JF2315: High Density Parking With Matthew Wiatrek & Ben Trantham #SkillsetSunday

Matthew Wiatrek & Ben Trantham Real Estate Background:

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“By using a mobile app you now can request your car from our parking garage” – Trident Structures

TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast, where we only talk about the best advice ever, we don’t get into any of that fluffy stuff.

With us today, Matthew Wiatrek and Ben Trantham. How are you doing, Ben and Matthew?

Matthew Wiatrek: Doing well!

Ben Trantham: Doing well, thanks for having us, Joe.

Joe Fairless: I’m glad to hear that. So we’re gonna be talking about high-density parkings; we’re gonna be talking about parking lots today. It is an asset class that doesn’t get talked about a lot, at least in my circle, and I always find it interesting to talk about stuff that I don’t know a whole lot about… And that is certainly parking lots.

Ben is president, Matt is vice-president of Trident Structures, and they focus on parking lots. They’ve got a website, Trident-Structures.com. There’s also a link in the show notes. They’re based in Cowtown, Texas. Who knows what Cowtown is, and where Cowtown is? Yes, it’s Fort Worth; good guess if you’ve guessed it. That’s where I’m from, too.

So let’s talk about your backgrounds in parking lots first… Where should we start with that?

Ben Trantham: Hey, Joe. This has been really about eight years ago, we realized one of our only [unintelligible [00:04:07].22] customers – again, coming from our design/build industrial construction background – they had a project up in Calgary that needed to expand. As a mid-rise development, they were gonna be forced to pay for some parking in a municipal facility in [unintelligible [00:04:22].08] dig deeper, whatever the options may have been, those weren’t on the table. So we came in with some high-density mechanical parking and said “Listen, this is what we do, automated storage and retrieval for a variety of commodities”, and that was the start.

So they were gonna be able to provide their own parking right on-site, invest in their own property, with space they already had. So since then, we’ve worked in a variety of locations around the U.S. We’ve traveled to ten different countries, learning what’s out there, what’s been working for 40 years, qualifying some of the OEMs, figuring out how we can put our special sauce on it, and really understanding how to bring value to folks like your audience.

So we’ve worked on a variety of the Carvana facilities around the country, everything from fabricating the structures, to installing the systems, and providing some maintenance/support to those facilities. Most recently, we actually have a high-density, fully-automated parking project here in Fort Worth, on a piece of property overlooking the botanical gardens in this region… A piece of property that the market said was undevelopable and was priced as such.

Long story short, with respect to parking, it’s a  class A office space, it is dedicated to that, but we’re gonna be putting 72 parking spaces on the footprint of eight, right outside the front door.

Joe Fairless: Wow… 72 parking spaces on the footprint of 8. So just to catch up to Best Ever listeners, because I might have teed it up in a misleading way… Trident Structures – you all have a company that creates these structures on a parking lot, that you can stack cars on top of, so that you can park more cars in less space, right?

Ben Trantham: Essentially, yes.

Joe Fairless: Okay. So the eight spaces — did I hear you right, 72 cars in 8 spaces?

Ben Trantham: You heard it right.

Joe Fairless: Alright. How do you do that? You go really high, clearly…

Ben Trantham: We go really high… So we have a couple of options on this site, and that’s part of what makes us unique in the marketplace… We’re able to evaluate with experience a variety of different system types… Because again, for many decades, in other parts of the world and in the U.S, especially over the last decade, a lot of mechanical systems have been employed, and there’s actually quite a few out there that most people don’t realize. But in this case, we landed on a final solution of a couple of towers; it’s an open-air garage, and it has an elevator in the center of it. Vehicles pull onto a steel pallet, we lift it up, and it slides left or right into a storage spot for the vehicle.

In this case, we’ll actually be deploying a first of its kind with this system a mobile app that also — in this case, again, the land use is office… These folks will be able to retrieve their vehicle from their desk. They’ll see the queue on-demand, wherever they’re at, on their smart device. They’ll come down, right outside the front door, and pick up their vehicle.

As you mentioned, it’s a structural tower, open-air… We’ll see how the developer ultimately wants to dress it up and make it look good, but in this case, it’s interstate frontage, a piece of forgotten property, and it’s a pretty exciting project, that is on the cusp of getting bought, much less pre-leased, before we even finish 100% construction [unintelligible [00:07:38].23]

Joe Fairless: That’s fascinating, how you were able to do that… Because it just opens up so many other possibilities with buying real estate. And I think that’s a really interesting angle, because if an investor, as we all are who are listening to this show, as a real estate investor who looks at a piece of property, especially — let’s talk commercial real estate, because it’s easier to think about in this context… If three’s a piece of real estate that doesn’t have a lot of parking, but is in a good location that you like, and the structure is pretty good too, then this is the solution for it. You just stack them. You just go straight up.

