WEBVTT - Bloomberg Businessweek Weekend - May 12th, 2023 0:00:01.360 --> 0:00:05.720 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business, finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:24.360 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:20.640 --> 0:00:32.599 Last all right, yeah, come on us and China. Why 0:00:32.640 --> 0:00:33.680 can't you be friends? 0:00:34.479 --> 0:00:36.640 This story is in the upcoming new issue of Bloomberg 0:00:36.640 --> 0:00:39.560 Business Week. It's actually the remarks of the upcoming new issue, 0:00:39.600 --> 0:00:41.840 which will be on newstands later this week, already online 0:00:41.880 --> 0:00:44.800 at Bloomberg dot com slash Businessweekend on the Bloomberg It 0:00:44.880 --> 0:00:47.040 really gets to the decoupling that has. 0:00:46.960 --> 0:00:48.920 Been going on between the US and China. 0:00:48.680 --> 0:00:50.159 And what hey, don't call it decoupling. 0:00:50.440 --> 0:00:53.280 What I'm going to call it decoupling. But Biden officials 0:00:53.320 --> 0:00:56.720 are saying, whoa, whoa, whoa slow your role on decoupling. 0:00:56.800 --> 0:00:59.160 Let's get into it with Bloomberg Sean Donn and he's 0:00:59.200 --> 0:01:01.800 senior economics writer Aplomberg News with us on. 0:01:01.760 --> 0:01:04.160 Zoom in Washington, d C. And then we've got the editor. 0:01:03.960 --> 0:01:07.040 Of Bloomberg Business Week, Jill Weber here in our interactive 0:01:07.040 --> 0:01:10.039 Brokers studio. Jill whatever you call it, it's kind of 0:01:10.160 --> 0:01:11.160 a little bit dysfunctional. 0:01:11.560 --> 0:01:11.920 It is. 0:01:12.760 --> 0:01:15.080 I think it's like maybe the Great American Walk back. 0:01:15.520 --> 0:01:17.720 What do you think, Sean, is that is that accurate? 0:01:17.840 --> 0:01:18.039 You know? 0:01:18.240 --> 0:01:21.960 The coupling is a word that I've hated for years. 0:01:21.080 --> 0:01:25.920 It's a word that is it implies like a divorce. 0:01:26.640 --> 0:01:30.240 And I think the US and China are always going 0:01:30.319 --> 0:01:34.360 to be kind of neighbors that try to get along, 0:01:35.240 --> 0:01:38.440 that have a relationship, and they just try and put 0:01:38.480 --> 0:01:39.480 up fences here and there. 0:01:39.640 --> 0:01:41.680 Are they staying together for the kids? That's what we 0:01:41.720 --> 0:01:43.839 want to know, Sean. Are they staying together for the kids? 0:01:44.520 --> 0:01:46.720 I mean the coupling feels a little bit like that, right, 0:01:46.800 --> 0:01:49.400 I mean, it's kind of it's it's it's one of 0:01:49.400 --> 0:01:51.920 those hard ones. Look, the US and China have this 0:01:52.040 --> 0:01:56.280 immense economic relationship. They are among each other's top trading partners. 0:01:56.280 --> 0:01:59.160 They will continue to be among each each other's top 0:01:59.200 --> 0:02:02.680 trading partners for some years to come. I think what 0:02:02.760 --> 0:02:05.120 the US has been trying to do in recent years 0:02:05.520 --> 0:02:11.000 has been to try and cut off certain strategic parts 0:02:11.040 --> 0:02:13.320 of the relationship. You know, we've all been reading about 0:02:13.320 --> 0:02:17.400 the semiconductors. There's this big competition over electric vehicles and 0:02:17.480 --> 0:02:20.519 so on. In the US wants to try and get 0:02:20.520 --> 0:02:24.799 ahead of China and compete. It's tired of having its 0:02:24.840 --> 0:02:29.280 intellectual property stolen. That's something we've seen in recent years 0:02:29.880 --> 0:02:33.799 or recent decades really, and so it's a dysfunctional relationship. 