table of experts - Knoebel Construction

JUNE 15-21, 2018

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TABLE OF EXPERTS

COMMERCIAL REAL ESTATE SPONSORED BY

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TABLE OF EXPERTS

MEET THE EXPERTS

TRACY HOWREN

BLAISE TOMAZIC

CHRIS WILHELM

Tracy Howren is senior vice president, commercial real estate lending officer in UMB Bank’s Commercial Real Estate division. Howren is responsible for managing the commercial real estate portfolio in the St. Louis region, expanding business relationships in the area, and sourcing, underwriting and closing loans. Howren joined the team in 2015 and has more than 15 years of experience in the financial services industry. Howren earned a bachelor’s degree in business administration with an emphasis in economics from the University of Missouri - Columbia. As an active member of the community, she is a board member and treasurer at Gateway Housing First and a national delegate and executive board member for the St. Louis chapter of Commercial Real Estate Women (CREW).

Blaise Tomazic is JLL’s research manager in St. Louis. His responsibilities include maintaining JLL’s entire research platform while coordinating research requests for tenants and landlords. He specializes in industry research, data visualization, strategy, mapping, and financial analysis. His research also includes macro and micro level economic analysis of the St. Louis region. Blaise is also an experienced user of mapping and visualization programs such as Tableau, ESRI, Blackbird and MapIT, using them for site selection and analysis. Blaise has been with JLL since 2008. Prior to joining JLL, Blaise worked for a real estate development company out of Cleveland. There, he was given the responsibility of learning the St. Louis retail market through various channels including meeting with brokers and exploring all parts of the St. Louis metropolitan area.

Chris Wilhelm has been with Tech Electronics since 1998 and was named the executive director of construction in 2004. His duties include overseeing all construction projects in the St. Louis area as well as directing all construction strategy and marketing at all nine regional Tech Electronics offices. In addition to his construction market duties, he is also responsible for overseeing all fire alarm projects, including managing the relationship with Tech’s fire alarm system manufacturers. Due to his vast expertise in fire alarm and life safety code, Wilhelm presents across the United States for various audiences, including manufacturers, AHJs, engineers, contractors, fire inspectors, state fire marshals and building owners.

JOHN MCEVOY

KURT MOLLET

MATTHEW MABIE

John McEvoy has been involved in the title and construction disbursing business for over 35 years. He is a CPA and has a B.S. in accounting from Rockhurst University in Kansas City. Utilizing his background in public accounting, McEvoy developed the first proprietary online disbursing software, Disbursa, for his companies Lawyers Title and St. Louis Disbursing. McEvoy joined Nationwide Construction Disbursing in 2017 as president. His Disbursa software has undergone several updates and continues to be used by Nationwide Construction Disbursing as well as other regional title companies. In addition to his accounting background, McEvoy has also been involved in residential home building as well as commercial construction development. His knowledge of construction and construction disbursing is a tremendous asset for commercial and residential lenders who often need leadership in complex construction deals. Nationwide Constriction Disbursing is currently disbursing on construction projects in seven states and McEvoy has disbursed on more than $4.5 billion in construction in 28 states across the nation. NCD has two disbursing locations in St. Louis and St. Charles counties.

Kurt Mollet is PARIC Corp.’s project executive focused on commercial construction projects. He has over 25 years of experience in the commercial construction industry and has a broad knowledge base and expertise in all aspects of construction. Mollet managed and developed over $500 million worth of projects in his career with experience in various segments of the commercial market. Mollet serves as a customer advocate and facilitator to ensure all in-house and external resources are utilized to achieve customer goals. Mollet studied engineering and business while at Southern Illinois University and also attended the Construction Leadership Institute. He is a member of the Construction Management Association of America and the American Society for Healthcare Engineering.

