Timeless Business and Building Strategies

Creating Value Without Chasing Growth: A Construction Company's Philosophy

• Tony Johnson

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Sam Rockaway shares his journey from body shop owner to Senior Vice President at Redcom Design and Construction, where they've doubled company size over 14 years to reach $70 million in annual revenue. His team provides vertically integrated design-build solutions with in-house engineering, architecture, and project management capabilities.

• Started with automotive experience before transitioning to construction in 2011
• Redcom was founded in 1982 by Jim Reddington and later led by his son Greg
• Company focuses on industrial buildings, automotive dealerships, and institutional facilities
• Their sales cycle typically spans two years from initial contact to project commencement
• Uses a three-stage sales process tracked through Salesforce CRM
• Implements cutting-edge technology including Procore, Sage, and Matterport 3D scanning
• Offers free feasibility studies, site analysis, and concept work to build client relationships
• New Jersey approval process can take 1-2.5 years and cost up to $1 million
• Multiple regulatory agencies involved include DOT, DEP, soil districts, and local towns
• Company maintains focus on New Jersey market rather than geographic expansion
• Future growth areas include multifamily residential and life sciences facilities

If you're interested in learning more about Redcom Design and Construction or connecting with Sam, find him on LinkedIn or call their office directly.

https://www.redcomllc.com/



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Tony Johnson:

Welcome to another episode of Timeless Business and Building Strategies. Today I have Sam Rockaway. He's with Redcom Design and Construction. Thank you so much for joining us today, sam.

Sam Rockaway:

Oh, you're welcome. Thank you so much for having me Very excited to be here. Yes, sir.

Tony Johnson:

So a quick background on yourself, Sam. So you guys right now are located in New Jersey. Could you kind of give us a background about yourself and how you got into construction?

Sam Rockaway:

and after college. I owned a body shop for many years, for about 15 years, and while I was owning my body shop I attended college, put myself through school and then around I guess the 10th year of owning the shop, I sold the body shop and then went to Johnson Johnson to work at corporate, which is was a complete change and that's where I really learned how to sell, because I had to deal with company presidents at the operating companies and get them to agree to certain comments on reports, which is very difficult. That's not really my personality. So 9-11, I was flying around the world at the time 9-11 had happened, I was in a tower a week before and I just decided to move on to do other things, didn't really have a plan.

Sam Rockaway:

I knew cars, I knew automotive, so I sold insurance specifically to car dealerships for about a year and that's how I met the owner of Redcom. The same day I met him, he asked me if I wanted to work here in the construction industry and I had no idea what construction really was. And four years later I said yes to him and it was the best decision I ever was. And four years later I said yes to him and it was the best decision I ever made and professionally, I've learned tremendous a lot. I've grown and we've doubled the size of the company in the last 14 years.

Tony Johnson:

That's amazing. Now, all right, so let's kind of go through. Thank you for that, that's amazing. So that's a great transition in there. So redcom so redcom didn't start out as redcom, so let's kind of walk through there. So redcom's been around since 1982, so could you kind of walk us through establishment and kind of give us a background on the company yes, so redcom was founded by a person named Jim Reddington.

Sam Rockaway:

Jim Reddington has a son, a couple of kids, and Greg Reddington is one of them. So Greg is Jim's son and Jim was running the company doing a great job. He had four employees and Greg took over the company, I think in 92. He graduated from Rensselaer with a degree in structural engineering. He worked outside for a little while independently and then came in and took this over and right away he built it up to nine about nine or ten employees. When I got here, there was about 12 employees here in 19 in 2011.

