Welcome to episode 30 of Offshoot. My guest today is Damien Farrell, founder of West Modular, a construction company that manufactures modular apartment buildings from a 210,000 square foot facility in Tijuana, Mexico. At maximum output, West Modular can produce 1,500-2,000 apartments annually and build them in half the time of conventional construction.
Damien brings over $500MM in completed developments to the conversation, including three major hotels—Dream Hollywood ($125M), Thompson Hollywood ($154M), and Tommie Hollywood ($114M)—plus a hospitality portfolio that grew to 20 venues across three states before being acquired by Las Vegas-based Hakkasan Group. His experience and frustration with cost overruns, delays, and change orders on those projects, combined with his experience entitling and permitting over $1B in projects, drove him to discover and commit to what he calls “the future of construction.”
What makes this conversation really compelling is Damien’s deep understanding of both the technical and financial challenges plaguing development today. While you can argue that this is a better mousetrap—the product itself addresses a myriad of external challenges, outside of the module, that make housing unaffordable and projects difficult to fund.
Listen in as we cover topics that include:
How BIM software and cloud collaboration (BIM 360) are revolutionizing construction by getting consultants to work together in real-time, eliminating costly coordination issues that plague conventional builds.
How steel-based modular can reach 12 stories (versus wood’s five-story limitation), which makes it ideal for the increased density created by California’s upzoning initiatives.
How West Modular’s 29-workstation assembly line breaks buildings down into individual part numbers, just like automotive manufacturing.
How full-time factory-based quality assurance and quality control management provides quality to superior to site-built construction
Why conventional construction’s change orders, delays, labor shortages, and development timelines cascade to increase cost and projects risk, while modular’s compressed timeline reduces interest carry and some significant building risks.
The critical importance of maintaining your team and network relationships through both successes and failures in entrepreneurship.
Why attention to detail, follow-up systems, and disciplined time management separate successful young entrepreneurs from those who confuse activity with achievement.
And… How adversity and getting knocked down creates the resilience necessary for long-term entrepreneurial success.
This episode is a bit of a masterclass on how technology, manufacturing principles, and strategic execution can and will revolutionize our industry and its outdated practices.
Transcript
[00:50] Kevin Choquette: Welcome everyone to episode 30 of Offshoot. My guest today is Damian Farrell, founder of West Modular, a construction company that manufactures modular apartment buildings from a 210,000 square foot facility in Tijuana, Mexico.
[01:05] At maximum output, west modular can produce 1500-2000 apartments annually and build them in half the time of conventional construction.
[01:15] Damien brings over 500 million in completed developments to the conversation, including three major hotels,
[01:22] Dream Hollywood, Thompson Hollywood and Tommy Hollywood,
[01:25] plus a hospitality portfolio that grew to 20 venues across three states before being acquired by Las Vegas based Hakkasan Group.
[01:34] His experience and frustration with cost overruns, delays and change orders on those projects, combined with his experience in titling and permitting over a billion dollars in projects drove him to discover and commit to what he calls the future of construction.
[01:51] What makes this conversation really compelling is Damian’s deep understanding of both the technical and financial challenges plaguing development today.
[02:00] While you can argue that this is a better mousetrap,
[02:02] the product itself addresses a myriad of external challenges outside of the module or module construction that make housing unaffordable and projects difficult to fund.
[02:14] Listen in as we cover topics that include how BIM software and cloud based collaboration are revolutionizing construction by getting consultants to work together in real time,
[02:25] eliminating costly coordination issues that plague conventional builds.
[02:30] How steel based modular can reach 12 stories versus Wood’s five story limitation which makes it ideal for the increased density created by California’s upzoning initiatives.
[02:41] How WestModular’s 2029 workstation assembly line breaks building downs into individual part numbers just like automotive manufacturing does how full time factory based quality assurance and quality control management provides quality superior to site built construction why conventional constructions change orders, delays, labor shortages and development timelines cascade to increase costs and project risk,
[03:09] while Modular’s compressed timeline reduces interest, carry and some significant building risks.
[03:16] The importance of maintaining your team and network relationships through both successes and failures in entrepreneurship why attention to detail follow up systems and disciplined time management separate successful young entrepreneurs from those who may confuse activity with achievement and how adversity and getting knocked down create the Resilience necessary for long term success.
[03:40] This episode is a bit of a masterclass on how technology,
[03:44] manufacturing principles and strategic execution can and will revolutionize our industry and its outdated practices. I hope you enjoy the podcast.
[03:59] Damian, good morning. Thanks for taking the time to join me on the podcast this morning. I appreciate it.
[04:05] Damien Farrell: Yeah, great to be here. Excited to talk about all things kind of prefabricated modular construction.
[04:13] Kevin Choquette: Perfect.
[04:14] Look, I know you’ve got a lot of experience in this. Just to get the audience acquainted with you and the company, why don’t you just give a bit of a background on West Modular and what it is you guys do.
[04:25] Damien Farrell: Yeah. So how I got into this space was I had a lot of frustrations with building high rise buildings in Los Angeles related to cost overruns, delays, change orders,
[04:38] all the above that you know, any, anyone in development has experienced.
[04:43] And I just set out to figure out a, a better way to do it. And I don’t want to say that I’m the first because volumetric modular construction has been around since the 50s,
[04:56] but really I recognized it. Especially in today’s markets with the labor shortages of skilled labor as well as just general construction costs. We have to do things more efficiently and faster.