Matthew Mabie has been president of Knoebel Construction since 2012. Under his leadership, Knoebel has expanded more than five-fold. Companywide revenue increased from $12 million in 2012 with nearly all local construction projects to $67.9 million in 2017 with nationwide service to the retail, retail development, restaurant and grocery industries. Today, Knoebel is one of the largest general contractors and fastest growing companies in the St. Louis region. Mabie spent the majority of his career in project management before he was promoted to vice president of operations in 2011. In 2017, he was named a Rising Retail Leader Under 40 by the International Council of Shopping Centers. Knoebel serves as the prime general contractor to developers, franchisees, retailers and independent projects. Proven subcontractor vetting, scheduling and quality control processes ensure consist high-quality, on-time project delivery.

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What trends are you seeing in commercial real estate and where do you see opportunities for growth? Tracy Howren: Overall, real estate fundamentals are really strong across property types in the St. Louis region. I think that bodes well for continued growth and development in the near-term, particularly for the four main categories we look at, including industrial, multifamily, office and retail. The industrial market is red hot and very strong right now. Vacancy rates are very low, despite five million square feet of space being delivered in 2017. That strong demand is driving rent growth up, and we expect to see continued development in the industrial space. In multifamily, we’re in the midst of an elevated supply wave. Vacancy is up a little bit, but I would expect that to moderate as properties lease up, and I still think there’s strong development opportunities in select submarkets. One example is St. Charles, which is a really strong performing submarket. There’s been roughly 1,500 units built since 2012, and they still have declining vacancy and increasing rents. On the office front, vacancy continues to trend down for strong growth. There’s a shortage of high-quality space in certain submarkets, including Clayton and West County. There are some big projects underway, such as the 500,000-square-foot Centene facility in Clayton and the office space at Ballpark Village, which will be the first office tower in downtown St. Louis in more than 30 years. Blaise Tomazic: I can dive deeper into that, and touch on industrial. As Tracy mentioned future growth, Gateway Commerce Center has done well in the last couple of years, and it is going to continue. Parts of North County still have ground to develop. You’re starting to see it moving a little further west into St. Charles County. As the country leans more towards online shopping,

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e-commerce is going to grow, whether it’s Amazon or others. With that comes the need for more storage space of goods, and it’s not going to stop. On the office side, Ballpark Village and Clayton as well. Clayton is probably a couple years behind where it should be for office development. Cortex still has room to grow. I don’t think they have enough room right now for all the tenants that want to be there. We’re going to see development in Cortex with The Foundry, the armory, new office buildings, hotels, the new MetroLink stop. I don’t see the momentum slowing down, and It’s going to help the surrounding area. Matthew Mabie: As far Knoebel is concerned, we focus heavily on retail and retail development as our specialty. From our perspective, good real estate is still good real estate, which by that I mean location is key. We’re seeing a lot more redevelopment of retail properties, such as properties with a good location that may have a subpar tenant lineup with a shuttered K-Mart or a J.C. Penney’s. Nationwide, we have several projects that take an existing K-Mart and subdivide it into an expanded tenant lineup; Maybe a Ross or a Home Goods or a subspecialty retailer. That’s definitely a trend that we’re seeing. We are seeing fewer opportunities from ground up. It’s redevelopment of the plaza, modifying an existing space, or creating a new shopping center through outparcel lots. Our retail clients are very much focusing on the quality of the properties that they’re leasing versus the quantity. Our clients are focusing on A+ malls and multi-use centers, but decreasing the amount of new locations opened annually. Our commodity retailers are also very strong. The T.J. Maxx and Ross Dress for Less brands are still very active. We’re also working on a lot more speciality or experiential retail projects within all property types.

