A Conversation with Rob Steward: Navigating Change, Driving Growth

Welcome to Oppidan, Rob! What excites you most about joining the team and leading development in the Southeast region?

Thanks for the warm welcome.  What excites me is the team that I have joined. Oppidan finds down-to-earth, cream-of-the-crop professionals that make coming to work every day enjoyable.  Oppidan also has a broad portfolio of asset classes including data center and senior housing, both of which have helped us grow at a time when our competitors have been challenged.

You have over 17 years of experience in real estate development. How has the market evolved during your career, and what trends are shaping its future?

Trends have come and gone during my career which started in real estate prior to the Great Financial Crisis and has evolved through our post-COVID world, but I think there are a couple macro trends that are here to stay. 

The first is the migration south. The Southeast has become a growth market not only because of its warmer climate, but because of the pro-growth and business friendly nature of many of its jurisdictions in comparison to much of the rest of the country. Businesses want to be here so this is where job growth and real estate opportunities are going to happen.

The second trend is suburban development. This trend was caused by our current economic environment, which I believe will be around for a while. Interest rates were at all-time historical lows for nearly a 15-year period from the Great Financial Crisis until the Federal Reserve Board started raising them in response to inflation in 2022. The fact that interest rates increased from 2022 to 2023 should not have been a surprise to anyone, but the rate at which the increases were instituted put financial markets into shock. The state of the capital markets has driven investors to other asset classes other than real estate over the past couple of years as they search for yield. These high interest rates and higher equity return requirements coupled with higher construction costs have caused developers to seek less complicated (less risky) and less equity intensive projects (with the exception of data centers). These less capital intensive projects are typically located in the suburbs and exurbs. This has been making development extremely difficult in urban sub-markets, but this trend should benefit suburban sub-markets for the next few years, until capital gets used to the new reality.

The third trend is a lack of skilled labor in the workforce. Over 40% of the current construction workforce is expected to retire in the next decade, and we already have an existing shortage.  We, as a society, just aren’t developing enough new skilled trade workers to replace those that are leaving the industry, and this labor shortage is driving up the cost and duration of construction. Commodity prices go up and down, but labor has a long-term impact on our collective ability to do business. Until we solve this problem, the cost of housing and other real estate asset classes will only go up. This can be resolved by creating more training and apprentice programs, and creating incentives for youth to enter this field.

Oppidan is expanding its presence in the Southeast. What opportunities do you see for growth, and what types of projects are you most excited to pursue?

Oppidan already has a presence in the southeast in affordable housing and industrial and we will continue that. Our affordable housing projects – Birch & Branch, Pines at Peach Road and Barton Oaks – are exciting because they are fulfilling a major community need. Oppidan’s industrial projects – Blue Ridge Commerce Center and Apex Commerce Center – are providing critical distribution, manufacturing, and transload facilities for the region. We’ve also been doing a good amount of data center work throughout the country for hyperscalers, but I’m eager to help Oppidan expand our presence with enterprise users throughout the Southeast. I’m also eager to get involved in more retail and active-adult projects, where the fundamentals make sense in the right submarkets, especially since a large portion of my background has been in multifamily.

You’ve been involved in developing more than one million square feet of mixed-use, multifamily, retail, and hospitality projects. What key lessons have you learned from these large-scale developments?

An older and much wiser colleague of mine had a great mantra, “Time kills all deals.” Basically, when things are great you never know when things can change so keep your foot on the gas.  Even when things seem bleak, trudge on and keep on finding a way to try to make the deal work, because you never know when things will change. Additionally, choose your capital partners carefully to ensure your incentives are aligned. I’ve seen numerous examples of value getting destroyed due to some hastily negotiated terms during the eleventh hour when drafting joint venture documents. At the end of the day, you want your investor’s interests to be aligned with yours, which leads to your project’s success.

Your past projects, like Seaboard Station in Raleigh, have earned industry recognition. What factors do you think contribute to a successful development in the Southeast?

My definition of a successful development is one where all stakeholders including the local jurisdiction and neighborhood can agree that the project fills the needs of the community, the project moves smoothly, and everyone does well financially. 

The majority of jurisdictions in the Southeast share a sense of collaboration to move new projects forward with a sense of urgency, in contrast to other areas of the country. We want to do business. There will always be the not-in-my-backyard crowd in every community, but the vast majority of community stakeholders that I have encountered have been supportive of new development as long as you communicate effectively, and they see some benefit in the project overall. This culture is what will keep the Southeast advancing.

What makes Oppidan different in the competitive real estate landscape of the Southeast?

What gives Oppidan its competitive advantage is really our experienced construction management team that has a proven track record of delivering the most complex projects inside of tight timeframes.  We are extremely focused on not just finding the deal, but bringing the project to fruition and keeping our promises to our partners, investors and the community. Additionally, our expertise across a myriad of product types has allowed us to find and create some wins in difficult financial conditions.

Looking ahead, what’s your vision for Oppidan’s role in shaping communities across the Southeast, and what can we expect from your leadership in the region?

No one person or organization can shape a community. It takes a variety of stakeholders to be able to enact change. Real estate development is in essence bringing change to an existing community. To do this properly you really need a leader who:

1. Cares about the community
2. Has a willingness to engage and listen to the community’s stakeholders
3. Has a willingness to find creative solutions to help build consensus
4. Delivers on their promises.

My role will not only be to expand business for Oppidan in the region, but to build new relationships and build trust across the communities in which we operate by doing these four things. Together is how we will shape communities.