[05:11] And that’s really what we do. We, we just build apartments and now multifam, now single family in a manufacturing environment.
[05:20] So we don’t treat it like a conventional construction ti.
[05:25] We literally treat it like manufacturing cars where we break down every part number and put the parts together to make apartment buildings and, or now single family homes.
[05:40] Kevin Choquette: And you’re doing it down in Mexico, right?
[05:44] Damien Farrell: Yeah. So when I studied this business originally there’s a. Internationally and specifically up in the Netherlands,
[05:56] in Asia,
[05:58] there was a lot of companies and countries frankly doing this already. And I said, why isn’t this happening in the US and we were, I was traveling to Poland,
[06:10] Latvia,
[06:12] China, and I’m like,
[06:14] well, I’m gonna buy these modules here. I gotta ship them halfway around the world.
[06:20] I have ports to deal with, logistics to deal with.
[06:24] The main common denominator that I recognized was less expensive labor.
[06:28] And I said, well, being a San Diego guy for the last 20 years,
[06:33] we’ve got Tijuana just right across the border here. So as I studied it more, I started recognizing that a lot of the Fortune 500 companies that we all know,
[06:45] Toyota, Samsung, Hyundai,
[06:48] Foxconn, all have a presence right there in Tijuana as well. And they, and they produce a lot of different products in that area.
[06:59] And once we uncovered that, I said, this is A no brainer to just set up our own factory right here essentially in Southern California.
[07:10] Kevin Choquette: I mean presumably with this sort of Fortune 5000 that you just listed, there is actually a skilled labor base down in Tijuana.
[07:19] Damien Farrell: Yeah, that’s what we recognize. I mean we’ve in the US kind of abandoned manufacturing in the current administration I think is obviously, if you watch the news is, is pushing to bring a lot of that manufacturing back to the US we do operate under the United States, Mexico, Canada agreements.
[07:42] So I think when we look at near shoring, which has been a huge movement since the pandemic,
[07:51] it’s, it’s again,
[07:53] we’re a lot stronger with our local trade partners than trying to logistically bring especially the size of what we do. They’re essentially life size Legos.
[08:03] So to try to bring that product halfway around the world can be challenging and, and also have dimension constraints where we’re able to just truck from 14 miles south of the border.
[08:17] It makes things a lot easier to execute and also give us, gives us more flexibility in our dimensions and sizes of our modules.
[08:25] Kevin Choquette: Yep. And I know you guys are building with steel,
[08:30] which I think is a pretty unique differentiator when in the past I’ve looked out into the kind of in a modular world, which I know is a term you guys are leaning away from.
[08:40] But why are you guys building in steel? And how does that differentiate you from like other modular construction vendors or people in the marketplace?
[08:54] Damien Farrell: Most US modular companies are kind of started around the mobile home park or the double loaded, double wide trailer.
[09:05] And what I recognize studying modular specifically in Asia and the Baltic states was that we were setting out to scale affordable workforce housing.
[09:21] And that product wants to be in denser urban infill areas where the jobs are, where the, you know, amenities, supermarkets and transit, mass transit are.
[09:37] And with the upzoning that’s occurred in California recently In the last five years, five, 10 years,
[09:42] with a lot of the state bills,
[09:45] height restrictions and density has been,
[09:52] you know, increased dramatically.
[09:54] And when you look at that, wood caps out at five stories.
[09:58] Right.
[09:58] You can do a type three building which is three levels of concrete and five levels of wood.
[10:05] Those buildings are very costly due to material costs of concrete these days and qualified subcontractors to,
[10:13] you know, put up those three concrete levels and then you have to come and frame five levels of wood where our system can go up to 12 stories with concrete reinforcement,
[10:25] where wood just can’t do that. Right. So when you look at whether it’s affordable housing obligations as part of Some of these developments to increase that density where developers get that bonus,
[10:42] the bonus amount of units in a, in a building,
[10:45] because there’s. Some of them are affordable.
[10:48] Oftentimes that that building has to push up in height,
[10:52] and that’s where we come in with the steel module.
[10:55] Kevin Choquette: It’s just a better product fit for the marketplace. Right. I mean, yeah.
[10:59] Damien Farrell: Well, again, wood just caps out essentially at five levels, and we can go up to 12 with our system.
[11:07] Kevin Choquette: Yeah. So I was just thinking, as you’re talking about the Baltics, you’re talking about that they have,
[11:12] you know, pretty vibrant systems over there for this kind of manufacturing.
[11:18] How would you guys be able to. I mean, now I’m just being curious. It seemed like the cost structure over there might be significantly higher. Are they actually able to deliver a product that’s ready for the international market at a price point that works?
[11:30] Because it seems like an expensive economy.
[11:34] Damien Farrell: Yeah. And. And I think when you look at geopolitical risks as well as just what happened during COVID with the complete shutdown of transatlantic or, you know, international cargo ships. Yeah, yeah.
[11:49] It’s just you’re, you’re. So then, you know, subject to any of those variables that could literally take down your project. And, and what’s really great about where we are, we get the benefits of the less expensive labor.
[12:04] So we’re able to make, you know, affordable housing and workforce housing deals underwrite much better for the developer because a lot of this stuff with current interest rates,
[12:14] you just can’t get it financed. And then when you can’t get it financed,
[12:18] those units aren’t, you know, those housing units aren’t coming on the market. So, you know, this is a hack to do it. We do it in half the time of a conventional build.