Sam Rockaway:

So I sold for Greg a little bit before I actually took a job here and then okay, and then. So that's what we did. So we have in-house engineering, we have in-house architecture and we have project managers that can combine. We can take a project from concept to completion. And then my role I was tasked with business development. Greg really wanted to just be an absentee owner, so Greg spent two years with me. I had I sat in his role. I was tasked with business development. Greg really wanted to just be an absentee owner, so Greg spent two years with me. I sat in his office. I shared an office with him. Everything he did, I did Everything I did. He came with me and he's a pretty intense guy, so it was definitely a tough two years. I was like, oh my God, did I make a mistake? But, like I said, I love it and I love Greg and he's been great to me. And so Greg, you know, after two years, took off, went down whatever he did. He moved to Italy. He did this, he did that and he would check in periodically with us and we then decided to build a company by essentially, just, you know, doing the right thing for the customers and going out and seeking new business in the lines that we were already in. So Greg had established our markets, which at the time were institutional, so private schools and religious facilities, industrial, so industrial would cover large industrial buildings, warehouses, logistics companies, light manufacturing, heavy manufacturing or flex space and then automotive dealerships. And that's what kind of attracted me, because I understood that business very well and we design and build car dealerships and it's a very complex process, it takes a long time and it involves the brand and it involves the owner and the brand has one mission and the owner has another mission and somehow you have to make it work. You know, a car dealership is no different than a franchise like McDonald's or Burger King or something else. Right, you have to be the same color and the same kind of shape, but the site dictates the shape of the building and what you can and can't do.

Tony Johnson:

Absolutely. So you know something that's intriguing here. So there's not everybody integrates and so vertically integrating with any business, you know that it's great when you can do it. It's a challenge and you have to have a lot of business established to pull in in in-house design engineers for civil engineering and then architecture. So it looks like you guys have built long-term relationships. So one of the good things when we talk about car dealerships, you guys it looks like you do toyota right dealerships. So, um, you know you, you get the, the Toyota dealerships and then you guys travel around probably and do Toyota, toyota, toyota. Once you do the new design, then they have to do refreshes, like any other franchise basically. So then you guys, once you've done that initial design, have the file, you can go help them with the refresh. So it's repeat business.

Sam Rockaway:

Right and the brands come out with new images, probably every eight to 12 years. And the other interesting fact is if a dealership is sold and there's a lot of sales, there used to be over 600 rooftops. We'll call them rooftops, a dealer like a point. Sometimes they're referred to as a point, a shingle or a rooftop. It used to be over 600 of them in New Jersey. Now there's around 500 of them and through consolidation. So whenever there's a buy and sell transaction for a dealership, a franchise only new car, not used car, a new car dealership the brand looks at the image of the facility and if it's not compliant with what their expectations are or what their requirements are, they most of the time will have that dealer sign into that contract that they will get that brand, that image, upgraded over. It could vary, so say, one to four years, something like that, but they have to commit to doing it.

Tony Johnson:

Yeah, and that can turn into a lot of money. So that's a lot of opportunity for you guys. And so when you guys were niched down in this and so normally the success, and when you start to really scale and build this up and it sounds like when Greg took it over from his father, that's kind of what you guys did you honed in, niched down and really started to scale with your sales techniques. Now not, you know, business development one is one thing. So when you're going out, what all are you just continuing to try and pursue and grow those relationships? Do you expand your territory? How do you go find new clients?

Sam Rockaway:

So when I first started here, I honestly had no idea what I was doing. All I did know was the customer is everything right. Without a customer, we have nothing, and at the end of the day, I work for Redcom, so all I have is my word. So those were the two things that drove me, and I had an architect that has been here at the time 20 years. I had the head of construction and I had our most senior engineer, site civil engineer and our head estimator. So let me take a step back With those four guys.

Sam Rockaway:

When I came here, greg used to work about six or seven months a year and then he would spend the rest of the time with his family. So he would go out, get some projects, come back, give them to everybody and then he would go off and do what he wanted to do with his family and then, when they were ready to be sold, greg would jump back in and go sell the deal. The team that I was given was hungry. Everybody here was hungry for leadership, they were hungry for work and they had positive attitudes. So by me showing up, these four people listened to me. It was very intimidating for me because I didn't know the difference between a TPO roof and a fully adhered roof. I had no idea what I was talking about. So they came around to all the meetings with me. They helped me. I opened the door and they kind of went through the process until I figured out how to do it on my own. So I had a great team.

