park, I selfishly will say that that is one of the nicest gyms I ever get to visit. So when I do a campus visit there, I love it. I didn't know it was the second largest corporate, but it feels bigger than my home gym in Denver. Like, it's just nicer and it's always full. So a lot of people use it. Let's start out by talking about building operational visibility across a massive campus. So Asperia is very different than operating a typical office building.

Bill Douglas: I mean, you have other office buildings in your portfolio. But at the scale of Esperia, where does operational visibility become the most important?

Chad Stafford: It actually is one of the best selling points that we created since acquiring the campus. The first thing we did is we knew that to have a campus, if you think about it, you know, Troy Marquis, our CFO, his favorite thing is this is a 4 million foot skyscraper flipped on its side because there is a lot of interconnectivity. And with that and you have all this open spaces and people need to do different things with conference centers and technology and all this stuff. The first thing we did was when we got the team in place, we hired what I call the mayor of Esperia. We went out and found a customer tenant concierge that can help them with anything they want. When previous to us owning it, it Was, you know, this was Sprint Campus World Headquarters. And yeah, there were other tenants on there but they were basically like subleases and it was like Sprint at some point would maybe take the space back because they were going to, you know, continue to grow or something. And they did the merger with T Mobile we ended up with one, one large big tenant that's its own subset of, of demands and, and customer service requirements which is all good.

Chad Stafford: But then we said okay, now I don't think they realize what they had and, and maybe they did, they didn't utilize it. We certainly saw that if you can communicate to the, the market and to the existing tenants all of the things that we can do. I don't think any of them knew that the technology underneath that campus services the entire west coast. I mean it's an eight foot tube stuff full of fiber optics and you know this better than anyone Bill. The, the services that you can provide tenants. When I have it, when I do a leasing tour now. And Kathy Brown is our, our mayor and she helps all the tenants with everything they want to do from events to 5Ks to leasing conference space or renting conference space or using technology. When I deal with tenants and we're talking about all the things in campus.

Chad Stafford: The best thing is how would you like it if you or a, a 40, 50,000 square foot user. But we can, with your own firewall, set you up so your employees can work anywhere on campus. Like they're sitting at their desk, they can print, they can, it's secure. They can be outside, they can be at the Town Center Plaza having a cup of coffee at the Roastery, anything like that, just like they were there and that gives them, you know, it's a, it's a change of pace to change your location and it gives you, your employees a reason why they want to be here because you can you, the conveniences. I don't want to say live, work, play because we don't have apartments there yet. They're coming. But a versatile workplace that allows employees to kind of venture and change their scenery whenever they want but still have the technological advances. I mean that's, that's the amazing part.

Chad Stafford: And people are just like wait what I can. So if I, I'm up at the north end of campus and I'm going to go down to the fitness center and I'm going to, I'm going to go walk around the track and I can do everything that come at my desk. Absolutely. We didn't even know about it when we bought it until we got, got involved with it and then, and you guys obviously helped us with this was do you realize all the capabilities you have that you can do that no one else can do? And we created a whole separate business out of, you know, aside from just renting a standard landlord, I'm going to rent you square feet and then you can call AT&T. Now we already have the. The data centers there and the technology that we can do anything you want. And it's really a game changer in commercial real estate when you have that capability.

Bill Douglas: And for clarification to the audience, your tenants, employees can wander around the entire campus and be behind your tenant's firewall and your tenant's directory services, under your tenant identity management, et cetera, et cetera, et cetera, regardless of where they are physically. So you, you challenged with us to do that when you first engaged, and we said, yeah, we do it all the time. And then within three months you're like, yeah, that's what we wanted. And so you had the vision and we were delighted to do it with you. But you hinted at something there a second ago, and it was the digital infrastructure. So what I've enjoyed working the most with Occidental over the years with both you and Troy in leadership, is that you treat digital infrastructure like it's real infrastructure, like you made significant investments in the campus because to your credit, that digital infrastructure, there was fiber there, but nothing else. There was nothing on the ends of it. When Sprint and they did their merger, they took everything.

Bill Douglas: So there was bones but no joints and no brain. If you're looking for an analogy in the medical world, right, you had to pay for the joints and the brain to be put in and then to operate it as well. But many owners think about roads and roofs and parking lots and mechanical as infrastructure. How has your thinking evolved around digital infrastructure not just in the beginning, but where you are now and where you're going?

