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Design Development
182: Nicholas Pasquenza, Senior Vice President, Development and Construction @ LCOR
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Nick Pasquenza has spent more than 25 years in commercial real estate, leading complex projects and the teams behind them across design, construction, and delivery. Throughout his roles, he has developed a deep expertise in the full arc of urban development, establishing a clear conviction: if you don't understand how buildings are valued, you don't truly understand the impact of the decisions you make.
Today, Nick serves as the Senior Vice President, Development and Construction at LCOR, a nearly 50-year-old integrated development and investment management firm. He leads their design, engineering, and construction teams across LCOR’s large-scale mixed-use and mixed-income developments, drawing on a career of over 4,000 apartments delivered.
Nick joins Rens on Design Development to walk through the behind-the-scenes of consistent development success: on their last seven projects, LCOR delivered on time with contingency remaining. The two discuss entitlement risk, preconstruction, contingency discipline, and what 25 years of weaving through roles as a contractor and developer have taught Nick.
Inside this week’s episode:
- Why slowing down during design can lead to better construction outcomes
- How LCOR structures preconstruction partnerships with general contractors
- Why a firm's delivery track record has become increasingly important in today’s capital market
- How BIM review, schedule analytics, and 3D site capture help catch costly problems earlier
- Entitlement risk, and the importance of a clear approval path
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I'm your host, Ren Hayes, co-founder of H+O Structural Engineering, a lifelong learner, and I'm personally obsessed with high-powered organizations and the leaders that can. Let's go. Today on design development, we bring Nick Pasquenza, SVP of Development and Construction at L COR. Nick, thanks so much for joining us today. Oh, thanks for having me. Looking forward to it. I'm excited to dig in here with you, Nick. Let's give the audience a little bit more background on LCOR. How many people, the type of work you do, geographic reach, that sort of thing.
Nicholas PasquenzaSure. So we're a multifamily developer on the East Coast, primarily urban centers. We do look in the suburbs as it relates to transit-orient development, but primarily large-scale urban development. We probably wouldn't do something under we're active from Boston all the way through Miami. And we own and operate the building. So we have our own in-house property management group that we, as the construction development team, deliver for them to own and operate for the long term. We're well in within the hundreds of employees when you factor in our operating group, you know, between all the on-site employees, the regional employees. So from that side of the business, we're in hundreds. But from an acquisition and development group, we're small. We're 30 to 40 people. We have an office in New York, a development office in Bethesda for the DC metro area. We just relocated, we know from my team down into South Florida for our first parking in Miami that we broke ground on a couple of weeks ago. And then we have HR, head of operations, and some other accounting functions.
Rens Hayes IVAll right. And then so development and construction, you're primarily headquartered out of New York. And then do you have small regional players that are also a part of one cohesive development and construction team? You're all like one operating group?
Nicholas PasquenzaWe're one operating group, absolutely. And that was one of the things that so we we're headquartered in New York and we have uh the development office in, like I said, the DC market, and we're we've opened one up in Miami. And when I joined El Corps in 2019, the CEO Anthony Barsante, he joined he joined, I want to say in 2014, 15, something around then. One of the things that he, one of his initiatives was to make it one company instead of, I think historically it had these regional offices that kind of somewhat operated independently and somewhat did their own thing. And he was really focused on aligning everyone, to be one organization operating the same way with the same goals.
Rens Hayes IVPrimarily an urban core developer. When I look at say even greater Boston over the last five years, private development has been very difficult to make economically viable, especially without subsidy. What has gone well, or what cities have had some momentum over the last five years to continue deploying capital?