Sam Rockaway:

So what did I do? I just, essentially, I looked for associations that we could be a part of. So NJ CAR in New Jersey is an automotive association that we were a member of at the time. So I became active in that association. I became active in the industrial association and I became active in the school organization for private schools, the NJAIS. And I went and I met with the presidents, the key KDMs, the key decision makers, the board members and essentially just drove around for a year knocking on doors, trying to meet with people, saying that we're out here, we can help you, we could do a concept, we could do a free concept. We could do a site analysis, we could do a feasibility study at no cost. So if you're looking for property, call me, I'll help you. I'll tell you what your yield is. I'll tell you what you can and can't do on the site. That's what I did.

Tony Johnson:

And after a year or so it started to pay dividends. Yeah well, yeah, that is a big help. And for you to offer that service for free, I'm sure that was attractive. You know a lot of. You know when you get into the design build, you really have to help these people understand. When they look at a piece of land, they don't know what it costs to build it. You know they don't know any of these things. So when you go in and help somebody that can really establish a relationship, build trust and build the sale, and you know when you're doing it from that perspective, you know you're not normally even having to go through any bidding process, so you guys eliminate 99% of your competitors once you do it that route. Let me ask you, let me ask you this so when you guys are finding and you're out searching, do you use a CRM? Or how do you operate as far as keeping up with new clients, building on a lead and then maintaining the lead, so you don't lose track of your client?

Sam Rockaway:

So when, when it was just myself here so when I first came for the first six years, it was just Sam Rockaway here and the architects and engineers and I used to use a board you know, like a dry erase board for my leads. And then there were too many of them and then I used an Excel file and then the Excel file was too cumbersome and I work with engineers, so everyone's an engineer here, so they all have ideas. So we kind of engineered a sales process and we decided to get a CRM when we use Salesforce, which is probably more than we need, but we customized it to have the ability to rank a lead and we put our sales process. I meticulously wrote down our sales process. We have a sales process that covers three stages stage one, stage two and stage three. A sales process that covers three stages stage one, stage two and stage three. Stage one are prospects that I mainly deal with and I go out, find, cultivate, bring them in and I put them into our CRM. I'll make a note to follow up with them or what have you. And then there's stage one If anybody else in the building besides me works on the lead, it becomes a stage two because they have to track their time.

Sam Rockaway:

So the estimator so hey, I need a ballpark. Hey, I need a concept. Roberto, can you hand sketch me an elevation? I'm trying to put a deal together. Can you hand sketch me a floor plan? So that now is stage two. So with stage two, our sales cycle is about two years. That's now a stage two. So a stage two, our sales cycle is about two years. And a stage two will sit there until we do a proposal. And after we, if we get the opportunity to do a proposal, once the proposal is presented, it becomes a stage three. So really, the professionals are back at.

Tony Johnson:

You know the engineers and architects are back out of it and it's back into my court. So you don't touch it through stage two and then stage three. Once you the proposal has been submitted, then it's for you to keep up and try and secure the project.

Sam Rockaway:

I mean I don't touch it in stage two because I'm not an architect and I'm not an engineer, but I've been doing this for so long now. I will sit down with them and you know, if I have an idea I'll share it with them, and sometimes you know 90% of the time they have all the ideas, but occasionally I do have an idea. I mean, architects and engineers are very talented people.

Tony Johnson:

Now do you guys? What softwares do you use construction-wise? Do you incorporate Procore, or do you have self-work software? What do you guys work on?

Sam Rockaway:

No, we use Procore. We use Sage and Procore for our software, for our finance software, and we use Bamboo for HR-related.

Tony Johnson:

Okay, and which Sage operating system you know they have intact. Now they have 100 and they have 300, which is the old Timberline.

Sam Rockaway:

So we have a brand new Sage system. So I don't know.

Tony Johnson:

Oh, okay, that's probably, if it's the cloud based one, it's the intact. So they're moving a lot.

Sam Rockaway:

We have a lot of technology here and we've always been a believer in having the latest and greatest technology, whether it's a computer, an iPad, a cell phone or software. And that's really from Greg.

Tony Johnson:

Yeah, and it's critical. Procore is a great project management software and if your team, if you can set it systems in place and your team uses it, you can use it for safety, project manager, all the reports, RFIs. It's a great way and architects love it, they work with it, so it's kind of universally adopted, so it's a great software to work with. Do you guys incorporate any? Have you tried to incorporate any AI for automation of any of these processes to date?