Chad Stafford: Yeah, and I will say, you know, in the beginning, it was kind of like light bulb on. This is amazing. We didn't know this. We didn't find this out during due diligence. We knew that about the fiber lines, obviously. And there's a lot of technology. We had no idea the capability of it while we were doing due diligence, once we got a hold of it and started working with you guys, and we started listening to tenants wants and needs and the employees, and obviously at that point is all about, you know, talent retention and recruitment. Well, if you have the best technology and you can tell Your employees or future employees.

Chad Stafford: You can do all this stuff here at our office in addition to all the other amenities. And that is a big win from, from a human resources and talent standpoint. From our side, it was kind of like, my gosh, where, where does, where, what's the limit? Where can we take this? And when you have that interconnectivity all over, all over campus and you know, DoD level security encryption on things and you can provide that as this is our standard and you've got companies that deal with, you know, not just a T mobile which is, obviously has some very sensitive things. But you know, there's a reason fiserv is creating a regional HQ here. There's a reason Hills, Pets, Nutrition move their entire headquarters to campus. And it's one is about the environment and all that stuff and that's critically important. But the ability to have the technology and the offerings that we've got from that perspective, from an employee standpoint, that just sets it completely apart. And you're right, I mean we had to install a new building automation system that tracks 51,000 data points at a given time.

Chad Stafford: I mean that thing is wired to the point where we know before a VAV box is going to shoot craps in a tenant space, it will sound the alarm, say, hey, this fan's not cooling or you know, this is not, it's not balanced correctly, you're going to have a problem and we can, we can get on top of it. So ultimately the great thing we learned about the technology and as you just mentioned, putting the brains in it and some of the joints is that it tells us before we have a real problem or maybe a more expensive problem, how to maintain and be a little bit more on the, on the preventative maintenance side of things so that we don't have, you know, a larger issue with a tenant. And ultimately that satisfaction ends up being why we, we've been able to attract the kind of tenancy we've got.

Bill Douglas: Well, we not only operate your digital infrastructure for you as your partner, but we collect all that data from all the operating technology platforms. And I can tell you, because we monitor all of those points, there's a lot more than 54,000. There's 54,000 points just in the BMS. Then you add everything else to it. There's a lot more than that because I can see exactly how many are there and whether it's red light or green light. And when it's a red light, it becomes an issue, of course. So how do you prioritize digital infrastructure investments going forward. Do you look at the value of the data? Do you just look at the value that the infrastructure is going to provide on services? Because I do know that the infrastructure investments you've made are paying for themselves based upon what tenants are paying you for them.

Bill Douglas: So how do you evaluate that going forward?

Chad Stafford: So I think one is as more and more tenants get used to that kind of environment, because a lot of times you'll have a tenant come in, they're used to being in a single building, right. And you've done this a million places too, where they're like, okay, where's your DMARC room? Okay, I'm going to pull this guy in and they're going to hook us up and boom, boom, boom. And they just need access. And we're like, no, no, no, that's not how this works. You, you have a point here and a point here and a point here. They can come in here, they have to get on our raceway. We have to have contracts signed with them to provide this. And by the way, everybody's already on campus.

Chad Stafford: So it's, it's not, it's not like we're reinventing the wheel with any of these, but just the, the switch from a tenant's perspective of I'm used to having to do this all on my own and bring in my own infrastructure to. It's already there. All I'm doing is renting it just like I would normal real estate. But then the scalable capabilities of it is what then really is exciting. And that's where I think, looking, looking forward, not only is it, yes, this is. It's a great infrastructure service that our tenants enjoy and utilize. And I think more and more, it used to be kind of a sell job, you know, when we first were doing this with you guys and kind of have to explain how it works and why. And people are like, I don't know.

Chad Stafford: And, you know, it guys can be fairly territorial sometimes. To now it's. We've. We've got enough bandwidth with users and people that rely on that backbone for so much, so much of their work on campus that it's not much of a sell at all really. It's just like we provide all this stuff and here's the guys that hook it up and here's where you got to go. And it's very. It's almost a seamless deal. The fact that we can get people fired up.

Chad Stafford: If someone came to me tomorrow and said, I got to have this space and I'm Critical infrastructure. I got to be up and running in seven days. With you guys on board, we can do it. And that's rare because a lot of people you're talking about, you know, time delays and 90 days to get in and all that. And we're like, we can have you fired up in seven days. And then that speed, especially in today's economy, if you can provide the space, provide the infrastructure, we got furniture all over the place. If we like, we can literally somebody could come to me and say I need space for a hundred people in a week. And I'm one of the few places that I could actually do that.