0:02:33.840 --> 0:02:35.840 The US is trying to reset it. It's trying to 0:02:36.040 --> 0:02:39.359 put some boundaries there, and the Chinese are saying, well, 0:02:39.520 --> 0:02:41.600 if you're trying to do that, you're trying to contain us, 0:02:41.639 --> 0:02:44.959 and that's really impolite and that's awful, and so there's 0:02:44.960 --> 0:02:47.680 a terrible shouting match that's going on. The problem for 0:02:48.480 --> 0:02:51.160 all of us and for the global economy is these 0:02:51.200 --> 0:02:53.359 are the world's two largest economies, and if they can't 0:02:53.400 --> 0:02:58.080 get along, if they can't find a floor for their relationship, 0:02:58.160 --> 0:03:00.320 then it really is going to be a terrible buzz stuff. 0:03:00.320 --> 0:03:01.639 And it's not just the kids that are going to 0:03:01.680 --> 0:03:03.280 get hurt, the whole neighborhood. 0:03:04.480 --> 0:03:07.280 That neighborhood being the world so interesting. 0:03:07.680 --> 0:03:13.160 We've heard Janet Yellen and Jake Sullivan recently kind of 0:03:13.600 --> 0:03:17.000 say as much in their remarks and speeches and whatnot. 0:03:17.720 --> 0:03:20.840 Wondering what was the language that jumped out to you 0:03:20.919 --> 0:03:25.040 that sort of attempted to reset with this narrative is yeah, 0:03:25.080 --> 0:03:25.799 so look, I mean. 0:03:25.639 --> 0:03:30.079 It's it's there's two things. One, US officials have been 0:03:30.320 --> 0:03:33.720 trying with increasing frequency to get out there and say 0:03:33.800 --> 0:03:36.360 we are not trying to decouple. We're not trying to 0:03:36.560 --> 0:03:40.760 have this big rerupture with the Chinese economy. We're trying 0:03:40.760 --> 0:03:47.680 to have a sensible, strategic and focused change in the relationship. 0:03:47.800 --> 0:03:52.240 And then something interesting happened when Janet Yellen talking that 0:03:52.320 --> 0:03:55.160 she took that a step further and talked about the 0:03:55.200 --> 0:03:58.080 relationship between national security and the economy. And then a 0:03:58.120 --> 0:04:01.480 week later, Jake Sullivan, the National Security Advisor, came out 0:04:01.880 --> 0:04:04.720 and he started using a term that the Europeans have 0:04:04.760 --> 0:04:08.120 been using and said, rather than decup, we're looking for 0:04:08.240 --> 0:04:11.560 a de risking of the economy, which is kind of 0:04:11.560 --> 0:04:17.480 a more polite Yeah, and it's a very European term. 0:04:17.600 --> 0:04:19.840 It makes perfect sense to me, as jehean. Let me 0:04:19.880 --> 0:04:22.080 first say that I think it's an incredibly well written story. 0:04:22.120 --> 0:04:24.600 I loved it. I breathed through from start to finish, 0:04:24.640 --> 0:04:28.040 which isn't that I always do with my attention span 0:04:28.160 --> 0:04:32.120 on exactly, I have the problems learning disabilities. But I 0:04:32.160 --> 0:04:35.200 think it's right in this you know, black and white 0:04:35.200 --> 0:04:37.920 world where everybody's either in bed together or at war, 0:04:38.120 --> 0:04:41.320 to acknowledge that there can be nuance. Right, we're not 0:04:41.440 --> 0:04:43.760 kind of completely decoup, but we're not going to totally 0:04:43.839 --> 0:04:46.960 isolate China. We just want to de risk and diversify. 0:04:47.000 --> 0:04:49.479 And that makes sense because we've been so concentrated in 0:04:49.560 --> 0:04:52.960 terms of the supply chain. We found out over COVID nineteen, 0:04:53.640 --> 0:04:56.000 over the pandemic, that we had way too many eggs 0:04:56.000 --> 0:04:57.840 in that basket and we need to move a few out. 0:04:57.839 --> 0:04:59.599 But that doesn't mean we're totally leaving. 0:05:00.120 --> 0:05:02.760 And that totally makes sense. We all get that there's 0:05:02.800 --> 0:05:05.080 a problem, though, and that is that the world is 0:05:05.120 --> 0:05:07.800 more complicated and that there aren't these simple levers that 0:05:07.880 --> 0:05:12.320 you pull the kind of d risk or or decouple. 0:05:12.440 --> 0:05:14.440 The fact is is that you and I have been 0:05:14.480 --> 0:05:16.760 buying a whole lot of Chinese goods in recent years. 