Sam Rockaway:

Not at this point, but we are looking into it what we have incorporated just recently. So our architects use Revit. We've gotten away from CAD. We use Revit and we also use I may pronounce this right a Matterport to measure buildings. So if we want to go out and measure or understand the existing conditions of a building, we use what looks like a survey tool. It's a Matterport, it's a camera that does a 360 degree shot of everything in a building. And now, from what I understand, is that the estimators that'll give the estimators the takeoff and quantities automatically.

Tony Johnson:

I was not aware of that, I think. I thought I think it relates it with, like a lidar style technology. But yeah, that that is awesome. Yeah, so that is that's a great little tidbit. I wasn't aware of that. Um, so, it'll do the little takeoff piece on it, so all right. So, and then, what are, like, some of the bigger challenges that you guys see in? Are you guys looking to continue to grow to another level? Where's the long-term view here?

Sam Rockaway:

So over the last 14 years we've doubled in size and it took that long to do this. So we I don't know if necessarily want to grow too much. You know we expanded out into New York At some point. We had an office out in Long Island. We we have completed projects in Long Island, like big projects, ground up, dealerships and and as such, we've also done six or seven ground ups in Manhattan.

Tony Johnson:

It's large, with $150 million.

Sam Rockaway:

And then we've done them in Connecticut, We've done them in Maryland, We've done them in Delaware, Pennsylvania, so we were up to 85 people at one point and it just got too much. You know, we're as the crow flies, we're probably 10 miles from New York and you know, and it's mainly me and I'm saying, look guys, I'm going to drive by a million people to go out and try to sell something that's 40 miles away and it takes three hours to get to. Let's not do that. Let's just stay here in New Jersey and let's try to just focus on the 8 million people that live in New Jersey. And if we can't make it here, we're not going to make it anywhere.

Tony Johnson:

That is smart, so could you give an idea? So what is your guys' annual revenue as a company right now? Roughly speaking, 70 million, 70 million, and so are you guys are trying to stay at and around the $70 million mark.

Sam Rockaway:

Yeah, $60 to $70 is fine. We're happy with that. What we're trying to do is be more efficient in the way we build. Let's try to shave some time off of projects. Let's do buyouts better. Let's be more selective with some of the projects we take. We're careful with what we take. It's a huge commitment to to to sign up a, you know, a 10 or 20 or 30 million dollar project. You know you're committed to that person for four years.

Tony Johnson:

Right and what you guys have created and it's it sounds like you're in the position where you can select that client because you're exactly right, you select a bad client. That's a 20 and 30 minute I mean. That is, you're basically married to this person for two to three years of time, so even more, and then and then thereafter Right. And so you know, when you select these you have to be very careful and it's very difficult for some. You know you guys are obviously very well established.

Tony Johnson:

So other people that are trying to get to this level, you know that's kind of pie in the sky hard to even relate to 20, 30, $40 million projects. You know when you're trying to level up to those next levels it's a challenge because you don't have that experience a lot of times. When you got, when you started and you were selling some of these things initially, had you guys already been doing the size projects you were selling or were you having to guys already been doing the size projects you were selling or were you having to? You know, help and build. I mean, if you did 150 million dollar project, that probably was a reach right or beyond your level when you were selling. Were you going beyond your level, and how did you approach those?

Sam Rockaway:

so that you're right, that was way beyond our reach, but that was for a family that. So we look for clients that want to develop. We don't look for clients that have one project and they're going to go away. We look for clients like, particularly like in the automotive industry. Most auto dealers like say, roger Penske, you know, I don't know a hundred stores.

Sam Rockaway:

You know something like that Ray Katina, here in New Jersey, he's got 20 or 30 stores. Open Road has 20 or 30 stores. So we look for those type of clients where we can really provide them with the best long-term value the free ice, the free concepts, the free architectural schematics, talking with the brands, so that's all the value to those folks. So that's what we look for. And then this particular family we had done we probably done $10, $15 million a year for this family for 10 years of work. And they had a project in Manhattan and this is how it came about and only because we've been working with them for 10 years. We were comfortable enough getting involved with a construction management type job for $150 million. And, believe it or not, that building, that dealership, was built on top of a FedEx building. What that couldn't close down. You know FedEx doesn't close down, yeah, yeah. So that was a beast from day one, but it went well. It took a couple of years, but it went well. Would we do it again? Probably not.