[12:27] So when you look at the interest carry, I know you guys are kind of finance focused company.
[12:33] When you look at the interest carry, we have a much more compressed duration of money out there and it’s frankly less risk in a lot of cases for the lender as well.
[12:47] So it’s a much more constant product and much more constant schedule coupled with less exposure to change orders and the likes of construction defects. Because again, we do it in a controlled environment we create.
[13:05] And we can probably sidebar into this conversation, but the Autodesk BIM software has allowed modular construction to flourish. Because just like you look at a video game these days, and I’m in my 50s, so I remember playing Atari and Nintendo, but now, you know, these games are, are virtual reality.
[13:29] Right. And when we look at that.
[13:33] Just as a,
[13:34] as a comparison,
[13:37] that’s what we do. We create a virtual twin of the building that literally has every screw.
[13:42] And now that software, if you set up the building correctly in the software, we have an exact quantity of every piece of material that goes in that building.
[13:53] So procurement becomes better and more efficient. Less waste,
[13:57] more efficiencies,
[13:59] again,
[14:00] resulting in cost savings to the developer. I mean, if you’ve seen a conventional construction job site,
[14:06] how many dumpsters get pulled away from that site over the course of the project?
[14:12] Kevin Choquette: Oh, yeah, or just the half utilized box or bin or pallet of whatever quantity or whatever skew that needs to go in there. It’s, it’s, there’s a lot of waste, undoubtedly.
[14:25] Damien Farrell: Yeah. And when I was building my, the hotels in Hollywood, you know, I built three high rise hotels. And exactly at the end of the project,
[14:34] the fire marshal saying, hey, you got to clear out the parking garages.
[14:38] One building had four levels of underground parking, the other one had three.
[14:43] And literally the lower two levels of the parking garage was completely full with material that frankly, we had to basically put on ebay or just send to the dump.
[14:55] And, you know, we’re eliminating all that. And when we even do our virtual twin of the building,
[15:02] we actually cut the material virtually so, so that we have the least amount of waste.
[15:12] So there’s multiple layers to studying reduction of material going in the dumpster or to the, to the dump.
[15:20] Kevin Choquette: Yeah, yeah, let’s, let’s chill in there. Because I think this, from my outside view, this aspect of what you guys do is really vital. It’s a huge part of the value prop.
[15:32] The BIM software is,
[15:36] you know, like,
[15:38] I’m not in your industry, but I’ve seen kids play Minecraft and that’s where I can kind of go like, oh yeah, it’s like 3D Legos and you can fly all around.
[15:46] And we have one builder, developer, architect,
[15:51] client, and he will fly us through his buildings, like literally just like go through walls. And you can see the H Vac and you could see that that’s exactly what we do.
[16:00] Yeah, yeah, yeah. MEP Systems. But it seems you guys have also got another piece which is that.
[16:06] And maybe that’s like the,
[16:09] the Revit piece that you detail on your website,
[16:12] which. Well, why don’t you tell me about some of the data that’s attached to the building model? Because it seems like you guys have a pretty cool tech stack that makes all this happen.
[16:23] Damien Farrell: And yeah, that’s really what allows everything to flourish. And you you know, it’s funny, I look back and when I was building these hotels, I often compare because that was really what pushed me.
[16:32] The cost overruns on those pushed me into this space.
[16:37] But we did do BIM.
[16:39] Okay. But we only did it to level 200, which is like routing your major air conditioning ducks, call it and, or like big clunky stuff that needed to be kind of figured out how to get it structurally through the building without compromising the, you know,
[17:01] integrity.
[17:02] Yeah,
[17:03] the structural integrity and. Or the seismic calculation.
[17:06] Right. Oh, we’re gonna, we have a concrete wall here, but We’ve got a 3 by 3 or 4 by 3 air conditioning duct that needs to pass through that wall.
[17:16] Well, obviously the wall becomes weaker when you put that big hole in it. Right.
[17:20] So we did it to that aspect.
[17:23] However, when you got up to the ninth floor of the hotel and you had all these,
[17:27] you know,
[17:28] different fire sprinkler systems and lighting and soffits and exhaust from the kitchen on the, on the, you know, on the ground floor coming up through the building.
[17:39] Well, the ceiling heights got pushed down so much that we couldn’t fireproof certain elements that are required for commercial construction. So the,
[17:49] the building inspector’s sitting there going, hey guys, this isn’t fire rated anymore. You don’t have the wrap or you don’t have the layers of drywall you need to protect this.
[17:58] And we’re saying, well, if we put that on,
[18:01] we don’t have the head clearance for code. And he’s saying, well, you got to figure it out.
[18:06] So these are the types of items, right? Where I just to come back to it, that’s level 200, where you’re only putting in like your major infrastructure systems, but you’re not detailing that BIM model down to the screws.
[18:21] Then after you say go to LOD level of detail 400 in the BIM model where you’re putting in every screw pattern and every last bit of literally the vinyl cove base on the, you know, back of house room.
[18:39] And then you have to go in and actually tag all those elements with the exact specification of material it is. So again, it’s, it’s the garbage in, garbage out scenario of software where you can have the best software in the world, but if the data that is put into that software isn’t true and correct and set up the correct way,
[19:03] you’re never going to be able to pull the correct information out. So the idea is that we have multiple layers of detailing in that BIM model and we take it all the way to 100% clash detection, where we know that no two mechanical systems are clashing and that everything can be put together correctly.