Nicholas PasquenzaSure. So New Jersey for us has picked up quite a bit. Similar to, I'll take it off. I'll answer your question, but I think it's an interesting analog. We are the master developer for the Hoboken ferry terminal. This is another 20-year-long saga, which we've been involved since day one. You guys like saga distance. Yeah, yeah. So we entered an RFT in the early 2000s. We were awarded the master developer in 2026. I'm sorry, 2006. We like to say since then there's been a financial crisis, super sermon sandy, and COVID, which has reshaped the development. But what it was is this the Lackawanna terminal, the ferry terminal at the end of the New Jersey rail line. There's also a ferry terminal that takes people across the Hudson into New York. There's a pass station, which is the underground subway from New Jersey into New York. There's a light rail, which is gets you up and down like New Jersey coast, and a bus terminal. So all of this transit is there. And a ferry terminal was built in 1906 and has been underutilized for since the 60s when they stopped using it for ferries. So we're the master developer. So we're redeveloping its historic building. We're developing on behalf of New Jersey Transit. So we don't have an ownership stake, we're just a development manager. But we have a redevelopment agreement with the city of Hoboken. And the redevelopment of that terminal, the bus station, the terminal, the public space around it was the key to unlock the redevelopment with the city of Hoboken because they get their public benefit, the improvement of this area. And then we have two ground leases with transit to build private buildings. So we have a project, a residential project in Hoboken that's on the 24th story of structure of 28. And that one, we had some subsidies from the state of New Jersey aspire tax credit, which made that it's a transformative development. The EDC of New Jersey, we competed for in one tax credit that made that uh a viable product project. And so we're moving forward on that. And then we just broke around on a project in Jersey City, 107 Morgan. This is our biggest project, 634 units. And Jersey City has exploded. Rents are fantastic, and it's just an unbelievable place to develop. So we bought that land a few years ago, got it through, had a couple more months, had a few more months of entitlement, which we did, got it designed and permitted, and we broke ground. We're very deliberate and meticulous in our planning. The way I view it is if there weren't problems in this business, I wouldn't have a job. We wouldn't be necessary. We would hire architects and engineers and contractors, and we'd, when you're done, we'll come occupy the building, right?
Rens Hayes IVSo we'll just come collect the checks later, right?
Nicholas PasquenzaYeah. We can't avoid the problems, but I want to make sure that when we and our project managers who are on site every day overseeing and working with the contractors and design team, that we've given them a chance to succeed. They're gonna find problems and they're gonna be able to overcome those problems. But if there's too many, then they have no chance of succeeding. So we take a very delivered approach to our design phase where we will pause at the end of schematic, we will pause at the end of DD, and we will give our contractors time to price the job thoroughly and make sure that we are not moving through the design process towards a place that is not going to be aligned with our goals. We've also we've also brought in a third-party BDC, virtual design and construction, who works as one of our consultants. And we host the BIM model. So we ask our consultants to upload every two weeks. And this third party will do checks, we'll do quality control checks, so to speak, of the model. And in a constructive way, not use a clash report, but in a constructive way, say, hey, you guys are 50% DD. I think the mechanical should be a little farther along, or hey, your columns aren't lined up with your architectural. So that when we get through the design process, we've had this continuous feedback loop between our kind of eyes and ears on the bin and the design team so that we on the 100% CDs that we feel is at a place where everyone feels more comfortable with it. We've been able to take that and hand it off to our contractors who then don't have to recreate it. They can actually use it to start mechanical coordination. And it's reduced RFIs, it's reduced the CA burden, I think, on some of our consultants. It costs money and it adds time, but it leads to more predictability for us, right? We don't get hit with change order number one on the IFC set. We don't GMP off an 80% set, and then 100% CDs come out, and we tell the contractor, no, you own it. It was implied, and there's that argument. And then three months into the project, you're fighting over a huge change order. We don't have that. We award our GMPs off of that 100% set that's been looked at by several sets of eyes, and it again just leads to us being able to do what we said we were going to do, which is deliver a building on climate.
Rens Hayes IVWe could take this conversation so many different ways on that one topic. I would say the first thing that jumps out to me is how aligned that is with just the perception we got of L Cor in our past conversation, right? It's like we want to have a risk-adjusted, predictable returns. We're willing to pay for to reduce that entitlement risk. And here you are, like a lot of times when I think of the challenges that we face in the commercial real estate design and construction world is how uh development is, but in line with LCOR's kind of purpose of risk-adjusted returns, they're willing to pay a little bit more upfront, maybe in that GP money to do quality control to limit downstream risk of construction. Because while it's upfront, you're absolutely reducing change order risk or scope gap risk, right?
Nicholas PasquenzaThat's right. And then the other interesting thing that's come up relative to raising capital is with the unpredictability of the macroeconomic situation, tariffs in, tariffs out, interest rates, oil prices, track record has become increasingly important to lenders and capitalists. So we can't tell you what the interest rates are gonna be in three. But we can tell you that on our last seven projects, we've had a million dollars left in contingency and we finished on time, right? And the reason is some of the stuff I've explained to you, and we're gonna do what that's we're gonna do all those same things on this project. Oh, and here's a couple other things we're gonna do that on this project. So I've as primarily the construction person in recent last couple of years, I've been spending a lot more time talking to potential partners about our process because it's becoming equally important to all of the financial aspects of what we do to get the partners, our potential partners comfortable with investing. I find that very rewarding because it really me, I mean I can point and tell my team the work you've done on this project. While for this project, it was great. It came in on time, on budget quality, it's leasing up, operations is happy. It's also growing our business because you've we're using it to demonstrate to future partners that we're good to invest in. So now my project manager who's dealing with problem after problem and doing a great job, now also knows that they're contributing to the directly contributing to the growth of the organizations.