Tony Johnson:

But it went well.

Sam Rockaway:

It took a couple years, but it went well. Would we do it again?

Tony Johnson:

probably not, but it went well so give me, if you could in, in all of your years, what do you look at as your biggest accomplishment that you have here at redcom I?

Sam Rockaway:

think my big, my biggest account like. Without the team that I have here I'm not any good. So I got to give a lot of credit to the team. It's definitely my team that helped me be this successful. I guess the biggest accomplishment is we've been able to keep 50 employees here maybe 55, you know employed with health insurance. They all have families and everybody's having a life and growing and you get to see their families come in and grow and that's a good feeling. We don't lay people off because we don't have any work. That's my biggest accomplishment. Now, project size I could say I sold a 20 or $30 million, but I get the most enjoyment at knowing that there's still work and everyone's got a job.

Tony Johnson:

That's right. And, to be clear on this, that's because if you don't have sales, you don't have anything. So you are one of the main factors in keeping everyone employed. So you can't do the operations, you can't show all the beautiful things if somebody doesn't sell something right so nothing happens without, without the sale.

Sam Rockaway:

That's great yeah, right, so it's very meaningful to me so what do you guys?

Tony Johnson:

what are your company's core values? Do you have that? Do you have an established core values for you guys?

Sam Rockaway:

yeah, we have core values. Uh, you know, collaboration is definitely one of our core values. Fun is a core value. Vision is a core value that's awesome.

Tony Johnson:

Do you guys, when you hire um and I understand this isn't your department but when you guys hire, do you use any type of um trait surveys or personality tests to determine whether someone would be a proper fit and have those core values? Or how do you guys determine that?

Sam Rockaway:

Yes, we do. We do a cultural interview for them and at the same time we do a disc assessment. And the disc assessment we don't really use as a personality tool, but we use the DISC assessment to understand how they naturally work at their job and what's their unnatural work habits. And then you know we meet them right. A lot of people meet with the person it depends on the position but a lot of people meet with them and get a feel for it.

Sam Rockaway:

And then there's five of us on on a team, uh, there's five senior uh managers. I guess we're our titles are senior vice presidents and we meet and go over it and try to. But you know, it's not just do they have a nice personality, it's their work, history, their skill and a lot that goes into it.

Tony Johnson:

Okay, do you now with the, when you have 50 people, do you have a training program on your team or do you only hire experienced people?

Sam Rockaway:

So that's it. So I am responsible for sales, right? I do not. I am not responsible for construction. I'm not responsible for estimating. So we have a construction department, an engineering department and we have an estimating department. So estimating and architecture and engineering go to two gentlemen. Hr falls to one person and construction falls to one person. So I worry about my sales team you know, how big is your sales team?

Tony Johnson:

I have five people, and how? How long have they been there? Like what's your longest tenured employee?

Sam Rockaway:

uh, three years on the sales team Okay, it's very difficult to find salespeople.

Tony Johnson:

Yeah, I was going to say so. How are they paid? There's different configurations on the business development side industry-wise. Do you guys work on a commission-only basis based on revenue, volume of sales, or how do you guys work?

Sam Rockaway:

No, we don't. There's no. You know, if a salesperson here goes out and sells a job for whatever it is, for $5 million, there's no commission that they get out of that. It's just not, you know some, it's just not conducive for that. In this type of, in this business, there's a bonus program that everyone is a part of in the company. That's, you know, driven off of our, our revenue. That's how we do it. The same way, yeah, and some, some do.

Tony Johnson:

Some do that though. Some have the business development guys. They pay them one, one and a half two percent of revenue. Yeah, we don't, we don't it's, it's too much.

Sam Rockaway:

And the other thing is this you can't sell somebody something for five, ten or twenty million dollars. It has to be a well thought out decision that involves a team of people. No matter what, you can't sell it to them, it has to work financially.