0:05:16.839 --> 0:05:19.720 And even though you know we've had to try the 0:05:19.760 --> 0:05:22.720 trade wars of the trunk years that we all remember, 0:05:23.560 --> 0:05:26.240 the trade between US and China last year was at 0:05:26.240 --> 0:05:30.120 a record level, in part because of our appetite for 0:05:30.680 --> 0:05:32.840 Chinese goods and a lot of companies, A lot of 0:05:32.880 --> 0:05:35.320 big American companies still want to do business in China. 0:05:35.600 --> 0:05:39.080 Tesla still wants to sell cars in China. In fact, 0:05:39.120 --> 0:05:41.800 it's adding to its factories there. So you know, the 0:05:41.839 --> 0:05:44.839 relationship is we can try and have this kind of 0:05:45.000 --> 0:05:48.640 Washington Beltway conversation about the risking and so on, but 0:05:48.800 --> 0:05:52.000 in some ways it's not just the governments that get 0:05:52.040 --> 0:05:55.039 to choose companies, and consumers are going to affect that 0:05:55.120 --> 0:05:58.880 decision in a lot of ways. And the problem is 0:05:59.760 --> 0:06:03.320 that people are worried, not just about an economic conflict, right, 0:06:03.400 --> 0:06:06.159 people are worried that you get this rhetoric building and building, 0:06:06.200 --> 0:06:09.120 and it gets into things like Taiwan and worries about 0:06:10.279 --> 0:06:16.120 a a move on Taiwan by mainland China and how 0:06:16.160 --> 0:06:20.120 the US might respond in a more belligerent world, and 0:06:20.720 --> 0:06:23.720 that gets out of hand, and then it's going to 0:06:23.760 --> 0:06:25.159 be an even the uglier world. 0:06:25.200 --> 0:06:28.000 So we also don't want to encourage slave labor. We 0:06:28.040 --> 0:06:31.600 don't want to support the Russians in their war in Ukraine. 0:06:32.560 --> 0:06:34.919 You know, there are things that we definitely need to 0:06:34.920 --> 0:06:38.400 be conscious of and make decisions based on those. 0:06:38.560 --> 0:06:41.120 I find this to be a tricky pass for American 0:06:41.240 --> 0:06:44.400 leadership to walk, you know, because it's like they can't 0:06:44.400 --> 0:06:47.599 go maybe full Trump here, because we know what that 0:06:47.680 --> 0:06:51.440 looks like. And there's some version of backpedaling that is happening. 0:06:51.480 --> 0:06:54.400 But they can't backpedal too much because then if it's 0:06:54.400 --> 0:06:56.360 going to be Biden in the election, like you know. 0:06:56.520 --> 0:06:59.200 We got back pedaling on China and on Saudi Arabia, 0:06:59.320 --> 0:07:00.880 come on the rematch. 0:07:01.320 --> 0:07:03.359 And I think that's and I think that's one of 0:07:03.400 --> 0:07:05.160 the big issues that we have right now, and it's 0:07:05.200 --> 0:07:08.400 why we're seeing this language now. The administration is trying 0:07:08.520 --> 0:07:13.360 very hard to tamp down the relationship, to tamp down 0:07:13.360 --> 0:07:16.080 the rhetoric, because it knows that in the next year, 0:07:16.120 --> 0:07:18.560 as we go into a presidential cycle, things are going 0:07:18.600 --> 0:07:21.280 to ratchet up again and it's going to get even 0:07:21.320 --> 0:07:23.840 more heated. So let's try and bring things down for 0:07:23.920 --> 0:07:27.120 earth a little bit now, and because we know what's 0:07:27.200 --> 0:07:31.000 coming ahead, and we also you know, it's a relationship 0:07:31.000 --> 0:07:34.400 that's not going to go away, and I think, you know, 0:07:34.440 --> 0:07:37.560 you're trying to set these new guardrails for the relationship. 