RALPH BIVINS: Welcome to the Ralph Bivins Project. I want to welcome Jake Donaldson. He is Managing Principal at Method Architecture. They’re a Texas Triangle company with Houston, Austin, Dallas, and San Antonio offices. They’ve done some really interesting stuff. I know that your firm developed a tremendous niche in building new craft breweries. There were a lot of them coming up five or six years ago, but they’ve been having financial difficulties now. What’s going on with craft breweries?
JAKE DONALDSON: It’s been a really challenging news cycle to read and watch because we’ve designed approximately 40 breweries, craft breweries, and distilleries across the state. We’ve even expanded into Oklahoma and Colorado, doing some small craft shops. That’s everything from concept design and strategic planning to full-blown renovation, build-outs, and ground-up. The news lately about them is that a lot of them got hit really hard coming out of COVID with all of the shutdowns. Breweries did eventually get some exceptions passed through the state to be able to operate, but I think some of the damage had already been done. You can’t just go from day-to-day taproom sales and then just shut down completely and not feel the hit of that. A lot of them took on debt, were already really strained with some of the cash flow, couldn’t fulfill some of their distribution orders, and they ultimately couldn’t dig themselves back out.
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RALPH BIVINS: Talking about the general economy, we’ve had our ups and downs, and there’s good places and bad places throughout the country in different sectors. Mortgage rates and interest rates are higher. Architecture is kind of like the front end when it comes to construction and planning, people looking ahead at what they’re going to do next. In general, what’s your take on the mood of businesses now?
JAKE DONALDSON: Our sweet spot is in the Texas Triangle. A lot of my market data is based on that, but what we are seeing is interest rates are definitely having an impact. They’re slowing down the speed of development. We have kind of clients on both ends of the spectrum. We work with a lot of small businesses end users, but we also work with a lot of commercial real estate developers, and on both sides of that equation it’s really slowing down the speed of development. On the real estate side, even just as recently as the last year or two, we could design, draw something, get it built, and the building wouldn’t have any leasing or tenants signed up but they could get full financing and hit the ground running. Banks are now wanting more peace of mind, wanting more security against that risk. They’re wanting more pre-leasing, they’re wanting to know that there’s actual demand and people signed up to take a space. It just takes time because of how quickly the interest rates have risen. It just takes time.
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Jake Donaldson biography
As Method Architecture’s Managing Principal, Jake Donaldson oversees the firm’s four offices in Austin, Dallas, Houston, and San Antonio. With over 20 years of experience, Jake and his teams have designed millions of square feet of spec industrial, manufacturing, distribution centers, cold storage, data centers, mixed use/retail, and dozens of breweries/distilleries across the state. Jake is passionate about exploring the next evolution of industrial building types including taller clear heights and innovative construction methods such as 3D printing, artificial intelligence, conveyance, and automation systems.
Method Architecture opened its new Houston office in the East River development last year.
March 25, 2024 Realty News Report Copyright 2024
THE RALPH BIVINS PROJECT PODCAST
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