[19:23] And frankly,
[19:24] I got a little long winded there. But the bottom line is it’s more work up front and then the results are less change orders and less exposure to delays. On those constructability issues that I talked about.
[19:40] And frankly,
[19:41] just to close on this topic,
[19:45] every developer wants to believe that the sooner they get a shovel on the ground, the sooner the project will finish.
[19:51] That’s actually the kiss of death,
[19:54] because when you start and you’re not fully coordinated, you just leave yourself exposed to change orders and, you know, delays because of coordination issues that often will cripple or bankrupt the project.
[20:07] Kevin Choquette: And I’ve lived the kind of thing you just explained when you’re on the ninth floor and you realize you’re no longer code compliant and then you’ve got to do,
[20:14] you know, RFIs and change orders, and then you’re actually pulling out things that have already been built and trying to solve a problem that you could only see once it’s actually built.
[20:24] Damien Farrell: Exactly. So we have to have developers that understand this and have experienced that and have the patience to coordinate these BIM models correctly. And then when we say, hey, everything’s coordinated, then you take the be because I just jumped around again.
[20:41] But to back it up again,
[20:44] everything will go faster and the real expense becomes the day you put the shovel on the ground. Sitting around a table with engineers and architects is less expensive than deploying workers out into the field.
[20:57] So, you know, again,
[21:00] it’s the Braveheart model of hold, hold, hold. And really have that patience to detail every, every aspect of the building and know that you’re going to have something that’s fully constructible.
[21:12] Kevin Choquette: Yeah, look, and we’ll get through all of this stuff, but there’s another part of what you’re doing, and I want to just on the software side, like,
[21:22] perspectively, I see this very clearly as the future. It’s been slow to get out of the gate and there’s probably a whole bunch of reasons for why modular hasn’t really taken off.
[21:30] But the other thing I understand about the software and I just heard a management consultant at a ULI conference talk about this, and it was kind of like the first time I heard somebody talk about big Data, I was like, wait, what is she talking about?
[21:43] But it seems like these systems can also become integration points for all of the different consultants. Like in the same way that there’s a Google spreadsheet that people can share and collaborate on real time.
[21:56] These systems are allowing your mep, your civil,
[22:00] your structural,
[22:01] your size.
[22:02] Damien Farrell: Yeah, everyone’s in a cloud and everyone’s working.
[22:06] Okay. So let’s, you know, if you want to just touch on that quickly. Yeah,
[22:10] because that is really what’s allowing this business to flourish. And that’s why it’s been a slow adoption because you still had a lot of these coordination issues that we just talked about in modular.
[22:21] Because,
[22:22] you know, BIM software has really begin to flourish over the last 10 years.
[22:27] And that what you just described is a,
[22:33] is they change the names a lot.
[22:35] Autodesk needs to, like, I know we talk about BIM Revit. It’s all in the same family.
[22:42] And then even now this, the cloud model of this is called BIM360 or WAS. I think they may have just renamed it again.
[22:51] But to your point,
[22:53] yes, it’s a collaboration where everyone’s working in a virtual cloud of the building.
[22:59] And you’re exactly right.
[23:01] Think about the old way of a 2D blueprint.
[23:04] Right now,
[23:06] guys were hand drawing these buildings on vellum paper and you know,
[23:14] very little multiple discipline coordination.
[23:17] But what you had was you had a labor pool or labor that knew how to build things.
[23:25] You know,
[23:26] the technological, call it revolution. Since the 90s,
[23:31] less and less kids went into the trades.
[23:34] So you lost these master craftsmen that knew how to do this stuff in the field and they didn’t necessarily need that BIM model as much. And they kind of had, you know, costs were much lower and,
[23:46] and people worked harder or not harder, but I guess smarter, let’s call it in the construction industry.
[23:54] Kevin Choquette: They knew how to build.
[23:56] Damien Farrell: They knew how to build.
[23:57] Now that I feel like my generation, and we can touch on my history and construction at some point, but I feel like my generation was the last group of guys that really went into the trades.
[24:08] Heavy coming out of high school, let’s call it.
[24:11] And as that dying breed essentially, you know, has evolved over the last 15 years, 20 years,
[24:21] there’s just less and less qualified labor in, you know, unions. And we can go up on that topic,
[24:29] you know,
[24:31] but union memberships are down.
[24:35] Even in the unions. I don’t think you get the quality of, of. And I was a union cardholder in New York City.
[24:44] But I,
[24:44] I don’t think you’re getting the kind of the, the benefits of paying for that union labor the way you used to. I think that has changed quite a bit as well over the last, you know, 30 years because again, it’s just Less and less people went into those trades.
[25:02] And this is allowing us now to kind of do a lot of that coordination and take that call it IP that a lot of these builders had and do it digitally.
[25:12] And that’s also allowing some of the techno technology kids that have come up or wanted to participate in the construction industry,
[25:20] but now they can kind of still geek out on the digital, digital side of things and then, and then see it get put together and, and put into a complete building.
[25:28] So I think, you know, we’re going to see this marriage of kind of technology and construction in the near future and we’re on the forefront of it.