0:07:37.640 --> 0:07:42.280 The administration has worked very hard to try and keep 0:07:42.320 --> 0:07:46.440 it focused, but the rest of the world is really 0:07:46.480 --> 0:07:49.760 worried about this. And as much as the language is 0:07:49.800 --> 0:07:53.040 aimed towards Beijing coming out of Washington right now to 0:07:53.080 --> 0:07:57.320 try and reduce the temperature there, it's also about telling 0:07:57.360 --> 0:08:00.720 allies that, look, we're not trying to get into a 0:08:00.720 --> 0:08:03.160 conflict here. We're not trying to have a major rupture 0:08:03.200 --> 0:08:07.040 between the world's two largest economies. We know that this 0:08:07.200 --> 0:08:09.960 is an important economic relationship and it's one that's going 0:08:10.000 --> 0:08:14.240 to endure no matter what we do. Uh, And we 0:08:14.280 --> 0:08:18.360 don't want the rest of the world to suffer as 0:08:18.400 --> 0:08:21.760 a result of of us going down a chaotic path. 0:08:22.360 --> 0:08:22.640 Sehn. 0:08:22.680 --> 0:08:26.720 Do you think the Biden administration would have wanted to 0:08:27.240 --> 0:08:31.040 have had this out in the open like this earlier. 0:08:31.120 --> 0:08:34.600 If not for spy balloons entering the lexicon? 0:08:35.440 --> 0:08:37.800 Yeah, so, I mean, we know, you know, one of 0:08:37.800 --> 0:08:40.160 the things I heard from from from folks as I 0:08:40.200 --> 0:08:43.280 was reporting this piece was a desire to get back 0:08:43.320 --> 0:08:45.880 to Bali And that's the phrase that they use. And 0:08:45.960 --> 0:08:51.079 Bali is where last November, Uh, President Biden and Chu Jinping. 0:08:51.320 --> 0:08:52.720 This really is a romantic company. 0:08:53.240 --> 0:08:55.720 We got to get back to thee they shot down, 0:08:55.800 --> 0:08:58.720 and they had their you know, they had their shot 0:08:58.720 --> 0:09:01.800 down in that kind of promise more engagement. They were 0:09:01.800 --> 0:09:04.920 going to get along better. Anthony Blincoln was going to 0:09:05.000 --> 0:09:06.920 head over there earlier this year, and then of course 0:09:06.960 --> 0:09:11.679 that balloon drifted over and everything went the pot. And 0:09:12.720 --> 0:09:14.480 you know what people in the youuistration are trying to 0:09:14.520 --> 0:09:16.520 do now is to get things back into a place 0:09:16.640 --> 0:09:21.720 where we can start getting that engagement again. There can 0:09:21.760 --> 0:09:26.559 be a frank conversation and you can talk through your 0:09:26.640 --> 0:09:30.120 issues rather than yell at each other. It's completely unclear 0:09:30.120 --> 0:09:31.439 whether that's actually going to happen. 0:09:31.559 --> 0:09:33.000 Yeah, But at the same time, and I'm going to 0:09:33.000 --> 0:09:34.959 bring up something Matt you shared, but it's also shown 0:09:35.000 --> 0:09:38.080 in your story that you know, it's not just the 0:09:38.080 --> 0:09:41.040 Biden administration in the US, you know, with a delicate 0:09:41.080 --> 0:09:43.040 balance when it comes to a relationship with China. And 0:09:43.040 --> 0:09:46.000 I understand that these two are the biggest superpowers out there, 0:09:46.000 --> 0:09:48.280 and I understand why it's so important. But Matt you 0:09:48.440 --> 0:09:51.680 shared earlier that Italy has signaled to the US that 0:09:51.720 --> 0:09:54.719 it tends to pull out of an investment packed with 0:09:54.800 --> 0:09:56.680 China before the end of the year. We're talking about 0:09:56.720 --> 0:09:59.640 Belt Road, which has been such a big Chinese initiative. 0:10:00.000 --> 0:10:03.000 There's a bigger, broader global thing going on where everybody's 0:10:03.040 --> 0:10:06.120 being very delicate. It feels like slowly when it comes 0:10:06.120 --> 0:10:09.959 to China and their relationship, even Apple as they pivot 0:10:10.080 --> 0:10:12.880 to India a little bit, there's still like, you know, 0:10:12.920 --> 0:10:14.720 Tim Cooks over there, I love you, I love you, 0:10:14.800 --> 0:10:16.240 China present shit, you know what I mean. 0:10:16.320 --> 0:10:17.640 Like it's this delicate balance. 0:10:18.240 --> 0:10:20.640 Yeah, and look, the rest of the world hates where 0:10:20.640 --> 0:10:23.200 it's stuck right now, right because they're stuck in between 0:10:23.400 --> 0:10:29.920 these two quarreling parents, and it has they have important 0:10:29.960 --> 0:10:31.800 relationships with both with the world. 