Tony Johnson:

Yep, yeah, and it's typically a lot of negotiation back and forth and the disadvantage when you're doing that is you typically don't have control whether the deal goes or not.

Sam Rockaway:

Right? No, it's just. You know we do a pro forma for every customer we have, based on market rents in the area. So if they're putting an addition on and they plan to rent it out, we'll do a pro forma for them and we'll look at rents, that recent rents, and we'll, this way, that'll tell me if our price is in line. It could still be high, but it may not be too high as long as the deal pencils and we give them the payoff times and we take into consideration all the variables. That would go into a pro forma. I have a dedicated MBA here, working here and that's what she does. And she does other things too, but that's one of the things she does.

Tony Johnson:

Yeah, that's amazing. That is a tremendous benefit that you offer. Do you guys ever, when you're doing that, partner in on the deals? When you're doing that, has your company ever partnered in with developers on the projects?

Sam Rockaway:

Yes, so we do two things. We do construction right, that's our primary source of revenue but we also buy land. So we buy land, we get it approved and then we sell it, and sometimes, when we buy land, we would buy land with someone else. Sometimes we'll do a JV, but same goal we're going to build it and we're going to sell it.

Tony Johnson:

And sometimes we hold it. So we have a couple that we're holding and we'll just they're leased out. So so what are you? Where are you guys looking to be in the next five years? So you, you, based on what you're telling me you're, you're staying just in the New Jersey area, because you've expanded way out and now you've kind of pulled it all closer right, mm-hmm. So is the goal just to maintain and stay in that realm, or is there any major pursuits? You guys are going after Any additional automotive industries that you really have your goals set on, or do you see a rise in your industrial division.

Sam Rockaway:

I think so A couple of questions there. The industrial division, because the interest rates are so high.

Tony Johnson:

I don't know if you.

Sam Rockaway:

You know you're from North Carolina, I think right, yes, sir.

Sam Rockaway:

Yeah, we're in New Jersey. So if you drive along the New Jersey Turnpike, over the last seven years there've been millions and millions of square foot of warehouses built. Some of them are as large as a million square feet and some of them are a hundred thousand square feet. But there's a lot of them Now and that's because of the internet, amazons and all the E transactions that have happened and continue to happen.

Sam Rockaway:

But interest rates, as soon as they started to go up, the REITs that generally buy these facilities they look at it differently than us. You know, if they're, if they're square foot prices off by 50 cents, they're going to pause and they're going to wait unless their basis is good. So it's just a math problem at this point for those folks. And then the users, who the mom and pops like the mom and pops that have a $20 million warehouse they're not really mom and pops, but they're small companies They'll buy 50 to 100, 150,000 square foot buildings.

Sam Rockaway:

They're still out there doing it right now, but it's just based on more like where their employees come from and where their homes are and how long does it take them to get to their office. On the automotive side, you know it's driven by brands and the schools. They're decimated. And they're not decimated, but they're ever since COVID, the private schools, they're all trying to get students, so it's all about how many students they have and what type of projects they want to do. We're looking to grow and to expand our residential work and multifamily.

Sam Rockaway:

OK we're looking to acquire more land and we're looking to get into into, you know, life sciences, and that's pretty broad life science.

Tony Johnson:

That's like saying yeah, I was going to ask you, could you expand on that a little bit? What specific area in that? What would that look like? That's a good question.

Sam Rockaway:

So we're going through that process now so I can tell you what we're not going to do. We're not going to try to build a hospital. We're not going to try to build anything over 40 million dollars. We'll probably have to partner up with an architect that really understands that market.

Tony Johnson:

Yeah, so do you, and you know I haven't heard you speak much. Do you work still? I know you said school assistant. Do you work with any local government? Do you guys bid any work or is it only design build?

Sam Rockaway:

No, we do bid work. We do bid work and during my tenure we used to only sell it as a design build job. So if we could not in New Jersey, you need a site approval to build something, and if you want me to talk about that, I can. It's a very complex process and it takes anywhere from a year to two and a half years, depending on what outside agencies are involved.