is right on from our perspective. The light-industrial and commercial segments are where we see the most significant expansion. I’m talking about light manufacturing and warehousing/distribution, as well as commercial office renovation and repurposing of existing retail space. When you take a look at our urban core, the trends are multifamily with a focus on hotels and apartments. While nationally there is a lot of growth with larger scale hotels, locally we see more boutique hotel projects. This trend is especially noticeable in the downtown area with many historic renovation projects transitioning to hotels. Apartments are going up across the area, from Ballpark Village to the Two Twelve Clayton apartment building located in downtown Clayton. John McEvoy: From my perspective, I see everything residential, industrial, commercial. I don’t do much TI. Residential, we have not developed lots since 2008 until about 18 months ago. I haven’t seen any developed lots coming through my way. They’re starting to come through now. The reason was because so many developed lots out there that the banks foreclosed on and were available through REITS and partnerships. Commercial, I agree with you on the senior housing, although I see it nationwide growing specifically in small markets, small towns. I do a lot in those areas. The origin of St. Louis is still applicable. I think everybody agrees warehousing is going to be strong for awhile. That’s because of the distribution aspect of where we’re going. The city was founded on the beaver trade distribution. We have the railroads, the rivers, the highways and the airports to do that distribution. So I’m seeing a lot of the warehousing going up. The commercial aspect what I’m seeing the most is hotels, large hotels and retrofits. That’s kind of across the country as well. I do think that the

Kurt Mollet: I don’t disagree. Everything Matthew said

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We are seeing fewer opportunities from ground up. It’s redevelopment of the plaza, the mileage of existing space.

MATTHEW MABIE,

Knoebel Construction

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rents have topped out a bit on that, yet still nationwide on the residential side we have historically needed 1.8 million units a year and for a number of years we were in the 300,000 range. So that built-up demand. It’s still there, whether we hit 1.8 million units — I don’t think so. I think that’s why rents have been so strong as well. I think

the millennials have a different aspect on life to some degree. But I do see changes in business, particularly in the general contracting end of it. I’m not sure it’s all good, but I’m seeing a lot of architects become contractors just because they buy software and they can go. The new contract is the “design build” contract. Chris Wilhelm: I would agree with nearly everyone’s opinions. One of the biggest things we are not seeing in

the commercial market is speculative builds. Today, it’s really purpose-built buildings. A topic of discussion has been about how the rents have topped out. However, as we continue to move towards purpose built, the buildings with high amenities allow for increases to be acceptable especially when catering to millennials. In the near future, the vast majority of the workforce will be millennials. They grew up with the technology in their hands, so they’re demanding that in the office environment. One of the key elements of today’s office environment structure we are seeing is the downsizing of company space requirements due to remote workers. With technology today, you can work pretty much anywhere. You can get connectivity in any coffee shop, in your home, etc. The commercial real estate industry will continue to stay strong but it will be through purpose-built buildings.

How are millennials and technology connectivity specifically impacting commercial real estate design and construction? Matthew Mabie: So I was born in 1982 and am technically a millennial. I think the millennial identification is over-hyped. This isn’t a generational trait. All consumers, of all ages, are the most educated consumers that there has ever been. We all have the information at our fingertips. Maybe millennials can get to that information a couple seconds faster, but we’re all changing as consumers. The value of time is what has really changed and time is more valuable than ever. That value of time has transferred into how we rate our

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satisfaction of our shopping and restaurant experiences. Great retailers are focusing so much more on providing an amazing shopping experience while also providing conveniences, like call ahead or pick up, to maintain their loyal customer base. As far as connectivity is concerned; educated developers are planning and are more interested in how ridesharing affects their developments. Including drop-off lanes and planning for a future with less parking requirements. Blaise Tomazic: From an office space perspective, flexible workspace is becoming way more modern and hip. A company like WeWork has locations all over the world now. A lot of people go to a location, drop in for an hour or two and then leave for meetings. We see it more and more. CIC is up to 160,000 square feet now in Cortex. That’s a huge tenant in our market, it gives people high-end amenities and the ability of flexible space. If they have a 10, 20-person company, they can grow and expand quickly if they need to. I think it allows them to move around as much as possible. They are given the same amenities as a highend office building in a more flexible location. Chris Wilhelm: I think Matt certainly has a point there. People commuting long distance for work is a thing of the past. Today, people want convenience and a better work life balance, which is why we see more and more people working from home. They’re not going to drive a long way anymore. The connectivity is driving a lot of how people operate and they expect connectivity regardless of where they are. Buildings are being built or remodeled today to meet the occupant’s expectations

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From an office space perspective, flexible workspace is becoming way more modern and hip.