Bill Douglas: Well, you keep talking about the tenant, which I love because you're an owner operator, but I'm going to selfishly switch it back to the owner. And you Occidental took ownership of the digital infrastructure and made this stance that you're not going to let tenants disrupt that. So you don't have riser crowding, you don't have vendors pulling cable all over your facility. So you own the core infrastructure and your tenants rent it from you. Right. So that's a significant income, right. To pay for that asset right there. The tenant benefits from instant service.

Bill Douglas: And if a tenant, we've had this happen several times, they grow and they grow and they grow, they need to move across campus. The cross campus move is as quick as changing across connect. There's no cable pulling needed. There's. They might not even have to move their equipment. A lot of times depends on where they're hosting it, whether it's on the one of the floor IDF's or one of the data centers. But even if it was a 200,000 square foot building all by itself, the concept and a lot of the times, maybe you can help owners understand this. They think that the connectivity is the tenant's problem.

Bill Douglas: But if they own the infrastructure, not only does it become your problem, but it becomes your income. And the tenant gets a quicker, more reliable because for instance, the Internet services available at Espirio triple redundant and power backed up. So they were getting when the power's out. But you could have two carriers fail and you won't even notice as a, as a customer in a 200,000 foot building, maybe you don't need three, but we'd advocate for two. So if you remove all the failure points, then tenants say, wait a second, I'd have to pay five times as much to have two carriers as I can get one circuit from you. Exactly. So you're monetizing your digital infrastructure. In a way that there's probably less than a hundred buildings in the country doing a hundred properties in the country.

Bill Douglas: I mean, you have a quarter of those buildings already, but under properties. And yours is a big campus. So I wanted to make the point to the audience that the, the fiber and the copper between the mpoe, wherever that is on campus, because there's several. And the tenant suite is owned by the property. It is not owned by the tenant. Right. But the tenant connectivity is private and secure. That is the tenant's data.

Bill Douglas: But when you have a building management system, that is your data, and you actually have the data, because I've seen it and we collect it, you don't leave it inside of a Schneider system. You get the data if and when you want it. And any other system, I mean, it could be access controls or the lock systems or anything like that. We, we collect data from all those systems.

Chad Stafford: You know, and what's interesting especially, and I don't want to harp on Covid, but one of the things that we get a lot of questions about from both tenants and, or outside partners, our investors and our capital partners from the lending basis is, well, tell us about the utilization. Okay, I don't have somebody with a clicker standing outside of every door looking at who comes in and who. What original our technology tells us what are our organic carb swipes and what buildings, when and by whom. And we can write down to who, who it was and what company, what tenant do they work for. And I then can tell people, you know, here's what our space utilization is at this moment in time, because we have the data to be able to back that up.

Bill Douglas: But I'll reiterate, the data is not just from the access control card swipes. We can collect that same occupancy or even density data through lighting control systems, through WI fi systems, through. And it's all anonymized data. We're not collecting any information on the users, but we can tell there's bodies there to validate the part swipes. So it's not only are you knowing somebody came into the door, you can tell where they are, where the bodies are. So space utilization becomes for primo.

Chad Stafford: And we're, I would tell you, we're. We're about, I mean, having tracked this now for a number of years. I mean, we're about at 82% utilization on campus, which is. And the Midwest is generally a little bit higher than the coast, or at least it has been. You know, I think you look at San Francisco still Probably in the high 50s, maybe low 60s. And I just think that there when you have the kind of the spaces we've got the amenities, we have the indoor, outdoor, the ability to go to multiple places to get food and work out and get, you know, if you need a break or whatever that, that has allowed companies to. And I think all most companies have wanted to do this is to get people back in not only for culture, for training, you know, for, for, you know, retention, recruitment, all those things. I think that these types of campuses, there's not many obviously across the country, but these types of environments have allowed companies like that to really get a gain a leg up coming.

Chad Stafford: Coming out of a very hotly contested talent and recruiting timeframe.

Bill Douglas: Well, you're right, there's not that many campuses, but there are a fair amount of properties that do operate with that premise. I Keep pulling up 200. You don't have to be 200. We, we have clients with a hundred thousand square foot building that operated on the same premise of you and relative. They earn the same percentage return on their digital infrastructure and their data investments. And they treat data as an asset. They don't treat it as something that's just there protect the tenant.