[25:38] Kevin Choquette: That whole topic of know, change orders, the, the example you gave is a perfectly good one where you could, you could see a bonafide issue show up. We’re on the ninth floor, we don’t have the clearances, we’re no longer fire rated.
[25:53] Okay, let’s, let’s huddle up and figure out how to solve this problem.
[25:57] But you could maybe go into your background of development on this question. But it seems that the savvy,
[26:07] shrewd, unscrupulous, whatever it is, general contractor, and I’m not meaning to as general contractors, they also have a really difficult job,
[26:16] can exploit the current contractual construct, if you will, and go, hey, your drawings aren’t complete enough on this particular detail.
[26:27] And now we’re in like RFI469 and change order God only knows what. And they’re, they’re really manipulating,
[26:38] you know, the, the developer who’s put them to work.
[26:42] Damien Farrell: But I live through that, right. And it’s very, I have personal experience in that.
[26:49] Kevin Choquette: Maybe sort of just drill into that as it pertains to the risk mitigation that you know,
[26:57] perspectively is what, you know, why, why this is the future. So you don’t have to deal with the, the sort of tri party thing of architect, general contractor and developer all pointing at each other as to why something gone wrong.
[27:11] Damien Farrell: Yeah, well, I think that that brings up a good topic. You know, like we don’t need, I mean conventional construction can still utilize that software the same way that we do.
[27:21] And I would advise anyone today, we know that data and technology is the future, right? So if technology’s out there and your architectural team and, and, and consultant team is not utilizing the current technology for building buildings,
[27:40] you’re falling behind,
[27:41] right? So whether you’re building modular or conventional,
[27:45] you should be doing BIM Lod 350 level of detail, 350 at a minimum.
[27:51] Because again, it’s A lot cheaper to figure out those constructability issues and code compliant issues that we talked about sitting around a,
[28:02] on a zoom. Frankly, everyone looking at that 3D model that we’re talking about in a cloud than it is in the job site and when you’ve got a bunch of contractors standing around that camp work and in their defense,
[28:16] when these constructability code related challenges rear their heads on conventional construction projects because there was no BIM model,
[28:26] well,
[28:27] subcontractors are also trying to pay their bills and if their guys over that job site are standing around because no one can figure out how to do it code yet,
[28:40] I understand why that change order comes out because these guys got to pay their mortgage and feed their family too. And you know, they’re not bidding jobs to have their guys stand around.
[28:49] That’s so again, it goes back to like the consultant team and modular or not utilizing this software and having the patience to coordinate it all prior to putting that shovel on the ground I think is so imperative to the success of the project.
[29:09] Kevin Choquette: Yeah. So look, maybe you’ve touched a bit on your background,
[29:15] you know, maybe take us the journey, right. Like what brings you. Like,
[29:20] I’m sure there’s some lyric about a long and winding road, right?
[29:24] Sure, yeah, sort of. Actually you gave a little bit of the end of the journey, but what, what brings you all the way to here?
[29:32] Damien Farrell: Yeah, you know, I’ve been a,
[29:35] a lifer, let’s call it.
[29:38] My dad was a New York City firefighter and a concrete contractor.
[29:43] My grandfather was a crane operator in New York City. Worked on the original World Trade Center.
[29:50] My uncle was an iron worker. So I’ve been around the trades forever. Right. Since basically I knew what work was.
[30:00] And then when I first got out of college, I actually worked mining water tunnels underneath New York City that were up to 7 miles long and 30ft in diameter that had to be fully concreted on the interior.
[30:15] And this was to bring water from upstate New York to New York City.
[30:19] So I worked on some kind of engineering marvels, let’s call it. And there’s documentary shows about this. And that was the union card that I held for years out of college and then,
[30:34] and then I got into kind of hospitality development and was the partner who oversaw the design and the construction of about 30 restaurants here in San Diego.
[30:47] We did have an exit on that building. So I’ve always had this kind of hard work ethic and entrepreneurial spirit.
[30:56] We sold that company that portfolio of restaurants in 2015.
[31:02] Then I was recruited to do the hospitality build Outs in these hotels. And I was just supposed to oversee the food and beverage outlets operated by Tao Group.
[31:14] And essentially the hotels themselves had had schedule overruns. And I frankly wanted to get back down to San Diego from Hollywood.
[31:23] I wanted to be, you know, closer to the beach again. And I just said, hey, look, I’m going to help on the hotel. So I, I just jumped in my.
[31:31] The restaurant and.
[31:34] And it was there where we had made some acquisitions in downtown Los Angeles that were single room occupancy,
[31:42] essentially homeless shelters.
[31:44] And that was when,
[31:46] you know, I kind of went from being the food and beverage guy at the company and overseeing the tau build outs in Hollywood to,
[31:54] hey, Damien’s now running the hotel stuff.
[31:58] And then it was, hey, we made these acquisitions of two historic hotels in downtown Los Angeles. Unfortunately,
[32:07] the Morrison Hotel,
[32:09] great historic building,
[32:11] just had phenomenal bones.
[32:13] Just burned down by homeless encampment and, you know, guys breaking in and sleeping in there and started a fire and burned it to the ground. It was a complete shame, but it was.
[32:24] We had obligations with those acquisitions to build 300 affordable housing units.
[32:32] And that was where I was tasked with, hey, Damien, figure out the fastest, cheapest way to build 300 apartments,
[32:41] permanent supportive housing units.