BLAISE TOMAZIC,

JLL

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of getting connectivity. As a technology company, we’re seeing a lot of distributing antenna systems becoming a necessity in construction because they can penetrate the building with Verizon, AT&T and Sprint and allow the connectivity to continue. Since the ‘90s and early 2000s there’s been a lot of change to wiring and technology in a building. Today, buildings are rapidly moving away from Cat 5 or Cat 6 and wireless is becoming more ubiquitous. No one wants to be connected via wire. They prefer to

be completely untethered and Wi-Fi is becoming a huge factor in buildings from the onset of a project. On top of that, cybersecurity has to be a worry for property owners as people enter into your building and get on your network. In the near future, we’ll see a point in time where cities are completely wireless, allowing you to walk around the city seamlessly connected to wifi.


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the growth of urban multifamily, retail and commercial office spaces.

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Are there other ways safety and security technology are impacting commercial real estate and construction?

We’re seeing that as a technology company and a security company, we’re being brought in on the front side with the architect and with the owner more and more. CHRIS WILHELM,

Tech Electronics

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Kurt Mollet: There is no question that this next generation and the rapid growth of technology are continually changing the way buildings are finished, where they are being built, and how we build them. When you consider all of the technology used to build some of these buildings and everything put in place to maintain and track the building’s various systems, the

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level of complexity has increased, but they provide a more seamless and connected experience. More and more in every aspect of the business, this is becoming the expectation. Something like wireless access to your HVAC system and security system is becoming just as common as the expectation for Wi-Fi in your building. The growth in the urban core is driven by the desire for a unique and connected experience. Taxis have been replaced with ridesharing apps such as Uber. You start putting it all together, and the impact of this generation and their use of technology is one of the driving forces in

John McEvoy: On the title side, title companies, security is really an issue. It’s changing almost weekly in those environments. Cashier’s checks are really becoming suspect. And that was our mainstay for years. We’re no longer accepting those any more. So I see it changing significantly. We had an issue with giving a check out at closing, depositing it off their phone and then taking it and depositing the same check again, and then skipping town. Matthew Mabie: Concerning construction, we have camera capabilities that allow on-demand access to view the job site. We have the capability to provide 360-degree cameras that allow our clients a link to their projects to review every niche and corner within their space with high definition if they wish. One value is sharing information with the client as often as desired. Regarding security, job sites are monitored 24 hours a day. It’s certainly an ideal technology for us. As far as safety goes, access to information for building materials for safety is at our fingertips. We can easily click a link, and view safety data for materials that are on the job site. It’s very simple to access and very helpful for us to maintain OSHA requirements. I don’t know if you guys are utilizing the same technology on your projects. Kurt Mollet: Absolutely. Even 10 years ago, everyone was

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talking about it then. The implementation of Building Information Modeling, or BIM as we call it, is becoming the standard practice today. It is a secure way to coordinate your entire team before, during and after construction. We have BIM stations on-site so everything is real time. Any changes to the drawings get posted within hours of an architect’s revision. What has more recently changed for us is how this extends beyond the office and into the field during the construction process. Our superintendents utilize iPads and have access to drawings while walking through the job. We see tremendous efficiencies there. The other element that we’re using with this technology is assembling things off-site in large scale. Because of the modeling software, we are prefabricating as much as possible. From ductwork to headwall units in hospitals to wall panels with complete plumbing, we’re doing a lot off-site before we ever get on the job site. We are looking to continue to TRACY HOWREN, expand our capabilities, especially with our selfUMB performing crews which we are now training. We’re employing about 250 carpenters in a given day. Our goal is for those carpenters to work in a similar fashion so that we can build a and managed, how the technology is going to increase job quickly and with an even higher level of quality. their effectiveness and efficiency, and how it will impact the safety of their people. As you see the areas like the Chris Wilhelm: The traditional construction model is Central West End start to revitalize, the social pressures changing with technology design being moved forward are really top of mind. I can look out the window today in the process. As a technology company, we are being and see a camera pointing down the street, which brought in more frequently in the beginning of the would not have been the case 10 years ago. Today, some process with the architect and owners. We are also cameras use artificial intelligence to understand what seeing that owners are wanting to get more involved is going on in the building and can even predict what is early on when it comes to their technology needs. going to happen before it actually happens. Instead of Being involved with this process, owners are able to people monitoring cameras and monitors, you can let AI understand how their systems are going to be monitored do the work for you and alert you when necessary. This

I think we’ll see continued development and investment, given the underlying strong fundamentals in the commercial real estate space. Regarding UMB, we are heavily invested in being part of the CRE market here in St. Louis.