Chad Stafford: And it's interesting because it's not like, I mean we have this discussion and we, we've been doing, you know, refina efforts and it's not just another line item on other income. What's that? Late fees? No, I mean this is like this is a separate business unit as we call it. I mean this is our technology infrastructure. And how do you monetize that? In a way that one benefits certainly the tenants from a cost perspective and a time perspective, but also is a enhancement to our investment that we've made in the, in the real estate.

Bill Douglas: Well, I know I saw the case study about the, what the BMS has saved you in utilities that's widely published. The listeners can go look that up. But if you add to that the revenue you get from all these technology services that tennis choose to buy, there's a, they opt in for this and that is a very large revenue line item that you didn't anticipate when you bought it. So it's been a beautiful maturation of

Chad Stafford: service offerings and it just continues to grow because you know, we just literally just I have a quarterly tenant meeting where we have, we invite all of the, all the tenants across campus once a quarter come and we give an update about what's coming. What's, you know, we talk about, hey there's, we're going to be doing fire drills and tornado drills on these days and these days. And we generally talk about security and we talk about make sure this and that and then I give an update from the ownership side and then I usually like, hey, tell me, you know, what are, what, what are we missing? What, what are, what's not on campus that you want to have on what events can we add all that stuff? And technology continues, even as good as ours are, is. Is continues to be like, hey, is there a way we can do this? Can we automate this? Is there a way to automate? So the tenants are now starting to drive the conversation as well about how we vendors like opticwise to then increase what we can provide on campus to them. So it's kind of cool to hear that kind of feedback.

Bill Douglas: Yeah, and we love it too because we don't want to tell them what they want. We'd rather they tell us. And then we just serviced it. So Esperia wasn't built yesterday. It was like 25 years ago. The core was built, correct?

Chad Stafford: Yeah, it started, the first building was started in 99 and it was complete by 2003. Early 2003, the whole campus build.

Bill Douglas: So what have you learned by now? What have you learned about modernizing a large legacy asset without disrupting operations and tenants?

Chad Stafford: You better make sure all the, all the parties are at the table because there's a lot of moving pieces. You've got underground infrastructure that things cross over and under. You've, you've got easements, you've got, you know, hardscape buildings, you've got. So when you want to go and start moving things. And as developers we like to think about how do we optimize an asset from either a square footage basis or how can we add this or that. When you have an asset of this size, you really have to yet to look below, above, around the corner and make sure you've got the right people at the table. Because the last thing you want to do is go and put a backhoe in the ground thinking you're going to put a cool coffee kiosk somewhere on campus and you pull up a 8 foot wide conduit line, stuff full of fiber and that's, you gotta have, you gotta have all that stuff nailed. And it is tricky.

Chad Stafford: And the other piece about that is when you start to operate a campus like this, you gotta realize, and I think most people that really were interested in trying to buy the campus aside from us, as we always felt like it needed to be kept as One campus. A lot of other interested buyers were like, oh, what if we can break off these three buildings and sell those and maybe we'll keep these and you know, we can parcel this up. You would be a nightmare. Right. Because we have our own power plant, we have our own substation, we have all the redundancy. There's. It's like a raceway through all those.

Bill Douglas: Yeah, there's that loop road around it without like the steam runs through there.

Chad Stafford: You know, it's exactly right. And so you got to realize, you know, this kind of asset is. It's a big institutional asset and it's not easy to try and pull that thing apart.

Bill Douglas: What do you think? Operational visibility and infrastructure, not just digital infrastructure, but infrastructure performance in general, are becoming more important in investment and financing and even valuation conversations.

Chad Stafford: 100% and because story with.

Bill Douglas: With how. Or give me an example or like a real world aha moment or gotcha moment. Either one. I don't care. The audience.

Chad Stafford: Okay, so here, here's a great one. Is, is when the campus was built, all of the water, water sewer stacks that go in the cores, up and down the building. Back then in the late 90s, it was all cast iron piping, which was supposed to last 50 years at least. What we found out is those things will corrode. Cast iron does not corrode out, it corrodes in. So eventually you just have a pinch point and it doesn't work. And so from a investment. And how does that impact your ability to finance things? Well now, so when I go to look at our lending and how we might refinance or how we might finance something, I've got to consider the capital input that's needed to replace.