[32:43] And that was when I started studying modular. And with my lifetime experience in construction, I just said to myself, wow, this is going to be the future. I got to get into this.
[32:54] And I just poured in heavy again. Like I said, the start was to maybe procure these modules overseas. And then when I started really drilling it down, I just, just said, I’d like to do this myself.
[33:09] And with their proximity to Mexico and some great real estate brokers essentially that we worked with in la, Cushman Wakefield team, they connected us with Cushman down in Tijuana. And we found a great landlord who built a suit lease.
[33:28] They built us a 210,000 square foot facility designed specifically for manufacturing these buildings.
[33:40] Kevin Choquette: And then the actual facility I was reading on Your website is 29workstations. Like, tell me how, like, how do you make the sausage?
[33:50] Damien Farrell: So we got. Yeah, we, we again, I touched on that. We kind of treated like automotive. So we even go way more steps than BIM in the coordination. Like, the BIM coordination is the,
[34:01] like the overall building and making sure all the plumbing and the electric and the routing of all that work.
[34:06] But we actually then take that,
[34:09] take that BIM model and we break that down into every part number of the building.
[34:15] So you know how you get the IKEA kit and it says, oh, you’re supposed to have eight of these screws and 10 of these dowels and five of these panels and 10 of these, you know, other items.
[34:26] Kevin Choquette: That’s invariably short one or over on a few.
[34:30] Damien Farrell: Yeah, yeah, but that’s what we do. We basically break the entire building down into part numbers and pieces and then we put it all back together again. And that’s where we’re similar to automotive, where those parts, you know, it starts with the chassis like a car.
[34:49] You have the structural steel frame and then you start putting the engine on and then you connect the, you know, exhaust to the engine.
[34:57] We treat it the same way. And just the way an assembly line for automotive manufacturing works,
[35:03] we do that for apartment buildings. And you know, and what kind of.
[35:07] Kevin Choquette: Capacity do you guys have? Like is this you, you know, and how many. I guess is this a five person operation and people are walking from stage.
[35:16] Damien Farrell: To stage or I’m sure the workers don’t move. So the workers stay put in their, in their station and they basically are putting together the wid digits which then moves over to the moving line where the module itself moves on a rail system down the assembly line.
[35:34] So the workers are like waiting for that box and prepping all their material. And then every hour, let’s call it, when the box moves,
[35:42] that worker jumps in, installs his part and then the box moves to the next station.
[35:47] We have about,
[35:48] we have two full moving assembly lines,
[35:51] 29 workstations on each line.
[35:53] And it’s very similar to conventional construction. It’s just done in a completely different process. So the structural chassis, let’s call it, comes into the production line from our welding station.
[36:07] The guys jump in and put all the plumbing that’s underneath the floor so you know, your toilet waistline,
[36:13] your shower drain line.
[36:16] Then they pack all that with sound mitigating insulation.
[36:20] Then you put your two hour subfloor down. Then you put your walls in.
[36:24] You know, again the walls are kind of already have the electric and the back box for the outlets already screwed onto them. We make the walls separately in a separate workstation and then it just goes down the factory floor step by step, you know, drywall, taping,
[36:42] painting, and then installing the final finishes. And,
[36:46] and with that said,
[36:48] I’ve been approached by multiple material suppliers saying hey, we’ve got this proprietary material that is better,
[36:59] better performance than the current stuff in the market. And my first question back is always, does it have the right code compliance listings,
[37:10] whether it’s UL for electric or UPC for plumbing or. And UL is not just electric but fire codes. And if it does, I’ll look at it. But if it doesn’t,
[37:21] you know, you can’t use it because the problem is the minute you go to submit for the plan check and you have some proprietary material that doesn’t have an ICC or equivalent listing on gets stuck.
[37:35] Right. So we, we don’t,
[37:37] we don’t try.
[37:40] We use the kind of typical materials and you know, people are talking about 3D printing buildings and doing all this stuff.
[37:49] Does it go there? Yeah, maybe. But until the building departments are willing to adopt these other technologies, let’s call it and or proprietary materials because that’s the thing. People that want it to be proprietary.
[38:03] Well, you can’t go get it anywhere else then,
[38:06] you know, so like, if you go down,
[38:09] then I’m screwed if you know. So, you know, again,
[38:12] it’s that balance of pushing the technology or the, the material,
[38:19] I should say,
[38:21] and having the proper code compliances still, because we still have to deal with the governing agencies and the municipalities and the bureaucratic stuff that can be very challenging and is really one of the reasons why construction costs are where they are.
[38:38] And you know, I think there are improvements to be made in all aspects of development.
[38:46] And you know, some of the stuff like that these municipalities ask for is just crazy. And.
[38:55] Kevin Choquette: Yeah.
[38:56] Damien Farrell: And the utility side of it is also equally as challenging. Like,
[39:01] you know, we know the challenges Los Angeles had, you know, with the fires. And we know,
[39:07] you know,
[39:09] in San Diego, for example, if you’re trying to build an apartment building, you have to apply for your power like two to three years prior to getting it.
[39:20] Kevin Choquette: Yeah.
[39:21] Damien Farrell: So when you put that in perspective, like, even if the construction process speeds up to the point that we can get it to where you could build an apartment building in nine to 12 months,
[39:34] you have to be looking three years ahead that you’re going to be doing a modular and start that application again. So you’re not burning the cash when you finish your building and saying, wait,
[39:45] I can’t get power. I can’t turn on my elevator, I can’t test my fire life safety system because I don’t have permanent power yet.