Matthew Wiatrek: Yeah. Joe, I think it’s not limited just to commercial. Even on the multifamily…

Joe Fairless: Well, that’s what I meant, multifamily, too.

Matthew Wiatrek: Yeah, on the multifamily side… If you’re a value-add investor, like the majority of your audience is, or if you’re on the development side… So if you’re developing an apartment community in Downtown Dallas, or you’re in one of the tertiary markets, the key here is the high density system – we’re talking about the parking component of it, but the system itself, the beauty of it is it’s for the creative investor, the creative developer. They’re getting land use back. So what else can we do with that? What are the kind of amenities that we can bring to attract and retain tenants? What other cash-generating opportunities? We can talk a little bit about those (self-storage, and whatnot), to help drive rents or just improve cashflows on the property.

So it’s really a tool. We talk about the parking component, but there’s so much more to just the high-density parking systems, that for the creative investor/developer it really opens up, and I think gives you a competitive advantage, when  you’re out in this market especially.

Joe Fairless: If you have an apartment community, how does installing this structure make you more money?

Ben Trantham: That’s a good question. There’s several scenarios we’re talking through with several interested parties right now that says “Hey, there’s a lot of things in the current market that got accelerated due to Covid.” Everything related to e-commerce, final mile logistics, the increase of fleets as it relates to the future electrification of the automobile industry. In Dallas there’s a startup company that’s competing with Uber and Lyfts, and it may be more sustainable simply because of how they classify their employees… But the interesting thing is they will actually own their fleets and vehicles, and they’ll eventually be electric.

So when you take a look at what we’re building here in Fort Worth at the project called the Triune Center, it’s essentially an automated storage and retrieval vault. So when  you think about the fact that we can store and retrieve something that’s at least 2-3 tonnes, and can fit in that virtual box of the space claim of the vehicle, what else can you put in that space in addition to a vehicle? Several things, and we can talk about those in a moment. Just to plant a seed, one of them with respect to the multifamily market – self-storage.

Joe Fairless: Storage, right.

Ben Trantham: You can put a storage box on these systems. But you can create secure space, easily accessed digitally, if you have some of these systems on your property. So is that high-end vehicle storage? Is that fleet storage? You name it. Electric vehicle charging…

Matthew Wiatrek: Amazon distribution…

Ben Trantham: There’s so many conversations we’re a part of right now, where people are expanding their mind on how to actually make the parking facility portion of the project revenue generating… Because in this day and age, with the technology, we can control access, we can automate communication, revenue generation… We’re really just selling space. But at the end of the day, it can be automated or it can be non-automated. We also don’t wanna paint the picture for the audience that just because you’re on the edge of the city, more of a garden style development or whatever – there are different price points within the family of solutions here, and it could create some interesting opportunities for whatever your property or your local market is hungry for.

Joe Fairless: If I want five parking spaces full of these systems that stack five cars tall, how much will that cost me?

Ben Trantham: Let me answer that by giving a little structure around what’s out there. There’s everything from manual systems that simply lift up one level, or even up to four levels; sometimes it’s a valet operation, sometimes it’s a dedicated operation where you will operate the system yourself with an RFID card, or a manual control that only you have access to… There’s semi-automated systems that are next up in price point, but give you the ability to only get the vehicle you need out of the storage area. And then there’s the fully-automated.

So it could be as low as, installed, anywhere from 5k to 10k a space, which is going to be equivalent to, if not less, in some cases, in your surface lot construction. If you’re a value-add group, you may already have the sufficient concrete to employ some of the simpler systems out there to get density, or add some flexibility of use; again, self-storage, or whatever it may be.

If you wanna go sophisticated – in Fort Worth, the project we’ve mentioned, we’re in the mid-twenties on the parking system for a space. So again, that was made possible from a proforma standpoint because the land – we were able to activate unutilized land, because the market saw it at a lower value. We’re putting 30,000 sqft. of class A office space, again–

Joe Fairless: Yeah, I get that. I’m thinking more for everyone who’s listening – most people aren’t developing that type of land. A lot of people do have value-add apartment buildings, so… That’s helpful.

So the 5k to 10k a space – let’s just say people are parking their cars there. I’m a resident, I live in a  unit, and – holy cow, there’s my car… But oh, wait. I parked it, and it’s on top of three other cars. How do I get it down?

Ben Trantham: So there’s a couple of ways to do it. If it’s manual, that’s what we call a dependent system, where you have to have access to the vehicle below to retrieve it.

Joe Fairless: That’s a problem.

Ben Trantham: If it’s your vehicle – no problem, you have the keys. If you’re the owner/investor/developer, then you may have reason to want to limit that cap ex, so you employ a system where they’ve got control over whatever they’ve put in that space, whether it’s their motorcycle, their other car, or their self-storage box, so that they can manage that themselves.