Chad Stafford: We've probably replaced the stacks and six or seven of the buildings, not to use a teenager. Six, seven thing. But we do have to, we do have to factor in that those capital requirements for that infrastructure for that building that then goes down into the, into the mains is going to have to be replaced. And so that is one of the. And I won't say it's a gotcha, but it is one of those that you're like, okay, now we have to account for this on every building that we're going to have to do this at some point. So let's get a capital strategy to do that. And that was just one of the things we found and not hugely negative, but it's just one of the things that you got to deal with. And it is a capital constraint.

Bill Douglas: We find that capital planning as Part of asset management data and the valuation of the operational visibility is becoming extremely valuable, especially in aged buildings, shall we say. So give another example maybe around. I've heard you talk about roofing before. How many square feet or yards of roof do you have and how do you plan for changing that out over the next X years? How in the world do you do that without interrupting tenants and operations and things like that?

Chad Stafford: Yeah, so, so the way you do that, and this is maybe one of the unintended benefits of a, a Covid type situation is when you got nobody in the buildings, it's, it's a great time to go make some improvements. Like we took the, we took advantage of that to rip out 360 dead trees that just had towards the end of Sprint that you know this, they were focused obviously on the infrastructure and the technology. Not so much. How is the landscaping on campus? Right. So we took advantage of some of those things to beautify the campus, get rid of some of the dead, increase the visibility. Right. They used to have these mounds. We took all that down so you can actually see into the campus.

Chad Stafford: And then from the, the roofing standpoint, I mean there's going to do quick math here.

Bill Douglas: That means 27 buildings, not counting parking decks because I don't have the roofs, but that's a lot of squares.

Chad Stafford: You've got probably 30 acres of rooftops and so you've got, and probably out of the 30, so you've probably got 8 to 10 acres of parking, top parking lot membrane that you also have to take care for. And then you've got, you know, the other, the other 15 to 20 acres of rooftops. And you know, the good thing is with some of the advancements in technology with where you can do a infrared scan and find out, okay, we got a wet spot. You can see it right there. You can do the core and you can determine is that a, is that a full roof replacement or is that not? And then it's a function of when are we going to do these in a strategic way. So when T Mobile was renovating the inside of their long term buildings, we knew that they were not physically occupying at least the top floor of those buildings. We said now's the time. So we went and replaced all the roofs on that same, same example Fiserv getting ready to do the construction.

Chad Stafford: That's when you go in and say okay, now we. But you have to plan that out. Right. The good thing is about today's leasing environment too is most times the example I gave earlier where Yes, I could fire somebody, somebody up if they came and said I need to be operating in a week. Most of the time with a corporate campus like this, you're negotiating deals that get signed 10 months in advance on average of when the, the butts need to be in the seats. And so that gives you enough time to make sure. Okay, did we have the capital plan in place to, to deal with the roof if that's. Or deal with the stacks if we need to replace those?

Bill Douglas: Have you seen lenders, financiers, capital partners or whatever the stack is? Be more open to seeing the value that the digital infrastructure investments are returning. Are they still looking that as ancillary income? Are they considering it core and giving you real value for what that real dollar is or are they discounting it?

Chad Stafford: No, they definitely look at that as a, as a, like I said before, it's not an other income like oh yeah, it's lumping in there with late fees and, and all that stuff. It's a separate line item that especially when you would be able to have the setup that way. And I know you can. You could do this, as you mentioned, in a hundred thousand square foot building too. But when you drive, let's call it between 50 cents and a buck a foot in additional revenue across a campus on an, on an occupied basis. That is not small dollars. And I don't care how big your building is, that's real finance able revenue.

Bill Douglas: Well, that is. No, I, not revenue. I know the numbers too. I'm not going to divulge your numbers.

Chad Stafford: Well, it's. I call it revenue because I still got to pay you. So I mean there's, you know, there's cost.

Bill Douglas: Yeah, well, fair enough. But that is a fraction. Put it that way. It is still impactful. Right. We, I was trying to make the point that a lot of our audience thinks that connectivity and digital and data are the tenants problem, whether it's office or apartments. They say the same thing in our con are we've been strong contenders for the last decade, but no, if the building owns it and treats it like an asset, then that income is not ancillary, it's core and it goes to financing. And that is why I asked the question.

Bill Douglas: Because you own the digital infrastructure, you can charge for the services. It's no longer ancillary it revenue minus expenses.

Chad Stafford: It is.