[39:54] These are the other wrinkles that, you know, frankly, developers have to deal with. And a lot of this is what’s caused the housing crisis here in Southern California. And, you know, that’s, that’s, you know, coming back to it.
[40:05] That’s really why I’m so passionate about what we’re doing,
[40:10] because I do believe we can show the different municipalities and call it political side of this,
[40:20] that there is a way to scale this, but we need help everywhere. We need help on the plan check side of things, we need help on the power and infrastructure side of things.
[40:30] It’s not just, oh, this developer’s building 300 apartments, he’s going to be make all this money.
[40:36] The risk, reward and development these days with interest rates where they are, is very,
[40:42] very challenging. And you have to have a pretty good appetite for,
[40:47] for dealing with all the headaches that we just kind of touched on.
[40:53] Kevin Choquette: I think there’s another aspect of what you’re talking about and I know you have a hospitality background, so this will be familiar to you.
[41:01] But with the big brands, Hilton and Marriott and sort of,
[41:07] I don’t know if I’d go so far as to call them cookie cutter, but if you wanted to go build a courtyard in anywhere,
[41:15] you know, central us, like there’s a template and there’s a, you know, massive marketing machine that’s going to get heads in beds, assuming you haven’t put it in an oversaturated marketplace.
[41:27] And what you have found,
[41:30] at least at the margin, is people are getting into the hospitality business who don’t necessarily know hospitality. And the, there’s another part of what you’re doing here that I think shouldn’t be overlooked, which is,
[41:44] and I may be off here, so correct me if I’m off.
[41:49] I think you can take out enough of the complexity that the developer faces on the vertical, build that at the margin you’re going to invite new industry participants.
[42:02] Damien Farrell: Yeah, I mean, I think that that’s a great point and I can kind of pivot off that in a couple ways. But one way that we’re focused on, obviously we touched a lot on multi family and talked about doing 12 story buildings.
[42:20] And I’ve had everyone from different guys on my cap table to friends saying,
[42:26] hey, why don’t you make ADUs? I really want an ADU. Can you do an ADU? And I was always hesitant to that because I’m like,
[42:35] do I really want to deal with, you know,
[42:41] mom who wants her she shed and dad who wants his home office. And I want this and I want that. And selling to end users spooked me, frankly. And you know, it’s a lot of work to just get one little order.
[42:54] We just talked about the size of my facility.
[42:56] Yeah, I could never make that pencil.
[42:59] Kevin Choquette: That’s right.
[43:00] Damien Farrell: And then all of a sudden though,
[43:02] you know, this tragedy happens in,
[43:05] in LA and I lived through 9, 11, which really isn’t comparable to the Fires, but you know, still a catastrophic incident that happened.
[43:17] And then we had Hurricane Sandy, more importantly in where I grew up in Rockaway beach in Queensland.
[43:24] And my sister and my grandmother lost their homes so in that storm. So, you know, I, I kind of started looking at that saying, oh my goodness, 10,000 people are out of their homes.
[43:38] This is, you know, terrible. And then,
[43:40] so then I started looking and saying, hey, maybe we should do some ADUs, because there’s obviously going to be a huge demand and we can help people get back on their properties,
[43:49] you know.
[43:51] And yeah, they might be in tight quarters, but you know, again, most of that was single family that burned. So you got a yard space, you know, you can kind of, you know, at least get back and out of a rental.
[44:02] Then we started looking at the properties and I’m like, wait a second, you know, the Palisade, specifically Alphabet streets,
[44:10] these are pretty standardized cookie cutter lots that are 5,500 to 6,500 square feet.
[44:17] Hmm, let’s look a little bit closer at this. And what we’ve done now is we’ve developed a just a beautiful single family home that’s about eight modules,
[44:30] so eight of our Lego blocks. And you know, with my experience in high end hotel development,
[44:36] I’ve been tapping into the interior design firms that, or just my experience in that,
[44:44] in that realm to say, hey, we can deliver a beautiful custom home that is just built in a factory and we can do it in half the time and we can save 30 to 40%.
[44:54] And you know, a lot of these people, again, I lived it during Hurricane Sandy.
[44:59] Your insurance isn’t going to cover the full cost of a, of a traditional rebuild.
[45:05] So now we’re kind of bridging that gap where we can bring, call it a custom home that is all steel. So it’s got better fire resilience,
[45:15] better R values for insulation because of the way we build in the factory.
[45:21] And frankly, then we can save money and do it in half the time.
[45:26] So less than half the time really for single family. So, you know, as we look at the different applications for this,
[45:34] you know, again,
[45:35] to build a big factory, like I have to sell a few houses a year,
[45:40] doesn’t make sense. But now we’re looking at scaling this into the fire zones in Los Angeles and frankly, there’s been a ton of interest. There’s been, there’s a big appetite for it and it’s really the way that we could rebuild these communities.
[45:55] You know, when you look at how long it would take and how many workers and how many trucks and how.
[46:04] It’s just,
[46:05] it’s.
[46:06] I’ve been through these areas multiple times now.
[46:09] It’s unfathomable to think about trying to restick, build all this and the material shortages and the labor shortages and all the stuff we talked about for multifamily.