A semi-automated is a great way to go, because one of the system types out there that’s very common is – if you can image a Hollywood squares type, where a cars shift left, they shift up and down… But in those systems, they’re independent. You only need to have access to the car you want. So it’s semi-automated in the sense that it knows how to make the machinery movements to present the vehicle you want, but you don’t have to literally have the keys to any other vehicle to get yours. That’s actually very easy. In the multifamily space in the U.S, what we call a lift-and-slide, semi-automatic system is actually becoming quite popular.

Joe Fairless: Okay. And that’s somewhere in between the 10k and 25k range?

Ben Trantham: Yeah, so that one’s gonna be probably more on the 10k to 18k range. You’re going to be towards the top end of that if you’re only putting 20 spaces in. But when you start to put in 100+ or more… And I’m not saying 100 is the breaking point, but as with anything, the more you do, the lower the cost per space.

Joe Fairless: Of course.

Ben Trantham: What we’re seeing in the U.S, most of the space is being built with semi-automated, with probably between 75 to maybe 200 in count.

Joe Fairless: What type of permit, if any, is required for this type of usage?

Ben Trantham: I can’t imagine a vast amount of your audience perhaps is — correct me if I’m wrong, but in places like L.A. County…

Joe Fairless: We’ve got a lot of California listeners.

Ben Trantham: There you go. So in L.A. though, they’ve actually done  a fantastic job developing a review process, where prequalified equipment needs to be selected. There’s been certain safety constraints verified… They’ve actually developed their own structural testing procedure, as I understand it.

So there there’s a well-primed mechanism to get these things approved and implemented. Although it’s an interesting use case, Carvana, the e-commerce car sales company – they’re putting up these automated towers all around the country. We’ve worked on at least 13 of them, in a variety of ways… But they also have paved the way, through a variety of  municipalities, getting these things approved.

So some cities, like L.A, there’s a rigorous process, but it’s a proven and fleshed-out process. Then in some cities, quite honestly like Fort Worth, so far we’ve been very upfront; strategically, they worked with us to — we’ve learned some things over the years about what is gonna make these systems most attractive from a regulatory standpoint… So an open-air garage that is breathable, you can limit the cap ex, and we don’t have to sprinkler so far in this location… So at the end of the day, you’re always up to the review of the local officials, but at the end of the day, it’s equipment. And there’s even some tax advantages associated with that as well.

We’ve commissioned some tax studies… Depending on how you implement the primary structure, even with the equipment in and of itself, a vast amount, if not the entirety of your high-density mechanical parking project could be depreciable year one 100% through bonus depreciation in the current tax law.

If you dispose of that property or resell that, the new owner – at least through 2022 – will get the same benefit. [unintelligible [00:17:39].08] if you don’t wanna do it all year one, but depending on what your portfolio looks like and whatnot, that could be attractive to some folks. It is expected that that tax benefit will be renewed, with some of the tax professionals we’ve talked to… But really, it depends on where you’re at.

The thing I wanna really impress upon you, Joe, and your audience – this isn’t brand new technology. This stuff is, one, proven, but more importantly, in getting things done, L.A. is a great case in the fact that these things have been around long enough they’ve developed a way in more involved locations to handle it.

NFPA (National Fire Protection) codes addressed specifically mechanical parking a few years ago. Most municipalities, if they’re going to take a position enough to make it difficult or easy on implementing this stuff, they’ve got great precedent if they haven’t already figured it out. Things like national codes, building codes, fire codes are responding in a way that we don’t’ have to overbuild these systems like maybe a decade we had to, because people were concerned about a variety of elements of safety.

So there’s a lot of things I mentioned to answer your question. I hope I answered it. If not, let me know.

Joe Fairless: Yeah, you did. Thank you. I appreciate that. I think it’s really interesting from a multifamily owner standpoint… And if you have an infill location and you don’t have much green space – maybe you’ve got all one-bedrooms, or your space is limited; you could do self-storage through some setup like this. As you said, you’re selling secure space. That’s what’s interesting. It’s like “What business are you in? No, no, no, what business are you REALLY in?” It’s like, okay, you answered the “What business are you really in” part, which is selling secure space. Thank you for that.

Anything that you wanna mention as it relates to this before we wrap up? I wanna make sure we’ve talked about anything that you think would be relevant before we wrap this up.