Bill Douglas: No, I, that's different. It won't be discounted if and when the building is transacted. It's not been discounted when you financed it.

Chad Stafford: That's right.

Bill Douglas: Let me ask you a fun question. Put on the future Hatchad five years from now, what operational capabilities do you think every major commercial real estate owner will wish they had today?

Chad Stafford: I think I certainly see in two facets. One is the portability of the technology. And you said it earlier, Bill, and this is just the world we live in. Five years from now, I have a tenant that may be in X number of square feet in this building, and then you go to this number of square feet in another, and if you don't have the ability to quickly and make that technology transferable and portable, it's a problem from a tie. And tenants will legitimately. This is a big question we get from tenants, because anything that we've learned, if history is a lesson, is you got to be flexible and you got to be able to pivot quick. And these and these companies are doing it even faster. And I think with kind of the adopt and the adoption of an AI model that a lot of these people are using to help them with decision making, the flexibility and the portability of the technology is huge.

Chad Stafford: And the other thing I think is going to come omni important is the use of technology from a security setting. And we see that.

Bill Douglas: We.

Chad Stafford: That's why I brought this up about our tenant quarterly meeting. We do extensive discussions with tenants on security, the technology around it, the visibility to it, the access to it from the tenants basis. And if you have not done that and allow and to a point where you can allow your tenants real visibility into any of the security issues, it will be a problem in five, 10 years. No, no question about it.

Bill Douglas: Well, I like the way you publish that privacy policy. It's the ultimate privacy policy. Not only do you not monetize their data, you don't even collect it. And I know that because we taught you that. And we're like, we believe in it at its core, but tenants love that. A lot of tenants have never heard that. And they realize, wait, I'm paying rent and I'm not the product. I'm not like this person is actually protecting me.

Bill Douglas: They're not selling my information like that. Data is not a revenue stream. So for all purposes of this show, when we talk about data, we're talking about the data generated by the systems at Asperia, not by the people at Asperia. Very, very different. OT is not pii. That's a lot of acronyms. But operational technology is the only data we ever talk about here. Right? So you came from operating many other properties, owning any other properties, to buying Asperia in 2019, as you said.

Bill Douglas: And then you saw the value of the data like flow through. When you actually started to own, collect and control the data from systems and, and devices and sensors you owned. What was the biggest aha to that whole learning process? Not tenant facing, but operational facing that you didn't know six years ago.

Chad Stafford: Well, we've probably spent a good amount of time talking about it. But the pivot from we own, we should own the technology to provide as a service versus okay, the tenant needs it. I'm going to have to get my property manager out there to let XYZ company, you know, bring it in to the DMARC and da da, da. Now it's just kind of a. Well, that's just part of getting a tenant to a. This is a critical component of, of the, the tenants experience and it's a critical component of how we operate the building. The most efficient, cost effective way possible. Right.

Chad Stafford: Because the bmss, all that, it really was a shift on. This doesn't have to be just because that's a big campus and happens to have a bunch of technology. We're implementing this in our, in our other properties that are 80,000ft. Right. An office.

Bill Douglas: I know as we deal with it. I get it.

Chad Stafford: Yeah, the same, same premise. And so what opened, opened the eyes was. Yeah, that was something that came along as a, as a great, I'll call it an unknown. When we, when we bought it, really we knew about it, we didn't know the capabilities of it fully. But having learned that then to be able to say, okay, now this model works and I don't care if it's a 30,000 foot, you know, class A shopping center or an 80,000 foot office building. The technology that you own and can provide not only adds asset value, but also customer value.

Bill Douglas: Well, before we published the book last year, the Peak Property Performance Book, you got an early, early copy and we're nice enough to put a quote on the back because you had seen this evolution and then all we did was write a book about how to do it yourselves. Like you don't have to hire optical eyes to do it. You can do it yourself. And here's how you do it. Maybe you want to, maybe you don't, but either way, we strongly believe in data and digital infrastructure ownership. So we've been allies for a long time and I appreciate you sharing all these ideas and thoughts and being so transparent with the audience.

Chad Stafford: There's still more room to run. I mean, we just had a conversation, you know, last week Bill about, you know, our now we're able to get launched on our development side and all the benefits that having owned and managed it inside of apartment buildings from an owner's perspective, what that can do from a financial standpoint, but also from a space standpoint and a cost of a cost per square foot from a new building. So, I mean, all this stuff is, I think, on the cutting edge.