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technology can be implemented during the building process so you can analyze potential issues and security threats from the start. Another technology advancement that we are seeing in the construction industry is the transition from traditional keys and locks to card access and wireless entry. Technology is simplifying how a building recognizes and gives access to people. For example, one can present their phone to the card reader and the building is able to unlock the door, turn on the


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CONTINUED FROM PREVIOUS PAGE lighting and set the temperature for your workspace. This technology gives us a plethora of opportunities to control the building from just your phone.

Geographically, what are the stronger areas in St. Louis in terms of future development, office, industrial, retail and multifamily? Tracy Howren: On the office front, high-quality space is really tight in Mid County and West County. As such, there’s more opportunity for continued construction in these submarkets for office space. For example, Delmar Gardens III in Chesterfield came online in 2017, and it’s leased up quite nicely. As far as industrial goes, Blaise mentioned earlier that development opportunities continue along the I-70 corridor all the way from St. Charles County through the Metro East, particularly for large warehouse users. With regard to retail, there are some interesting things going on in Chesterfield with Michael Staenberg having purchased the outlet mall next to where Top Golf is being developed, as well as gaining control of the Chesterfield Mall through the purchase of Sears. I look forward to seeing his vision of mixed-use developments on those sites. In the city, the Central West End has really established itself as a desirable neighborhood. There’s a new residential tower proposed for the Central West End called One Hundred that will add to that neighborhood. And then you have Ballpark Village, which includes a residential tower, as well. So, I think you will see continued development in that area. I think you will see more grocery stores come to the area. Schnucks has Culinaria downtown, and Whole Foods is now established in the Central West End. Their success will drive others into those submarkets.

Blaise Tomazic: The demand is there, especially in the Central West End. The Orion just sold for the highest per unit price of any multifamily building here. So there’s obviously investment Interest, a firm from Toronto that purchased it. There is that demand. There’s more going on downtown than people realize. We have two hotels. Ballpark Village is going to be a central point to the stadium the city can build from. You’ve got a proposed development at the former St. Louis community college building that will be an apartment tower. There is activity that should spark from that. The Chemical Building just traded hands. The Arcade was just redeveloped. 720 Olive is probably three-quarters apartments now and so

is another building down the street. There’s activity down here. I have to go around and see it. It’s a lot of rehabbing older buildings.

Are the tight labor conditions making it more difficult for you to find qualified employees, whether in construction or in your markets, your companies? John McEvoy: It’s a difficult task. I think things are changing from an educational aspect. Younger people are seeing the burden of tuition debt and maybe are not going to go the traditionally beginning route and more