Rens Hayes IVVery, very rewarding. Even just looking at this from a capital or even a debt provider, it's like somebody's handing you a pro forma for a deal. You're gonna want to underwrite and stress test that. And the first thing you're wondering is like, how quality are the numbers that they give me? What did they miss or what are they hiding? And so to be able to point to that track record of say having a shit left over these consistency returns, you can understand in an otherwise volatile market how predictability is gonna attract the right capital to your deal. I've even heard in this capital market, it's really challenging for say that mid-sized developer that maybe aren't national or multi-regional doing thousands of units a year. Maybe they're doing a couple hundred units a year, but they could have a really good pro forma, but a capital partner might elect to go with an L Cor, whereas a more proven track record for slightly lower returns, but higher perceived predictability. And I think it comes to this question that you're bringing, right? Or this conversation you just brought to us here.
Nicholas PasquenzaYeah, and what I agree. And what I've also noticed is we're starting design on a few projects. And when I have described our process in the past, I used to get strange looks because everyone has been so used to gotta get in the ground, gotta get in the ground, gotta get in the ground. And we're we were the ones saying, slow down, let's take our time. If people think we're crazy, and we had we've had to acclimate our design teams and our project teams to that process. But what I'm noticing is when I'm describing that to potential new architect engineers and CNs, they're like, Yep, yeah, got it. So I think other folks are starting to, not that we were that novel to begin with, but I would say what I'm noticing in the market is I think more and more people are realizing, you know what, we can't take that flyer and we can't GNT off a 60% set, kick, crank, and it's a different market. So I think it's I think more and more people are really starting to focus on that predictability, which is good, I think, for the overall industry.
Rens Hayes IVYeah, for the industry, for the economy. But like when the cost of capital was so cheap, you couldn't get into the ground fast enough, and that the macroeconomic environment was hiding all since. So it really was a game of speed. But then you see what happened to say the life science market. All of a sudden interest rates go off, venture funding's gone, and all of a sudden we have millions of square feet of vacancy. But that was the only way to get a commercial building. You'd take an office, call it life science, and now all of a sudden your performer works in the back, right?
Nicholas PasquenzaYeah, we were partners with Divco West in Ambridge Crossing, up by you, uh you know, which is a combination of life science and resi. So we were doing the residential project with them, and we uh we were they were cranking away on the life science, and they were gonna build another one, then we were gonna do another resi. It was gonna be great. And then when the life science struggles hit, everything has just stalled there, which we were so it isn't just life science that gets impacted by that, right? The whole development is uh has slowed down, unfortunately. But we've been still in contact with them.
Rens Hayes IVYeah, that's an amazing development. I have no doubt that's successful long term. But when the capital markets change interest rates went up, it really changed the dynamics of uh of urban development. But the DIFCO is a great team and definitely want to see that that development through.
Nicholas PasquenzaYeah, which my first high rise ever was when I was with Archstone in Boston, and it was uh one Lighton Street, which is the first high rise in what was called North Point before it was Cambridge Crossing. And that was 2007, 2008. And we were not getting top of the market rents, but it was this vision that we were going to create, not we, but this place was gonna be created and it was gonna really drive value. And then fast forward almost 20 years, I'm doing another project there, that's a seventh, eight, ninth project. And we were actually getting top of the market rents. So it was really cool to come back, do another one and see the sort of vision that I that was like way off in the future someday. Oh, it's here, and I like to be part of it again.
Rens Hayes IVWhich I mean, it is absolutely its own scaling community, like adjacent to downtown Boston. It is a piece of dirt and an exciting development. And I I think that's one of the coolest things in our industry, the built environment, is getting to see your career through the buildings as you go by and how they wrapping up that conversation on the diligence. You mentioned pricing at schematic, pricing at design development, and you guys use all third-party contractors, if I'm not mistaken. So, how do you walk the line over a construction partnership so that you're getting good information while also having maybe a competitive bid process? Because sometimes when you're sitting in a subcontractor or a contractor seat and you're looking at schematic or design development, you're like, I don't quite have the job yet. I really want to tell them what they want to hear so I can get the job and we'll figure it out later, versus your team is trying to build partnerships, reduce risk for the long-term value of this asset. How do you kind of manage that conversation?
