Speaker 1: This is Bloomberg Business Week with Carol Messer and Tim
Speaker 1: Stenebeck on Bloomberg Radio. I think this is really exciting.
Speaker 1: Cheryl McKissick Daniel joins us right now. She is president
Speaker 1: and chief executive officer at Makissik.
Speaker 2: It is the.
Speaker 1: Oldest minority owned professional design and construction firm in the US. It's,
Speaker 1: as Carol was saying before the breakup, family owned business
Speaker 1: for more than one hundred years. And I think it
Speaker 1: is incredibly interesting now, especially because of all the problems
Speaker 1: we're having regional banks, the jump in interest rates, the
Speaker 1: tightening of credit markets. So I'm very pleased to welcome
Speaker 1: Cheryl to the program. Thanks so much for joining us. Cheryl, Hi,
Speaker 1: how you doing? We're doing I'll speak for both of us. Fantastic.
Speaker 1: I love it because we have a whole week ahead
Speaker 1: of us and I'm just getting settled in here. Let
Speaker 1: me get first your take on being the oldest minority
Speaker 1: owned business, the oldest minoritady know, design and construction business
Speaker 1: in the US, and a family owned business for one
Speaker 1: hundred years. How much does it mean to you? How
Speaker 1: important is that to you?
Speaker 2: Wow?
Speaker 3: I stand on the shoulders of four other generations, and
Speaker 3: so you know, I feel like I'm winning before I
Speaker 3: get started.
Speaker 2: For them to navigate.
Speaker 3: This country of ours, this great country of hours for
Speaker 3: five generations is.
Speaker 2: An amazing thing.
Speaker 3: And so I feel honored, I feel blessed, and I
Speaker 3: feel as though I have a mission to keep this
Speaker 3: company going, especially in New York City.
Speaker 1: So how are you doing in that mission right now?
Speaker 1: How is business at Meckissick?
Speaker 2: Business is booming.
Speaker 3: New York just passed a three hundred and twenty two
Speaker 3: billion dollar budget and a lot of that is capital
Speaker 3: work throughout the state. And then of course we have
Speaker 3: a significantly large buzz for the City of New York,
Speaker 3: so there is plenty of work for Mechisic corporations are
Speaker 3: are working or have large capital programs. I think the
Speaker 3: only area where we're seeing some slippage is with our
Speaker 3: developers with respect to residential and office space. I think
Speaker 3: the interest rates are affecting their ability to make these
Speaker 3: deals work. And then we also need to deal with
Speaker 3: our affordable housing. We need to get something in place
Speaker 3: where we can get some assistance from our government for
Speaker 3: affordable housing so we can make those projects work as well.
Speaker 4: Cheryl take a step back let's go to office because
Speaker 4: we certainly are just trying to figure out if that's
Speaker 4: the next shoe to drop. And we've been speaking a
Speaker 4: lot about, you know, the nervousness that continue, certainly among
Speaker 4: the regional banks. They rallied a bunch of them today,
Speaker 4: But nonetheless there's still questions. So office space specifically, how
Speaker 4: would you describe it? And you guys really work within
Speaker 4: the state of New York.
Speaker 3: Correct, we're in New York, We're in Philadelphia, Orlando, and
Speaker 3: down Nashville, and you know, office space right now has dwindled,
Speaker 3: as we know as a result of COVID. You know,
Speaker 3: if we just take my hometown Nashville, Tennessee, where Amazon
Speaker 3: just finished a beautiful, you know, mid rise building, there's
Speaker 3: nobody in it. People do not want to come to
Speaker 3: work the way they used to. Most people want to well,
Speaker 3: I wouldn't say most, but a lot.
Speaker 2: Of people want to work remotely.
Speaker 3: We in Nashville, we're trying to renovate or develop a
Speaker 3: building that my building, my grandfather built in nineteen twenty four.
Speaker 3: And I was just on the phone with a prominent
Speaker 3: developer on Saturday saying, okay, can we make it office
Speaker 3: space and the answer is absolutely not.
Speaker 2: You can't get a loan from banks for office space.
Speaker 3: For my understanding, a lot of the banks that are
Speaker 3: failing are the bank that you know, let money on
Speaker 3: you know, office space construction, and so you know, it
Speaker 3: is in a crisis right now, and you know, I
Speaker 3: don't see, uh.
Speaker 2: And from what I can tell, how we're.
Speaker 3: Going to recover with the office space without doing maybe
Speaker 3: some conversions. Yeah, we know, the conversions, Yeah, conversions. Housing
Speaker 3: is a big issue in New York. As we know,
Speaker 3: we need over eight hundred thousand units of affordable housing.
Speaker 3: Housing is an issue in most urban cities, and so
Speaker 3: you know, maybe that's the answer.
Speaker 4: But a bunch of developers I talked with at Milkin
Speaker 4: last week, they said, how do you take those buildings
Speaker 4: that are in midtown old buildings like they're just not
Speaker 4: the idea of converting them into housing. It just doesn't
Speaker 4: make sense. You really need to knock them down. But
Speaker 4: then there's the problems and issues where the exteriors you know,
Speaker 4: are old and wonderful and nobody wants to mess them up.