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of the technical route if you will. I think we’re going to have to be patient. I think college degrees are getting extremely diluted. You’re going to see more and more of the technical schools. Matthew Mabie: From our standpoint, the St. Louis market has been blessed with a very skilled workforce. It’s a workforce receiving a good wage they can raise a family on. Our problem is it’s an aging workforce. It may not be a problem today but in seven, 10 years from now this will be a major problem within our industry. Compounding this issue, the skilled trades have not historically been promoted as a respectable opportunity to the younger generations. Secondary education doesn’t necessarily have to be a college secondary education. There is a living wage to be made with a trade and a skill, and those skills can’t be passed overseas. Recently, there has been some progression with this issue, but it’s certainly about 20 years too late. Kurt Mollet: The workforce shortage is a problem, especially in our region, and is going to be a real factor in future developments. So much so, that investing in our future workforce is one of the strategic focuses for PARIC. We have known for a while now that the labor pool is tightening up and we’ve been aggressive with employing a substantial labor force. When you consider the subcontractors we employ, we are utilizing 2,500-3,000 laborers in any given day. We are probably one of the top three employers of laborers in any given month for this region. It is purely because of our need for resources and how busy things are. Having these resources has been an advantage for us, and we want it to be one as we move forward. If I can take a step back and answer the geographic growth question, I would say that there is robust growth across the region. However, I would say for the county and surrounding areas it is more focused on light industrial and commercial retail. So, projects such as warehousing and distribution, data centers, light manufacturing and retail are driving a lot of the activity for those areas. In the urban core, it is more focused on commercial office, hotels, apartments and condos, and retail, but more mixed-use with a retail component or repositioning of old retail developments. Chris Wilhelm: To John’s point, the secondary education model is certainly going to change. You see it changing today. In fact, only around 30 percent to 40 percent of people that start college graduate, which is very low. During the recession, we saw a decrease in those who attended trade schools, which is hurting the ability to hire and train quality people for the building industry.

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We see that for our clients between the attorney’s fees and all the prep work, the design firm fees, everything just to get review and approval, the cost of delay is ridiculous.

JOHN MCEVOY,

Nationwide Construction Disbursing

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Furthermore, the technology that’s being used to build buildings is advancing rapidly and it is difficult to find tech savvy individuals. It’s no longer the traditional hammer and backhoes. With the Internet of Things (IoT), the workforce has to be much more tech savvy to continue to allow the construction and real estate industry to grow. Matthew Mabie: To your point, completing some scopes offsite to help facilitate the construction schedule is a solution to not having enough manpower on site. Efficiency is a response to the issue. Everything we’re doing is becoming more efficient so it’s not necessarily manpower to our needs. What’s the smartest way to do it with the people you have. Kurt Mollet: Absolutely. And to your point here, we’re doing robotic layout. Instead of having multiple laborers out there with the measuring tape, we have a laser scanner and one person with a prism pole locating and marking interior walls, and openings. It is a system that utilizes the control points we have established outside of the building using GPS and then establishing control points inside the building floor by floor. Then we combine that information with the model and use this new equipment to improve our efficiencies and quality. Blaise Tomazic: Same goes for industrial users. Robots take products, move them to a smaller workforce that

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We’re starting to see pricing escalate so much that what you would have priced something out just even earlier this year or late last year has to be reevaluated. KURT MOLLET,

PARIC

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only needs to be in front of a warehouse. Whereas the robots are flying around and moving everything. When they need to charge, they go back and get charged, and we keep on moving through. Tracy Howren: That being said, we are actively monitoring interest rates and trying to help our clients plan for their financial future. There are many out there who predict the Federal Reserve will raise rates another two to three times this year. John McEvoy: The competition is making it very strong and varying the margins. China is having a big effect on material.

There was recent news on the implementation of tariffs on steel, aluminum and other products. Can you talk about how those are expected to impact your businesses? Matthew Mabie: First, everything changed recently. Unfortunately, the tariffs only affect our North American and European segments so it doesn’t really help the China situation you’re bringing up. Volatility is the key word of 2018. We’re seeing cost of steel that can fluctuate 30 percent dependent on the week. That volatility has a significantly adverse effect on the frontend work with our clients. It’s increasingly difficult to forecast a budget on a proposed project without any stability in the commodities markets. The volatility has the potential to kill some deals. I know from our market standpoint, we’re seeing our steel suppliers holding pricing for very short windows and we’re pre-paying for steel orders to get them on the books. Matthew Mabie: To your point, it’s not just steel. This affects piping, electrical supplies, ductwork and framing materials. This is not just that your structural steel price is going to increase. Every aspect has the potential of cost increase. Kurt Mollet: We’re starting to see pricing escalate so much that a project that I developed an estimate for earlier this year or late last year has to be reevaluated. So, we’re constantly looking at things with that in mind. In contrast, as busy as we are in the construction industry our margins are still very tight. Chris Wilhelm: The cost isn’t just isolated to steel and raw materials; it’s an impact from everything. It encompasses the cost of borrowing money, fuel,