Nicholas PasquenzaSo that's a good question. What we typically do is we'll do an a competitive RFP at the conceptual state, and we'll lay out the pre-construction scope of work. We'll ask them for business terms, general conditions, schedule, fee, insurance, below the line indirect costs, try to get some competition at that level through from the general contractors. We'll include our template contract agreement, right? Because when they're competing, they're less likely to have comments. So we do that up front and we'll pick a partner. And the goal is that becomes the partner who takes us through pre-construction and construction. And then we will buy the job out with the GC. So we'll get the competition at the subcontractor level. We'll take it to 80% bought before we finalize the GP number. And they we rely on our contractor's expertise for bidding, scoping, descoping. But we'll we participate. We're at the meetings, we're asking the questions, and we're actually part of the negotiation to talk. We try to get the best deal we can. And sometimes we are even leveraging the work we're doing up and down the East Coast with some of the same contractors to try to make the best deal we can. And I think the incentive for the GC is the only way they know that they're going to actually build the building is the cost that they give us every step of the way better be the costs that we get when we're actually buying the job out. Otherwise, it doesn't. So we always say at the end of DD, that's it. This is the cost. So this is what we expect. We don't do any more estimate. We do an in-house check at 30% CD where we ask the contractor to look at the 30% set, make sure it's still on track with what we were expecting. But we don't do any full estimating. We go from the DD level into the CDs and then we start buying out the so where when the numbers don't come in where they were, that's that's a problem for everybody. And that is that'll be when we'll take it out to a competitive situation with the general contractors and say, right, here's a hundred percent set, got to bid it out. It's not the way we draw it up. We've had to do it a couple of times. It's not how we want to do it. But I think the other part is we don't have the quantity of data that our CMs do. But we have enough and we build only ResD that we can actually look at our own historical data and we can identify where we do think maybe the GC's pre-con team is not pricing it correctly, or if they are, then our design is not where it should be, right? So we can we're constantly evaluating where our costs, or I should say the cost of a certain project, are deviating from our historical cost. And maybe that's on purpose, maybe there's a reason and we're okay with it, or maybe we've either made a mistake in the design and need to rethink it, or maybe the GC is looking at. I think all those combined get us to the right number and win respond to the phone.
Rens Hayes IVThat's smart to bring your own data and not just rely on a third party. And I think the critical piece there is that we all have different data and different experiences that we're bringing to the table in the partnership. And if the data is the same, great. If the data is different, now we know, hey, this is probably an area we should focus on and have a deeper conversation to make sure that we're heading in the right direction.
Nicholas PasquenzaThat's right. That's right. So we've created a standard trade breakdown. And we've we ask our contractors to send us their detail on Excel and we actually map their detail to our trade breakdown. I don't want to give a contractor a template to follow because they train their estimating department. They're used to estimating a certain way. I don't want to be this outlier. You estimate it your way. We will bring it into our way of looking at it. So then we can look apples to apples across all of our costs. And so it does. It it it the anomalies will jump out of it.
Rens Hayes IVQuick break from the show. Thanks for tuning in to design development. We're trying to help as many people as possible. So if you could subscribe and leave a review on today's episode on whatever platform you're listening, it would be a great help. It's the only way we're going to reach more people. Let's get back to the show. In your experience, what's maybe the biggest scope gap or area of increased cost from DD to CD, despite that delay?
Nicholas PasquenzaFor us, it's finishes and primarily common area finishes. Uh, because those are they, those are the one thing that goes into CDs and still and needs a lot of development, right? We know it's tile. The cost is in the detail when it comes to the common areas. And it's very it's every project is unique. So that's one of the things that I like about working with Elcor. We're institutional, we are consistent, but we design every building is bespoke to the location, the demographic, the time and place at which it's being built. So our amenities and to some extent our units are always different. So we have to relearn what those costs are in a lot of projects. And we can try to make sure that we get cost per square foot of amenities and units similar, but it if I am New Jersey, you're going to be completely different, right? So you have to learn the new costs. It's not a huge percentage of our overall budget, but it is an area where we have to put a lot of effort in towards the end of the process. And then mechanical equipment, METs in general, those they're just unpredictable, I think, from a market cost standpoint, a fluctuation of equipment and those commodities, it's volatile. That's the right word. Yeah. So that's one that we try to be conservative in our estimating so that we can get a contingency for that volatility.