Speaker 4: So it's it's complicated and converting isn't so easy, or
Speaker 4: you know, creating conversions.
Speaker 1: Is this good news?
Speaker 2: Form chistic?
Speaker 1: I mean, can you guys do conversions or can you
Speaker 1: go to places where we knock down buildings and put
Speaker 1: up new ones?
Speaker 2: Is this great news? We absolutely can.
Speaker 3: I mean any construction project that's vertical, we are happy
Speaker 3: to participate it on in I can't say it's great
Speaker 3: news for the private industry because we still need our
Speaker 3: developers to be able to borrow money at a good
Speaker 3: interest rate, so the deal makes sense for them, and
Speaker 3: so that's a concern for our industry.
Speaker 4: So how much has it slowed down? Like, does it
Speaker 4: is a crisis situation in terms of what you've seen
Speaker 4: slow down in terms of development? And what tier of
Speaker 4: the market are you talking? You know, is it top
Speaker 4: level top tier properties?
Speaker 2: Is it like?
Speaker 4: What is it?
Speaker 2: So?
Speaker 3: So at mchisick the majority of our work is with
Speaker 3: large institutions and government. So you work for the higher
Speaker 3: ed K through twelve.
Speaker 4: You know, it's like the Columbia Business School right uptown.
Speaker 3: Columbia Business School, Lehman College, hospitals, you know, Coney Allen,
Speaker 3: So those projects are moving along. You know, the MTA
Speaker 3: looks like you know, their their capital program is going
Speaker 3: to be whole.
Speaker 2: And so that is the bulk of of mckiswick's work.
Speaker 3: We're not really working for private developers building residential or
Speaker 3: office space. But I can only talk to you about
Speaker 3: what my colleagues are telling me that are in that area,
Speaker 3: and they're telling me that their projects are slipping out
Speaker 3: to the point that, you know, they're carrying staff in
Speaker 3: hopes that a project's gonna start in six months.
Speaker 2: But what if it.
Speaker 3: Doesn't, what if it gets you know, trashed completely because
Speaker 3: the interest rates are still a problem.
Speaker 2: You know, their companies in New York who have.
Speaker 3: Gone out of business in the last two months just
Speaker 3: around that issue.
Speaker 2: Yeah, so they call staff.
Speaker 1: You know you basically, I mean kissing you have the
Speaker 1: dream product mix. Then you want to be in hospitals,
Speaker 1: you want to be in universities, you want to be
Speaker 1: in you know, federal government projects because they get credit
Speaker 1: cards exactly. But your colleagues that are in uh, other sectors,
Speaker 1: they're not able to get loans, or if they are,
Speaker 1: the loans are just unaffordably expensive, is what you're saying.
Speaker 3: Well, yes, right, And as a result, the builders for
Speaker 3: those developers, you know, what do they do with their
Speaker 3: staff because the way we went our work is by
Speaker 3: having confident staff to you know, implement you know, whatever
Speaker 3: project that we're going after. And you know, staff again
Speaker 3: is hard to find, so you can't let us a
Speaker 3: key staff person go. You have to hold onto them
Speaker 3: in hopes that the project is going to start. And
Speaker 3: so I'm seeing that across the board with these construction
Speaker 3: firms that work for private developers that are in the
Speaker 3: office space or residential space.
Speaker 4: Yeah, we've heard that a lot in terms of the
Speaker 4: labor market, that builders just don't have the people that
Speaker 4: they need.
Speaker 2: As a result.
Speaker 3: What is that?
Speaker 4: Still is that still putting pressure on costs, the development
Speaker 4: costs and just unfortunately Shara only have about thirty forty
Speaker 4: seconds left.
Speaker 3: Yeah, well development costs, everything's going up because the supply
Speaker 3: chain is a problem. Still so still yes, still, yes,
Speaker 3: you know there are contractors who have contingencies just based
Speaker 3: on supply chain issues and the cost that might you
Speaker 3: know result as the you know, because you can't get
Speaker 3: switch gear or any other kind of product in a
Speaker 3: you know, reasonable amount of time, and as we know,
Speaker 3: time is money, and so you want to make sure,
Speaker 3: you know, you cover yourself if you have to wait
Speaker 3: on a supply chain, so yeah, those issues are still
Speaker 3: out there.
Speaker 4: Wow yeah that listen. What a great vantage point and
Speaker 4: just very real in terms of what's going on and.
Speaker 1: What a great company. I want to come over and
Speaker 1: check out the buildings you're putting up. It sounds awesome.
Speaker 1: I want to go to Nashville and see that building
Speaker 1: your grandfather put up.
Speaker 4: Let's go on the road, Cheryl, come back soon.
Speaker 2: We would love it.
Speaker 4: Cheryl McKissick Daniels. She's president at McKissick, joining us via
Speaker 4: Zoom in New York City,