0:10:31.840 --> 0:10:34.400 But isn't it like the whole world kind of stepping 0:10:34.440 --> 0:10:35.959 back a little bit from China. 0:10:36.920 --> 0:10:42.280 Yeah, the whole world is everyone's reconsidering their their relationship 0:10:42.280 --> 0:10:44.040 with China, you know, and for all the reasons he 0:10:44.120 --> 0:10:47.319 talked about, whether it's slave labor in Xinjiang or whether 0:10:47.400 --> 0:10:52.079 it's just an over alliance on everything from semiconductors to 0:10:52.120 --> 0:10:56.800 antibiotics coming out of China. At the same time, I 0:10:56.840 --> 0:10:59.760 think if you talk to allies of the US, a 0:10:59.800 --> 0:11:03.199 lot of them are also have their concerns about US 0:11:03.320 --> 0:11:05.800 industrial policy right now, and what they feel like is 0:11:05.800 --> 0:11:08.800 a more selfish economic policy coming out of the United 0:11:08.840 --> 0:11:12.280 States and the potential consequences for them there. And they 0:11:12.320 --> 0:11:17.360 also are more broadly concerned about a world that will 0:11:17.400 --> 0:11:20.960 become more fragmented and what that might mean. And IMF 0:11:21.000 --> 0:11:23.400 came about, you know, a few weeks ago, so that 0:11:23.520 --> 0:11:25.280 was going to mean slower growth in the world, which 0:11:25.320 --> 0:11:26.000 no one wants. 0:11:26.760 --> 0:11:29.520 It's you know, I would just I want to talk 0:11:29.520 --> 0:11:31.120 about what's going on debt ceiling, but I do want 0:11:31.120 --> 0:11:33.280 to tell our listeners to encourage them to go to 0:11:33.800 --> 0:11:36.160 the website read your story because it's a great piece, 0:11:36.400 --> 0:11:38.760 and even better, buy the magazine because I like the 0:11:38.840 --> 0:11:39.959 actual paper copy. 0:11:40.280 --> 0:11:43.839 You're listening to the Bloomberg Business Week podcast. Catch us 0:11:43.880 --> 0:11:46.679 live weekdays from two to five pm Eastern. 0:11:46.440 --> 0:11:49.800 On Bloomberg Radio, the Bloomberg Business app and YouTube. 0:11:50.040 --> 0:11:53.079 You can also listen live to our flagship New York station, 0:11:53.640 --> 0:11:56.520 Just say Alexa, play Bloomberg You Love Them thirty. 0:11:58.160 --> 0:12:00.640 I think this is really exciting. Cheryl mckisson Daniel joins 0:12:00.720 --> 0:12:03.160 US right now. She is president and chief executive officer 0:12:03.720 --> 0:12:08.000 at Mackissik. It is the oldest minority owned professional design 0:12:08.040 --> 0:12:11.080 and construction firm in the US. It's, as Carol was 0:12:11.080 --> 0:12:13.160 saying before the breakout family owned business for more than 0:12:13.200 --> 0:12:19.160 one hundred years, and I think it is incredibly interesting now, 0:12:19.320 --> 0:12:22.199 especially because of all the problems we're having regional banks, 0:12:22.240 --> 0:12:25.600 the jump in interest rates, the tightening of credit markets. 0:12:26.240 --> 0:12:28.400 So I'm very pleased to welcome Cheryl to the program. 0:12:28.840 --> 0:12:31.560 Thanks so much for joining us. Cheryl, Hi, how you 0:12:31.640 --> 0:12:36.160 doing it? We're doing I'll speak for both of us, fantastic, Sarah. 0:12:36.760 --> 0:12:38.280 I love it because we have a whole week ahead 0:12:38.280 --> 0:12:41.120 of us and I'm just getting settled in here. Let 0:12:41.160 --> 0:12:45.920 me get first your take on being the oldest minority 0:12:45.960 --> 0:12:49.800 owned business, the oldest my already know design and construction 0:12:49.920 --> 0:12:53.280 business in the US, and a family owned business for 0:12:53.320 --> 0:12:55.160 one hundred years. How much does it mean to you? 0:12:55.200 --> 0:12:56.839 How important is that to you? 0:12:57.200 --> 0:12:57.480 Wow? 0:12:57.720 --> 0:13:02.480 I stand on the shoulders of other generations, and so 0:13:02.920 --> 0:13:06.000 you know, I feel like I'm winning before I get started. 