Ben Trantham: What I would do, Joe, is pull on the string you’ve just mentioned just a little bit further. We get into these conversations with some folks, and we’ve been conversing with municipalities, universities, individual developers, all across the gamut of folks that could potentially be interested in these types of systems… And there’s no problem ever in getting people excited. When the rubber meets the road, one of the things we’re learning is, really again, what you’ve just said – yes, we’re selling secure space, but these things are better than a Swiss Army knife, in the sense that directly, they can reveal some incredible new opportunities of how you leverage or utilize the space opportunities you can have by employing one of these systems. Add that dog park, or increase that open space, make up for the space that you need to give back to the onslaught of delivery van spaces we may need to provide now, and food delivery, and you name it.

But indirectly, we really wanna leave with folks the thought that the potential is really at your limit of creativity. So what else could you do with the space that could be revealed? Do you have such an amount of surface lot – if you’re a value-add and you come onto a property that others developed, is there an amount of space that could be reclaimed, that a vast amount of value can be revealed through an amount of space that could add units, that could reveal property that could go to a new land use, or whatever it may be…

We were in meeting about a year ago with a development group that said “Man, the thing that annoys me the most with some of my properties is having to deal with the trash dumpsters. Could I automate the material handling of where those dumpsters are, bring it more in close proximity to where people wanna use it, but then automatically kick it out at the right time to the best place for where the trash track could get to it?” Well, the answer was absolutely yes, because again, we’re already handling big and bulky with the vehicles… But some of the off the wall potential that could be is just stuff that we’ve never considered before.

So you’re right… To pull on that string – yes, we’re space-savers, we’re selling secure space, but the real return that can be realized is not what you can do from even solving a parking problem, but just what incredible opportunities could be revealed because now you can go after a piece of property that previously wasn’t available to your development footprint. Or what else, if you’re looking at a property, is going on around it in the gig economy or in adjacent development… All of a sudden, you get a tool here that – again, because it’s giving space, but because it’s secure and controlled, there’s just so many things that you could do. Matt, you’ve been in this space a little bit more, but that’s really the seed, I think, most important to leave with folks.

Joe Fairless: It makes sense. The challenge though, just from a practical standpoint, that I would have as an apartment owner – I have ideas for it, but I would be concerned about the permitting and approval process to actually execute those ideas, and how could you possibly get the approval of everyone who needs to approve it prior to closing on, or at least getting under contract, that deal. Do you have a solution for that?

Matthew Wiatrek: Well, I think you look at our background, Joe – we’re not an OEM. We’re design/build contractors. That’s our history. So navigating those waters from conceptual stages of a construction project, through the commissioning process – that’s what we do, and that’s what we’re experts at.

Joe Fairless: You could customize it based off of what’s needed by the permitting process.

Matthew Wiatrek: Right. Our value is to say “Look, here’s all the options, and then to help you as the end user or potential client navigate those waters, and to walk you through to [unintelligible [00:23:19].09] from a concept to a reality. That’s the role we play.

Joe Fairless: So it’s not a “round peg, square hole.” You can actually shave it down to whatever you need to, or customize or update it based off of what they’re saying. That makes sense.

Ben Trantham: That’s right. Real quick, Joe, to go back to the project here in Fort Worth  – we knew on the frontend this was the first of its kind for the city. We had actually already primed the city as far as five years ago that “Hey, we’re in town. We’re looking to do this stuff”, and we had support from day one. But we knew there would be certain challenges from a fire standpoint, from a design standpoint, from a potential developer tenant standpoint… There were certain things we did, like make it a standalone facility, open-air, various things like that that made it less of a target for any type of barrier to getting this thing approved. So some of them were site-specific, some of them were in the design… And just like Matt said, that’s what we do.

Another important thing to consider – it’s equipment, right? One of the things we do in our company is we maintain facilities that are 24/7. Again, our background came from industrial space, so we spent a lot of time traveling around the world in the last eight years. Good design, and then after, construction support is essential. So it’s one of the things we do, and it’s how we’re trying to position ourselves as a differentiator. But no matter what you do, folks, if you consider the use of these tools, you’ve gotta make sure you’ve got the backend squared away. Just like you take care of your HVAC systems, the elevators, whatever you may have. And that’s what we do for a living as well, is take care of these systems from a remote standpoint, and from an outside standpoint, mechanically.

Joe Fairless: How can the Best Ever listeners learn more about Trident Structures?

Matthew Wiatrek: You can visit our website, Trident-Structures.com. We’re also on all the major social media platforms. LinkedIn and Instagram I would say are our most active. You could obviously email Ben or I directly.

Joe Fairless: What’s your emails?

Matthew Wiatrek: mwiatrek@trident-structures.com.

Ben Trantham: And then ben@trident-structures.com.

Joe Fairless: Ben, Matthew, thank you so much for being on the show, talking to us about your business and how it could help us make more money on our current properties, or uncover opportunities that others are passing by because they know about this.

Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you again soon.

Matthew Wiatrek: Thanks, Joe.

Ben Trantham: Thanks, Joe.

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