Rens Hayes IVI actually, when it comes to construction budgeting, like I always think of as we have this check at conceptual or schematic or DD along the way, I think it's really important to have good communication, both from the development to the GC to the subs, because we obviously want to make sure we're covering scope that's we're expecting and covering scope gaps. But it's like, where is the contingency lying in the budget? Because if we're a structural engineering firm, so if we're providing a contingency in our, say, steel tonnage, and then the subcontractor adds a contingency because they don't want to be cursed out later for increasing their price. And then the GC has a contingency over the whole GC. It's I think you could have too much contingency, which then just leads you to having misinformed decision making. The whole point of the budget is to guide decisions along the way. So it's like really important to understand where that contingency is.
Nicholas PasquenzaAnd if our estimate was $20 million too high, everyone, everyone's, oh my God, we saved 20 million bucks. No, that means we made some decisions during design that were off by 20 million dollars, right? So yeah, we want to get, we want to be really close to the final cost on day one. So we're very clear with our contractor about what your contingency below the line. It'll start off high, and as we get more certain, it'll shrink. We carry our own contingency. We have a design contingency and a hard cost contingency. And as we move through the design, that design contingency shrinks, goes away to nothing. And the hard cost contingency is probably going to stay throughout most of the project. And then what I find interesting is sometimes structural engineers or mechanical engineers will put on the plans, carry X amount of tons of rebar and carry some fluff in, I don't know, switches or something, right? They'll just throw these. So we don't want that, right? We don't want that. We will handle contingency. We want to know, we want to be able to price what we think the actual design is going to be. We will decide at depending on where we are in the design phase, what the appropriate contingency is at that time. So we do have a lot of those conversations. And I think that's also where having our own data is helpful because sometimes, to your point, when we see a difference, we go, oh, you threw an allowance of $500,000 for floor leveling. Okay, I see. Don't include that. We don't want that. Don't include that.
Rens Hayes IVWe're covering that in the data is the key. And I know you're familiar with our business, Nick, but like we're like the only engineering firm who actually has like the process, the technology, and tracks the data of every single building we design. We track that data, we compare it. And before, the challenge with trying to make sure we were cost effective. And to communicate that to our customers was like every building's different. This has this soil conditions, this soil is this is a slope site, this is a different geometry, this has a bigger courtyard, that one has a pool. And it's really hard to predict what that's going to be on a single development until you have a lot of data. And then all of a sudden you start to see how little that volatility is that gives you a much higher level of confidence earlier in the process. So it kind of I relate it to the insurance industry. Like you can't predict the probability of a car getting in the car crash, but over a million cars you can, right? It's like the volume of the data makes it more predictable.
Nicholas PasquenzaTrue. I think you're unique in as an engineer that you do that. To your point, we when we have a design of post-tension structure, right? We want, we tell our circle engineers, total pounds per square feet of rebar, including the tendons, should be about five and a half, right? Because over that, somewhere along the line, we've made a bad assumption. And then we want to get 23, what is it? I'm gonna say this wrong, 23 cubic feet of concrete per 23 cubic, I'm gonna say it wrong. We have a metric, always have to look it up. Over 20 cubic yards of concrete per square foot. I think that's the metric, right? So if we're under, if we're under that, then our concrete yield is too. So once again, we've made some bad assumptions to the design, or it's due to just being conservative, right? So you have that in your systems. Our structure engineers at Weber don't have that, but we will ask our contractor and this third part of the bin consultant, hey, do this, do the quantity takeoff for us. We want to see how the concrete yield is and let us know what the rebar tonnage is so we can make sure that we're hitting those marks. And to your point, we may projects may deviate, but as long as we know why and we're okay with it, fine. But we want to know, right? We want to understand that.
Rens Hayes IVI'm gonna package up our data and send it to your team so we can compare. What did you study in college? Where did you get your career started?
Nicholas PasquenzaSo I was a civil engineer in college. I focused on the structure as opposed to smart men, as opposed to the infrastructure side of things. And then when I was in college, I got an internship with there. Uh I went to Lafayette College and they were building a new student sports facility. And I got an internship with the general contract. I was like, oh, I like this. So that's when I realized I wanted to go into construction as opposed to to design. And then I started returning construction in Boston out of college.