0:13:06.760 --> 0:13:07.360 For them to. 0:13:08.400 --> 0:13:13.640 Navigate this country of ours, this great country of hours, 0:13:13.679 --> 0:13:18.360 for five generations is an amazing thing, and so I 0:13:18.440 --> 0:13:21.840 feel honored, I feel blessed, and I feel as though 0:13:21.920 --> 0:13:26.440 I have a mission to keep this company going, especially 0:13:26.480 --> 0:13:27.440 in New York City. 0:13:27.800 --> 0:13:30.160 So how are you doing in that mission right now? 0:13:30.200 --> 0:13:32.280 How is business at Meckissick. 0:13:33.640 --> 0:13:35.079 Business is booming. 0:13:36.600 --> 0:13:39.480 New York just passed a three hundred and twenty two 0:13:39.559 --> 0:13:44.160 billion dollar budget and a lot of that is capital 0:13:44.320 --> 0:13:47.280 work throughout the state. And then of course we have 0:13:47.320 --> 0:13:50.880 a significantly large budget for the City of New York, 0:13:51.600 --> 0:13:56.679 so there is plenty of work for Mechissick. Corporations are 0:13:57.240 --> 0:14:01.360 working or have large capital programs. I think the only 0:14:01.559 --> 0:14:05.400 area where we're seeing some slippage is with our developers 0:14:05.480 --> 0:14:10.280 with respect to residential and office space. I think the 0:14:10.320 --> 0:14:16.280 interest rates are affecting their ability to make these deals work. 0:14:17.280 --> 0:14:19.760 And then we also need to deal with our affordable housing. 0:14:19.920 --> 0:14:22.000 We need to get something in place where we can 0:14:22.080 --> 0:14:26.160 get some assistance from our government for affordable housing so 0:14:26.200 --> 0:14:28.480 we can make those projects work as well. 0:14:28.640 --> 0:14:29.600 Cheryl, take a step back. 0:14:29.680 --> 0:14:32.440 Let's go to office because we certainly are just trying 0:14:32.480 --> 0:14:34.680 to figure out if that's the next shoe to drop. 0:14:35.040 --> 0:14:37.400 And we've been speaking a lot about, you know, the 0:14:37.880 --> 0:14:40.840 nervousness that continues, certainly among the regional banks. They rallied 0:14:40.840 --> 0:14:43.800 a bunch of them today, but nonetheless there's still questions. 0:14:44.560 --> 0:14:49.880 So office space specifically, how would you describe it? And 0:14:50.080 --> 0:14:52.280 you guys really work within the state of New York. 0:14:52.320 --> 0:14:54.440 Correct, we're in New York. 0:14:54.480 --> 0:14:57.880 We're in Philadelphia, Orlando, and down Nashville. 0:14:57.920 --> 0:15:02.800 And you know, office space right now has dwindled, as 0:15:02.840 --> 0:15:06.000 we know, as a result of COVID. You know, if 0:15:06.040 --> 0:15:09.480 we just take my hometown Nashville, Tennessee, where Amazon just 0:15:09.560 --> 0:15:13.440 finished a beautiful, you know, mid rise building, there's nobody 0:15:13.520 --> 0:15:16.640 in it. People do not want to come to work 0:15:16.760 --> 0:15:19.720 the way they used to. Most people want to well, 0:15:19.720 --> 0:15:22.280 I wouldn't say most, but a lot of people want. 0:15:22.160 --> 0:15:24.280 To work remotely. 0:15:24.960 --> 0:15:29.760 We in Nashville, we're trying to renovate or develop a 0:15:29.800 --> 0:15:33.920 building that my building, my grandfather built in nineteen twenty four. 0:15:34.440 --> 0:15:36.720 And I was just on the phone with a prominent 0:15:36.760 --> 0:15:40.760 developer on Saturday saying, Okay, can we make it office space? 0:15:40.880 --> 0:15:43.600 And the answer is absolutely not. You can't get a 0:15:43.640 --> 0:15:45.520 loan from banks for office space. 