Tony Johnson:

I would love you to go through that how you guys do your feasibility study, through that, if we could get kind of on a high level for somebody to understand it.

Sam Rockaway:

I can, but I'll finish this design build question. So we used to only sell design build jobs where we took on the site approval, the architecture and the construction. But it was very difficult to price up something that was going to be built in three years. So at some point people would take advantage of the concept free concept work that we did, because this was all for free until they signed a contract. So we started to separate out the engineering and architecture and just give them consulting agreements. Right, we're a very competitive price. So we do engineering.

Sam Rockaway:

It's not really it's design build, but it's engineering with a separate contract. So if they're not happy with us, they could walk away Anytime. We'll give them the plans, architecture with a separate contract. But again, if they're not happy, they could stop. If they just want to use us for architecture, they could do that. And then, while we're going through the approval process, if they're happy with us and we're meeting their expectations and we're happy with them as a client, then we'll try to convert that opportunity into a project and start talking about like, all right, what's it going to actually take to build this project from a budgeting standpoint, timing, and have discussions and move the ball forward. That's what we, that's what we like to do, and everyone's no one's handcuffed to anybody anymore.

Tony Johnson:

It's just you don't like us, go ahead right because obviously you know when you're going through these iterations, you're starting with a complete budget and when you talk at this long timeline that I would love you to go through a little bit more. We're looking at that long timeline. You set that initial budget. The market market is moving, you've got tons of commodities, everything. It's like we're going through now with tariffs. You don't know. This is a moving target. So the deal might work when you initially run a budget and then it doesn't work when you're eight months down the line.

Sam Rockaway:

Right. So I'll talk about the site approval process in New Jersey. So I'm not sure what it is in other states, but I just signed up a $10 million contract for a very large dealership that located out of another state. Because they found us online and they sent me an email and said hey, I'd like you to bid this project. So I got on the phone with them and then said great, what's the status of your approval? And their answer was what approval? We have permits, which they didn't have, but we have building permits. You can't get a building permit without a site approval. So once I understood that they didn't have a site approval, I explained to them what was needed and that's how I got the job.

Sam Rockaway:

So in New Jersey, if, if there's, if it's raw land, you obviously need a site approval. If it's an existing building and you're going to change the footprint in any way, shape or form, you need a site approval. Like, even if you just add a canopy, you're going to need some kind of an approval for that. So let's just take a raw piece of land. Or you're going to take an addition, say, at 40 or 50,000 square feet. It doesn't matter what size it is, it can be 5 million square feet or 10,000 square feet. It's the same exact process and it costs about $500,000 to get through an approval process in New Jersey, plus the fees at the end. So you could spend close to a million bucks on an approval in New Jersey. So you have outside agencies. You have the local right the end. So you could spend close to a million bucks on an approval in New Jersey. So you have outside agencies. You have the local right. The town that has to approve the project Does areas zone for a particular use, and then you could go for a use change, which is very challenging. So we try to just stick with the current use and work within the confines of the zoning. So you have those approvals and then the outside agencies, depending on where the facility is located.

Sam Rockaway:

If it's located on a state highway, you'll need the Department of Transportation's approval. If it's on a county road, you'll need the county approvals, you'll need the soil district approval and you'll need the approval from the Department of Environmental Protection. So if your property is not affected by any wetlands or anything DEP related, then you just need a letter of no interest right, which will take six months, but you'll have to get a biologist to walk the site and confirm that there's really no plants or endangered species or turtles or anything like that on the site. And then you do that. If it's on a DOT highway, the state highway, then you're going to need to get a traffic engineer and understand the trip generations and what you're doing, and that could take two years. It's taken two and a half years.

Sam Rockaway:

That is the critical path. The DOT in New Jersey is the critical path to every project. And then if you have any airports located near you, you just you got to get the blessing from the FAA, which is pretty easy, but it's just one more outside agency. And if you're near any rails, any public transportation like New Jersey Transit and we do have two projects going on with that right now you have to notify the railroad. You got to be a certain distance away from it. If not, there's a process I'm not too familiar with that because we don't do too much of it but you have to notify a railroad and explain to them what you're doing and get a permit from them.