Bill Douglas: Well, as I shared with you and I was on a podcast this morning talking specifically about multifamily. I was a guest on that one. We can not only reduce the build costs and a new apartment, but we can find you another thousand dollars per door per year. Noi not just from revenue, but from expense reductions. And we find at least 300 on retrofits. So those are the two things that we two markets we operate in. And it's nice to be able to cross chasms with you on that. At this point of the show, we shift from talking about the market and your portfolio to talking about Chad.

Bill Douglas: So we call this the extra floor. We're gonna. I'm just gonna ask you three questions. It's. I'm not gonna chime in. It's not conversational. Take as long as you want, but it's about you. And we call it the Extra floor because it's fun.

Bill Douglas: So what's the best piece of career or life advice you've ever received?

Chad Stafford: If you're going to hoot with the Owls, you better soar with the Eagles. So my first CEO that I worked for, he came from, he was a Wall street banker, but it was kind of the work hard, play hard. He's like, look, if you really enjoy the people that you work with and what you're trying to do and build, have fun. That's a good way to build. That's not the only way to build. Team cultures, how we did it, you know, back in the day. But his, his career advice was, I don't care what you do, but if you want to hoot with the Owls, you better be ready to soar with the Eagles in the morning because we got work to do and we got a, you know, a vision to go pursue. And it's all.

Chad Stafford: I tell that to my kids, too, because, you know, they think they're cool because they stayed up till 1 o'. Clock. I'm like, hey, you're gonna hoot with the Owls, you better be soaring with the Eagles. You got practice and games in the morning and don't be upset at me

Bill Douglas: when I'm up at 6. Waking you up. Don't be upset at me. Right.

Chad Stafford: That's right.

Bill Douglas: Well, what's one habit or practice that consistently makes you more effective?

Chad Stafford: I am, I am still a list notebook guy. And as much as technology and boy, I couldn't live without my outlook, calendars and all that stuff, but I am still a guy that I have this and it is riddled with all kinds of stuff in it. But that's how I organize my thoughts, so to speak. And I've always done that kind of at the. I know what I got at the end of the day, I look at it and I'm like, okay, these are the things that are my. What's my critical path tomorrow? And, or you know, and some of those A, B and C priorities, but these are the ones I got to jump on right away. Always done that. And it just helps you.

Chad Stafford: There's lots of stuff, especially when you're dealing with many employees, many projects, many priorities, many personalities that if you can at least with your thoughts towards the end of the day, organize them in a. In a quick list. It just, just, it's always helped me to get my things done.

Bill Douglas: I hear you identifying what I call mit and that's the most important tasks. But I will jokingly say you're an analog guy.

Chad Stafford: Well, it's fair.

Bill Douglas: That's fine. I was an analog guy for a while and then I finally got a Mac, I don't know, a decade ago, and then I gave up my Android phone for the iPhone and then I became a digital guy. But I can't live without the structure of the calendar, so I completely get what you say. All right, this one's short but telling. Are you a early bird or a night owl?

Chad Stafford: I'm a night owl.

Bill Douglas: Really? Even with kids? Yep.

Chad Stafford: I have my, My brain tends to get more creative in the evening. I do get up early. There's no question. I mean, I get if I don't, you know, I know you like to work out. I'm. I'm the same. I like to get up and get, get a workout in and it's quiet and I can get, get some things done in the morning. But my preference always have been I just in a little bit more.

Chad Stafford: My, my brain works a little bit more creatively in the evening, the morning. I just have always been that way.

Bill Douglas: See, we're just. The extra floor is just supposed to be a little fun, a little telling about you, the person. So the last one's not about you. It's just how would you like listeners to contact you if they what's the best way? We'll put all this in the show notes but just say it for those that are only listening and not looking at the notes.

Chad Stafford: Sure. Yeah. I mean the best way is is just to email me, you know, Chad stafford c c mgmt.com and that website

Bill Douglas: does show their portfolio and you can go see anything you want about Esperia on there. It's, it's pretty awesome place. So Chad, thank you, thank you for the time, thank you for the transparency and thank you for the listeners. Be sure to follow like subscribe, suggest, forward it to somebody you know and we'll see you on the next episode of Peak Property Performance.

Bill Douglas: Thanks for tuning in to another episode of the Peak Property Performance podcast. To learn more, grab your book@peakpropertyperformance.com or click the link in the Show Notes. Don't forget to subscribe so you never miss an episode.