0:15:46.360 --> 0:15:48.600 For my understanding, a lot of the banks that are 0:15:48.600 --> 0:15:51.520 failing are the banks that you know let money on 0:15:52.120 --> 0:15:56.000 you know, office space construction. And so you know, it 0:15:56.040 --> 0:16:00.240 is in a crisis right now. And you know, I 0:16:00.280 --> 0:16:04.280 don't see, from what I can tell, how we're going 0:16:04.320 --> 0:16:08.760 to recover with the office space without doing maybe some conversions. 0:16:09.120 --> 0:16:10.920 Yeah, well the conversions. 0:16:12.240 --> 0:16:15.080 Yeah, conversions. Housing is a big issue in New York. 0:16:15.120 --> 0:16:18.160 As we know, we need over eight hundred thousand units 0:16:18.160 --> 0:16:22.840 of affordable housing. Housing is an issue in most urban cities, 0:16:23.800 --> 0:16:26.360 and so you know, maybe that's the answer. 0:16:26.600 --> 0:16:28.840 But a bunch of developers I talked with at Milkin 0:16:28.920 --> 0:16:31.080 last week, they said, how do you take those buildings 0:16:31.080 --> 0:16:35.280 that are in midtown old buildings like they're just not 0:16:35.880 --> 0:16:38.800 the idea of converting them into housing. It just doesn't 0:16:38.840 --> 0:16:41.240 make sense. You really need to knock them down. But 0:16:41.280 --> 0:16:45.120 then there's the problems and issues where the exteriors you know, 0:16:45.200 --> 0:16:48.160 are old and wonderful and nobody wants to mess them up. 0:16:48.200 --> 0:16:51.320 So it's it's complicated and converting isn't so easy, or 0:16:51.640 --> 0:16:52.760 you know, creating conversions. 0:16:53.680 --> 0:16:56.080 Is this good news for me chistic? I mean, can 0:16:56.160 --> 0:16:59.240 you guys do conversions or can you go to places 0:16:59.280 --> 0:17:01.320 where we knock down buildings and put up new ones? 0:17:01.400 --> 0:17:02.840 Is this great news? 0:17:03.720 --> 0:17:04.920 We absolutely can. 0:17:05.160 --> 0:17:10.399 I mean any construction project that's vertical, we are happy 0:17:10.440 --> 0:17:14.680 to participate it. On in I can't say it's great 0:17:14.720 --> 0:17:18.080 news for the private industry because we still need our 0:17:18.160 --> 0:17:21.200 developers to be able to borrow money at a good 0:17:21.240 --> 0:17:24.840 interest rate, so the deal makes sense for them, and 0:17:24.920 --> 0:17:27.360 so that's a concern for our industry. 0:17:27.520 --> 0:17:30.720 So how much has it slowed down? Like does it? 0:17:30.800 --> 0:17:33.120 Is it crisis situation in terms of what you've seen 0:17:33.160 --> 0:17:35.720 slow down in terms of development? And what tier of 0:17:35.760 --> 0:17:38.000 the market are you talking you know, is it top 0:17:38.080 --> 0:17:39.520 level top tier properties? 0:17:39.680 --> 0:17:40.119 Is it? 0:17:40.200 --> 0:17:40.280 Like? 0:17:40.359 --> 0:17:40.920 What is it? 0:17:42.400 --> 0:17:42.600 So? 0:17:43.600 --> 0:17:46.679 So at McKissick, the majority of our work is with 0:17:46.880 --> 0:17:50.479 large institutions and government. So we work for the higher 0:17:50.640 --> 0:17:52.960 ed K through twelve, you know, like. 0:17:52.920 --> 0:17:55.040 The Columbia Business School right uptown. 0:17:55.400 --> 0:18:01.560 Columbia Business School, Lehman College, Hospital Olds, you know, Cony Allen. 0:18:01.880 --> 0:18:05.280 So those projects are moving along. You know, the MTA 0:18:05.600 --> 0:18:08.440 looks like you know, their their capital program is going 0:18:08.480 --> 0:18:09.080 to be whole. 0:18:09.520 --> 0:18:13.960 And so that is the bulk of of mckissick's work. 0:18:15.359 --> 0:18:20.760 We're not really working for private developers building residential or 0:18:20.880 --> 0:18:24.159 office space. But I can only talk to you about 0:18:24.200 --> 0:18:27.240 what my colleagues are telling me that are in that area, 0:18:27.880 --> 0:18:33.320 and they're telling me that their projects are slipping out 0:18:33.520 --> 0:18:37.719 to the point that you know, they're carrying staff in 0:18:37.800 --> 0:18:40.359 hopes that a project's going to start in six months, 0:18:40.680 --> 0:18:43.040 but what if it doesn't what if it gets you know, 0:18:43.960 --> 0:18:47.840 trashed completely because the interest rates are still a problem. 