Tony Johnson:

And so all of these things are in your first piece that we're talking about when you're doing your consulting agreement. This is all of the engineering. So first you're getting all of these studies, so they're laying out the initial site plan, and then, once they have that initial site plan, then they're going through all of the different agencies, getting one to approve, another to approve, another to approve. One will give you a comment wait another month, wait another couple months. Got to go back. You know, work on the design, more design, more, uh, and so these things can take a long time, and so you have to have a educated group alongside of you that knows how to get you through that process or this, this process that might take you to what you say six months a year, two years. If someone doesn't have that that, you can go ahead double that and they're not gonna.

Sam Rockaway:

Yeah, they're not. They really need local people, and then nothing's going to work and all the stormwater management that goes with it. They changed the flood hazard regulations, they're changing the wetland, the DEP rules and regulations again, and you have to comply with all of that. Now rules and regulations again, and you have to comply with all of that. Now you know, historically you'd be able to put one basin at the end of the site, on the slow side of the site, and have all the water drain to that basin and then slowly drain out into the system. Now they don't want that anymore. So now you have to put multiple basins around the facility and you have to make sure you have to prove that through math and calculations that the engineers do that that water drains properly. And that runs $30 to $40 a square foot.

Tony Johnson:

Right, and so this is the biggest challenge that I see. They make all of these things so unaffordable to do. You touch a building, you update a building, there are so many regulatory expenses that leaves very little for the consumer, the end user, to be able to really select what they want, because all of the money goes to all of the different regulations that someone has to fulfill and abide by. And then you're stuck with, you know, trying to make the money work for the client while giving them something that they want, and that's the biggest challenge, as I see, in construction.

Sam Rockaway:

Well, when I'm talking to someone and that's one of the first things I talk about is the site approval process we don't give lump sum prices, we give budgets, we give, say, listen, this is what we think it's going to cost and this is why and it's based on this If town folks come out to the hearing and you have 100 people or 50 people, even just one person contesting your project, you may have to go back. You may have to go back and back and back, and we've gone to some hearings 14 times. We've gotten denied by towns that the projects were as of right, with no variances, and we're still denied and we're in court. Now. You know I mean this.

Sam Rockaway:

Just, it's just very difficult in new jersey. There's no guarantee that someone's going to get it approved, even if there's no variances, even if it's as of right. It's very risky. That's why the returns are big. If you can get a piece of land for $20 or $30 a foot and you get it approved, you'll spend a million dollars, but you'll be able to triple the value of that land.

Tony Johnson:

Yeah, now that is where the rubber meets the road on development and being able to make money. If you can get, if you can understand and properly entitled property, you can create a ton of value because then you can sell that off to someone and they can hit the ground running right. Then you know, make you know they, they have all the parameters they need to abide by so they know what they're buying. It's a lot easier to sell the land because you could be buying a piece of land that doesn't have any of those approvals and don't know what it's worth.

Tony Johnson:

It's just nothing so it creates tons and tons of value to bring that, so that's amazing. So if people are in your area and wanted to, you know, work with you, sam and Redcom. What is the best way to reach out to you?

Sam Rockaway:

They can find me on LinkedIn I have a pretty active profile on LinkedIn or they can call our office and ask for me.

Tony Johnson:

Awesome. Well, I sincerely appreciate you coming on today. It's been very informative. I think it's been a lot of help. I sincerely appreciate you coming on today. It's been very informative. I think it's been a lot of help and I think, if anybody's in the New Jersey area, you've definitely proven yourself to be as knowledgeable as possible, and so you know looking to invest in that area and you're looking to do anything with automotive, expand your automotive grasp or you know doing. It sounds like you've got a lot of industrial build-out already going there, but you also you're going through land entitlement or looking for land for building multifamily. He'd be a great person to reach out to. Sam. I really appreciate you jumping on with us today. We've enjoyed having you and speaking with you.

Sam Rockaway:

Well, thank you very much. I appreciate being on the show and thanks for taking the time out to meet with me.

Tony Johnson:

Yes, sir, I hope you have a great day.

Sam Rockaway:

You too.

Tony Johnson:

Bye.