Rens Hayes IVOh, very nice. Did you grow up in greater Boston or did you move here to work with Turner in the city? I grew up in Connecticut, New England.
Nicholas PasquenzaSo I knew I wanted to live in the city and so Boston. Yeah, very cool. And Turner's an amazing company. What type of projects did you work on? I started working on pharmaceutical doing a a fill finish wing. So where they bottled and packaged the drug. They had it, it was Gen Zine. They had increased their production capacity so much that they couldn't bottle it fast enough. So Turner had this long relationship with so my one of my first projects was renovating their Phil Finish facility, which was technical, right?
Rens Hayes IVLike I was just gonna hit at like what a great project to get access to so early in your career, because there's no more complicated mechanical systems than that type of building, that healthcare.
Nicholas PasquenzaIt was interesting because when I went into residential, I was like, oh, I can handle this. I can do pharmaceutical manufacturing, I can certainly handle an apartment building. But what made a difference is the motivation. We couldn't spend enough money in a day that Gen Zen couldn't make by getting their product to market a day sooner.
Rens Hayes IVThat is a hard thing to learn from the design and construction world. You're like, how are they being so wasteful? It's because despite this waste, that company has so much opportunity cost that it's worth the waste. And I think that it's hard to fathom.
Nicholas PasquenzaSo you put that, you structure that financial less of a financial burden to subcontractors, then nothing against the subs who are successful residential, but the subcontractors who work on those pharmaceutical type projects are just a super high level certification. So they they don't need much help to get the job done. And you're building the building around the process, right? The process governed and you're building the building right. So everything about residential is different, right? You're jamming as much stuff as much process HVAC electric plumbing into the smallest possible spaces you can to maximize the sellable, right? And you have subs who their business model is production. And I did, I think it's fascinating to watch a good sub who knows how to make money on a job, how to produce, but they're not, they don't send five top people who are gonna analyze the heck out of slumming to get it perfect. They send 25 people who are just gonna who know how to get it done and know how to flow. So it's a different animal altogether.
Rens Hayes IVWhere they're assembling off-site and they have their way of getting stuff done.
Nicholas PasquenzaSo I would venture to say it's more challenging. And when I started it, a residential is more challenging. Oh, that isn't that interesting.
Rens Hayes IVI I think about the you mentioned the sub-sophistication and the operations. To build a company with that type of sophistication, you have to have the revenue and the deal flow and the margin to be able to invest in this. And so when I think about those two industries, pharmaceuticals, we just talked about like how valuable that industry is and the opportunity that they have as a company. So they are willing to pay for sophistication, speed, quality, predictability, all of those. And while those things are still important in market rate development, the end user is governed by rents and affordability. So like it is you can have much more price compression in a multifamily, market rate multifamily versus, say, a pharmaceutical building. So it's like that's how like the economics of those two markets changed the sub supply.
Nicholas PasquenzaAbsolutely. Yeah, completely different businesses. And what it but it's it's I think it's more it's actually more, I find it more interesting when you see a subcontractor come in, like a drywall sub or a plumbing sub who gets in their flow and just starts cranking up the building. Like it's a thing of beauty, right? They figured they figured it out, and you know they're making money, right? There's not a there's not a there's not a movement that's wasted on the job side, right? Everything is super intentional. It's really on the pharmaceutical side, be they're technicians, they're experts, there's your borderline science has to be subs. On the residential side, they're business people. They've figured out how to make a business profitable, which you know it all ties with the overall business, but it's an it's really an interesting thing to see when it when it comes together.
Rens Hayes IVIt really is a thing of being what led you to jump from traditional general contractor to development side?
Nicholas PasquenzaI think I liked even when I was working as for Gen Zime as a client, observing the owners who have a lot more levers to pull to solve problems, that was appealing to me, right? Some of there's some I was obviously on the execution side during active construction and there'd be this issue. Oh, we can just move that. Oh, okay, great. As a contractor, I couldn't make that decision, but they could. Um so I thought that was interesting. I like that bigger picture. And then as I did have some more time with Turner, you realize that a lot of the really cool decisions that require input from a wide group of professionals, a lot of those are made before the contract's involved, or at least before I did in my at the time when I was project engineer. So I I just I gravitated towards that kind of holistic view of the business where I'm not a finance person, but I love the way that and financially the way that financial decisions are so closely tied to how we're going to design and build something and pulling all those together to optimize the end result, I just found that really interesting.