0:18:48.160 --> 0:18:50.240 You know, there are companies in New York who have 0:18:50.359 --> 0:18:54.159 gone out of business in the last two months just 0:18:54.200 --> 0:18:55.199 around that issue. 0:18:55.560 --> 0:18:57.800 Yeah, because they've felt staff you. 0:18:57.680 --> 0:18:59.920 Know, you basically and mc kissing you have the dream 0:19:00.080 --> 0:19:02.919 product mix. Then you want to be in hospitals, you 0:19:03.000 --> 0:19:05.840 want to be in universities, you want to be in 0:19:05.880 --> 0:19:09.840 you know, federal government projects, because they get credit cards exactly. 0:19:10.280 --> 0:19:14.359 But your colleagues that are in other sectors, they're not 0:19:14.480 --> 0:19:16.480 able to get loans, or if they are, the loans 0:19:16.480 --> 0:19:18.560 are just unaffordably expensive, is what you're saying. 0:19:19.280 --> 0:19:23.560 Well, yes, right, And as a result, the builders for 0:19:23.680 --> 0:19:26.880 those developers, you know, what do they do with their 0:19:26.920 --> 0:19:30.840 staff because the way we went our work is by 0:19:30.880 --> 0:19:35.960 having confident staff to you know, implement, you know, whatever 0:19:36.480 --> 0:19:38.040 project that we're going after. 0:19:38.680 --> 0:19:42.400 And you know, staff again is hard to find, so 0:19:42.480 --> 0:19:47.359 you can't let us a key staff person go. You 0:19:47.440 --> 0:19:50.160 have to hold onto them in hopes that the project 0:19:50.200 --> 0:19:53.240 is going to start. And so I'm seeing that across 0:19:53.240 --> 0:19:58.879 the board with these construction firms that work for private 0:19:58.920 --> 0:20:04.760 developers that are in the office space or residential space. 0:20:04.840 --> 0:20:06.800 Yeah, we've heard that a lot in terms of the 0:20:06.880 --> 0:20:09.119 labor market, that builders just don't have the people that 0:20:09.160 --> 0:20:09.919 they need. 0:20:09.840 --> 0:20:10.479 As a result. 0:20:10.480 --> 0:20:10.840 What is that? 0:20:10.880 --> 0:20:13.480 Still is that still putting pressure on costs, the development 0:20:13.480 --> 0:20:17.040 costs and just unfortunately Shara only have about thirty forty 0:20:17.040 --> 0:20:17.680 seconds left. 0:20:17.760 --> 0:20:21.160 Yeah, well development costs, everything's going up because the supply 0:20:21.280 --> 0:20:26.840 chain is a problem still So still yes, still, yes, 0:20:27.600 --> 0:20:31.560 you know there are contractors who have contingencies just based 0:20:31.600 --> 0:20:34.800 on supply chain issues and the cost that might you 0:20:34.800 --> 0:20:38.000 know result as the you know, because you can't get 0:20:38.400 --> 0:20:41.679 switch gear or any other kind of product in a 0:20:41.840 --> 0:20:44.199 you know, reasonable amount of time. And as we know, 0:20:44.359 --> 0:20:46.680 time is money, and so you want to make sure, 0:20:46.840 --> 0:20:49.320 you know, you cover yourself if you have to wait 0:20:49.800 --> 0:20:53.400 on a supply chain. So yeah, those issues are still 0:20:53.400 --> 0:20:53.879 out there. 0:20:54.200 --> 0:20:57.119 Yeah that listen, what a great dvantage point and just 0:20:57.240 --> 0:20:59.280 very real in terms of what's going on and what 0:20:59.359 --> 0:21:00.000 a great company. 0:21:00.200 --> 0:21:02.080 I want to come over and check out the buildings 0:21:02.119 --> 0:21:04.480 you're putting up. It sounds awesome. I want to go 0:21:04.480 --> 0:21:06.560 to Nashville and see that building their grandfather put up. 0:21:06.640 --> 0:21:08.280 Let's go on the road, Cheryl'll come back soon. We 0:21:08.320 --> 0:21:11.600 would love it. Cheryl McKissick Daniels. She's president at McKissick. 0:21:12.000 --> 0:21:16.320 Joining us via zoom in New York City. 0:21:20.119 --> 0:21:23.680