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materials, technology as well as hiring and training quality people. Another thing that’s impacting the cost is the bidding/pricing process. You used to bid/price a project and it would start fairly rapidly. Also, today we’re seeing iteration after iteration elongating the design phase, which is hindering the ability to lock in a price quickly. Therefore, I don’t think there’s any smoking gun in the industry. It’s just a ripple effect that’s occurred. John McEvoy: I do see with China, it goes into cabinets, like you said, and it’s a number of different materials. But the problem is it really affects our bank’s loan-to-value on these large projects because they’re requiring more than 50 percent deposit. And they’re wire transferring funds to China, which specifically affects the bank’s loan-tovalue. That’s why I have a real problem with design-build now because of the same issue, there’s never a number. It’s always fluctuating. What is the bank lending? An appraisal is a beginning and the banking industry is still set up under a guaranteed maximum price format and that’s not what is happening. Matthew Mabie: I don’t necessarily see the delay in the permitting process once projects are in place. Much to the point I was speaking to earlier; developers need a development budget prior to leasing. They need to know what rates they can offer. The delay we notice in projects are within the conceptual phases, the due diligence period. From our standpoint, the minor upfront investment to minimize risk by completing an accurate and well thought out set of construction documents is still well worth the value compared to the delay.

I’d like to hear from each of you about your expectations for what you think is going to

TABLE OF EXPERTS

happen in the rest of 2018 in the commercial real estate market in the St. Louis region. Blaise Tomazic: Sure. Kind of touching on what Tracy said, the major foods groups, industrial is going to continue to be strong. Shopping online, we have to store the products. Online appliance sales were up 42 percent last year. It’s going to continue to grow. I don’t see an area where it’s slowing down. We continue to absorb new space every day, which is a good sign for the market. Office is going to continue to do well. Particularly certain pockets, such as Clayton and Cortex. So the demand is there for more space. I think Centene’s building will be completely leased by the time it’s done. The second phase of The Boulevard is supposed to start soon. Just in downtown there is a demand for new hotel and multifamily space. I’m sure there is more going on downtown than people realize; particularly, from a development perspective. John McEvoy: 2017 was a strong finish for us. Probably the strongest we’ve had in a while. Barring any unknown tweet or any statement by anybody, I think the business will stay strong even with rate increases that will be — but I still see it being strong. There are specific needs that we are trying to fill. Kurt Mollet: For us, 2018 is going to be another great year. While we have some high-profile projects in the next two years, we have positioned ourselves well as a company. We have addressed and continue to address the tightening of the regions labor pool. We have scaled up our own labor force and built the needed relationships with established subcontractors to provide the same level of support and quality that our clients have come

to expect. We have also focused on our approach to acquiring materials so that we can create more value for our clients. The other strategic focus for us in the coming year is the utilization of technology and our ability to accelerate schedules for our clients. In the past five years, we have significantly decreased project duration through the use of virtual design and construction services, which includes BIM, robotic layout, AR/VR and drones. Matthew Mabie: Knoebel is on pace for a strong 2018, we’re set for a very strong 2019. Retail is reinventing itself and Knoebel will be a part of that for the foreseeable future. Chris Wilhelm: I’d say 2018 is shaping up to be a pretty good year. Technology backlog is strong, up considerably and I think 2019 looks promising. However, one of the things that could inhibit our growth locally and geographically is certainly the lack of qualified, techsavvy workforce. Getting a skilled work force who is more tech savvy, and understands cloud technology is critical. Tracy Howren: I think we’ll see continued development and investment, given the underlying strong fundamentals in the commercial real estate space. Regarding UMB, we are heavily invested in being part of the CRE market here in St. Louis. We’re continuing to grow our CRE portfolio, and we have a great deal of capacity and deep expertise in the space. With that capacity for growth, and our 105-year history in the Midwest, we’re looking to build long-term relationships that last through the ups and downs of all economic cycles and be a long-term player in the space.