Rens Hayes IVI think the second you start to see the financial side of the business, it really changes how you think in every seat throughout. Is there any piece of advice you have to general contractors to maybe share like an insight to the development side or how it impacted the way you made decisions?
Nicholas PasquenzaYeah, I think this whole concept of cap rate, where when you realize that saving $10 is worth $20 is worth $200, right? I don't, if you don't under if you don't understand how buildings were valued, then you don't really understand the impact of the data save decisions, right? So when we as the owner are trying to save, we're not trying to, we're not trying to save every penny at the expense of quality or ability to execute, but we're analyzing every it's because we are create, if we do our job correctly, we are creating value. We're literally creating value that we realize by making those smart decisions. When I was on the counteractor side, and even my first several years on the developer side, I didn't, that was something that I didn't really totally grasp. And so once you understand how buildings are valued, then you start to understand how your every decision you make impact how that's magnified over the life.
Rens Hayes IVYeah, or like a decision of construction costs versus operating expenses. It's like the operating expenses really start to ding the business value.
Nicholas PasquenzaThat's right. That's right. Like we'll spend a few hundred thousand dollars if we can save a few bucks on the NLI or increase the NOI by a few bucks because we've actually increased the value by 10 times the amount we saved.
Rens Hayes IVDid I see you teach uh construction, finance, and cost control at NYU? When did you start that?
Nicholas PasquenzaSo yeah, I started that about 2014. And actually, now I'm at I work at Fordham, uh, teacher Fordham because uh NYU's construction was with the SHACS, a school of professional studies, SHAC Institute of Real Estate. And it was a construction cost and finance control class. And we it was really about it was geared towards people who wanted to go to who are in or wanted to go to a career in construction management. And it basically was the first half of the program was managing project costs, understanding how to handle understanding a requisition, understanding change orders on ACR. And then the second half was like the business side of things. It was analyzing investment decision, understanding financial statements, kind of thing that hopefully would sink into the students and they would realize 10 years from now when they were at that level and the organization had to think about this. And I loved it. It was so much fun. It was in the evenings, and sometimes I'd be tired and just want to go home. And then I would get there and I'd be energized because the students were there because they wanted to learn and they were asking questions and they were engaging. I was it was a lot of fun.
Rens Hayes IVI really enjoyed it. That's amazing. Thank you for giving back. I I think financial literacy is the big missing gap in the education system in the United States. And I think a lot of things stem from that lack of financial literacy. It's hard to make an educated vote when you don't understand the economic impact of the policy you're voting on, for instance. So any piece of education throughout that process where you can dig into finance, cost control, and the bigger impact, I think is super valuable. I know you're passionate about technology. Where did that first stem from and what tools are you using today?
Nicholas PasquenzaI am. So it actually stemmed from college way back in the 90s. I'm old. I did a senior honors thesis on a project website for managing construction projects. Like I said, I'm old enough that that was novel. And I can remember when I was doing my defense of the thesis, the professors in the room were trying to ding me for not having cited educational resources. I was citing trade publications. And finally, one of my advisors who came from the business side said, it's because no one's done this yet. It's too new. And I was like, Oh, I'm on the cutting edge. This is amazing. And then I went into my career and like nothing happened, right? Yeah, software, project management software system came to be, and people stopped mailing and stopped faxing and started emailing and then started using FTP sites. And I can remember when I started at Turner, one of my jobs as a new hire was packaging hundreds of rolls of drawings to Yeah, I remember that. But I you so you saw obviously some level of technology continue to be implemented, but it wasn't changing, it was changing the way in which the same process was done. It wasn't enhancing the knowledge gained through the process. Uh, I could and another funny story, my last project in Boston was a building called the Avenue right by the garden, one on like down. And so we were doing punch lists, and there was a system called Baylist, which was a laptop with drawings, floor plans, where you could pinpoint the punch list item on plans instead of just like writing it down. So I was like, be having this like, I love tech, I want to do something. I we're gonna do this. We literally had to put a harness to wear a laptop like at our waist to go to go do and I was like, I was like, nope, that happened. And so we put these pets of paper and pencil. And then like two years later, the three years later, the iPad came out, right? With the advent of mobile technology, faster cellular service, Wi-Fi in your construction project, the adoption of technology has actually gotten to a point where it is changing the way we're doing business. The first, so I mentioned the BIM, the BDC that we're doing. But the first system we implemented several years ago is a company called Smart PN. And we up what it's an upload of the contractor's native T6 file, schedule file, and it spits out, in my opinion, a schedule consultant level analysis of the schedule compared to the last update compared to your baseline. And it happens in a matter of minutes. So my team now has that level of analysis at their fingertips every month. So it helps them focus on where the actual problems are in the schedule and use the schedule as an actual tool for tracking progress and solving problems as opposed to be just something stuck up on the wall.
Rens Hayes IVI can see that being so important. And you found that analysis in the in Smart PM to be like highly useful, really accurate.
Nicholas PasquenzaI mean, it tells you what's changed, it tells you what's been compressed, it tells you what's been delayed, it gives you a grade of the quality of the schedule. Not it doesn't evaluate whether your duration's right or wrong, but just from schedule science, it tells gives you a grade as to whether it's a good schedule or not.
Rens Hayes IVThat's really cool, even like preliminarily. But I imagine even as a project's going, if weather delays, winter conditions, or a sub misses a key deadline, you can automatically see the impact and probably I imagine see like where you can pick up time.
Nicholas PasquenzaYeah, 100%. And we had it in it, we had a project where it was a five over two, and our concrete podium was severely delayed. And so the GC re-sequenced the project, resequenced how they were going to do the stick portion above, issued the updated schedule, we put it into smart pn. Smart PM said it was there was 80% compression, meaning durations had been shrunk and tasks had been stacked that had been previously sequential. And the rule of thumb is if you get over 25%, you've hit a point of no longer feasible, right? So we said this isn't real. So we looked at Smart PM, it developed a whole we were able to develop a whole list of questions to try to understand how it got to this 80%. Sat down with the GC, the superintendent, who by the way was a great scheduler, asked him one question, he answered it. Oh, that makes sense. Then he proceeded to explain his logic, which followed every single question that we had, answered them without us having to ask them. So it told us, wow, he did this on purpose. He knows exactly what he's doing, he has a plan for how to get there. So despite being 80% compressed, we were able to say, this is achievable. If if we didn't have that at our fingertips, we would have been like, yeah. So that's the first time I was like, yep, I like this tool. Any other technologies you're excited about? Yeah. So we have a we use a company called onside IQ that does a 3D capture every week of our projects. And they've really innovated with some AI where they're able to identify work in place, give you kind of percent complete and actually compare that to your schedule in a way that's accurate enough that we it helps us focus on things and say, hey, this looks like a big deviation. Is it a deviation or is it fine?
Rens Hayes IVWe can go look at it and either hey, it's fine, or no, is it deviation? You use technology when you first started talking about it as a way of it's like new information to help you make better decisions, to improve your judgment. Both of these examples are exactly that. There, it's data that allows you to make better judgment.
Nicholas PasquenzaIt's not just accelerating something you do day in and day out, it's giving you new leverage, it's giving us more confidence in our decisions and it's helping us identify early potential issues so that when we can have the ability to still overcome them.
Rens Hayes IVNick, I got one last question before I let you go. What's a favorite book or podcast you would share with the audience?
Nicholas PasquenzaAll right. So if I had to pick one podcast, I would say this is sounds silly, but I like Marketplace. It's the NPR financial show. It's a half hour, it's on at 6:30 at night. I listen to it the next morning on my way to work, and it just gives me a high level of what's going on in the world. And I can't tell you how many times I've gone, ooh, that could impact us. Let me look into it. Whether it's a tariff or it's some corporate acquisition or whatever it might be. And my commute's about a half hour, it just fits perfectly into my morning routine, and it's been informative.
Rens Hayes IVYeah. The more the further and further into my career I go, the more like macroeconomic and political impacts I see on the industry and the business to give me a cue of things that I might have to navigate in the future, right? So it's like staying, staying top of mind and relevant and important. Nick, thanks for sharing your journey. All the great things happening at El Core. I know I'm certainly going to be paying attention to some of these mega projects that you're doing, which is super exciting. Thanks for sharing your journey on design development. Everyone, thanks for tuning into design development. Real quick before you leave, our goal is to help as many people as possible. We're a growing community and you're a big part of it. So just click that send button, send this episode to a friend to let them get the same insights that you got today. We appreciate you to see next time.