[46:20] Unfortunately, you know, it’s not, hey, this one guy on the streets remodeling his home, it’s annoying that he’s got four or five worker trucks in the, you know,
[46:29] parked on the street here and it’s dangerous for my kid because he’s popping out from behind these cars. And other neighbors are frustrated so they’re speeding around these double park, you know, worker trucks,
[46:41] you know, it.
[46:43] There’s just,
[46:44] I don’t see a way to rebuild those zones without doing something or scaling.
[46:48] Kevin Choquette: Well, you’re talking about the way we’re talking about.
[46:50] Yeah. You’re talking about like a suburban tracked scale redevelopment that presumably is going to be done one by one with a bunch of bespoke executions. Well, no, I want this general contractor and I want this architect.
[47:03] And I like that just is, I mean that’s decades if you take that path.
[47:09] Damien Farrell: Unfortunately, it’s virtually impossible to do it that way. So we have to look at these different technologies and means and methods to scale this and do it quickly.
[47:19] And we’re happy to help. So it’s a feel good, it’s a do good and hopefully we can make some money in a successful company doing it so that we can stay in business and help, you know, put a dent in the,
[47:34] the affordable housing that we know,
[47:37] you know, the homeless crisis and there’s multiple, you know, we’re not going to get off topic on that. There’s multiple reasons for that. But I think,
[47:44] you know, the,
[47:46] the issues have to be addressed with what we have with the homeless in downtown and, and you know, frankly, not just downtown, but all San Diego.
[47:55] And we have the ability to put a big dent in that.
[47:59] Kevin Choquette: Yeah.
[48:00] Damien Farrell: So again, for when you look at, Sorry, I interrupted you. But when you look at the costs that are spent to build a permanent supportive housing unit, it’s absurd. You know, there’s, yeah, there’s multiple layers of it, but it’s the bureaucratic and the grant money and the time it takes to get the project approved and then funded and then through grants because it doesn’t pencil with the,
[48:25] you know, with the, the rent that you get in one of these buildings.
[48:30] And it, I believe that if we fix the process,
[48:34] we can build.
[48:35] Well, I know hard cost wise I can build these, these affordable housing units at half the cost.
[48:41] Kevin Choquette: Yeah.
[48:41] Damien Farrell: And it’s not taxpayer money.
[48:43] Kevin Choquette: That’s right.
[48:44] That’s right. I love that you brought this up. The affordable housing moniker is really misplaced because,
[48:51] you know, for a developer or anybody on the finance side who understands costs, like,
[48:57] you’ll see these press releases where they’ll be like, and we just built this new project in National City. I posted on LinkedIn about this years ago, maybe a year ago, and the cost per unit was like $900,000.
[49:09] And we were doing a market rate deal,
[49:11] you know, less than two miles away for less than $400,000 a unit. And like, okay, so that’s what we’re calling affordable housing. We should just call it like government subsidized housing.
[49:21] And it’s, I don’t blame the affordable housing developers. They understand their ecosystem and how to navigate and get deals done. But it’s, you know, this kind of a thing, there’s, let’s just say it this way, there’s better ways to skin that cat.
[49:35] Damien Farrell: Well, I can give a good example. Those 300 affordable housing units or the permanent supportive housing units, they were like studio apartments.
[49:43] In Los Angeles,
[49:46] you’re supposed to go to the top of the line at the building department. Right. And you do for architectural and structural,
[49:53] but not for the fire department, not for low impact development, not for the, you know,
[49:58] dw. Well, now they have, you know, DWP focused on the affordable housing stuff. But when we were doing it, they weren’t.
[50:05] And we gave up.
[50:08] We gave up as developers. We couldn’t get the subsidies we needed.
[50:12] We, you know, we were part tied in with that skid row housing trust that when eventually went under,
[50:18] which was a nonprofit.
[50:20] And frankly though,
[50:23] just some of the nuances around,
[50:27] like the building department approvals were really what killed the project. Because when you get the grant money or the low income housing tax credit money,
[50:38] you need to be fully RTI and you have to put a shovel in the ground within.
[50:44] I think it’s like six months of getting those funds.
[50:48] You really don’t apply for those funds until you have your building permit ready to be issued.
[50:55] And we could never get it to that point. And we were trying to do two buildings that were 150 units each for homeless people to come off the street. And we still went through plan check for almost two years.
[51:08] Kevin Choquette: Yep, yep.
[51:09] Damien Farrell: And the affordable housing and the buildings were in skid row. They weren’t in Beverly Hills where like you got, you know, all the neighbors saying, wait a second, the NIMBY’s not in my backyard.
[51:20] I don’t want that here.
[51:22] We were going into skid row.
[51:24] It was insane. It was just completely insane. You know,
[51:28] I want to ask a.
[51:29] Kevin Choquette: Couple more questions on the build side and then we’ll switch to personal. I know you’ve got some time constraints this morning, but with all the detail you’ve already laid out, I really confident I know the answer, but I want to ask on behalf of any listeners,
[51:43] the end product quality versus site built. Is this better product or is this a inferior product?
[51:52] Damien Farrell: Well, it’s far better and I’ll tell you why. I mean again with the BIM modeling we do and we won’t start production until that’s fully done, coordinated and all the materials are tagged because then we.
[52:04] One of the most challenging aspects to what I do is then we have to go buy everything.
[52:09] So when you have a general contractor, the general contractor is able to hire an electrician that knows right where to get his electric supplies. He has to hire the plumber, which is the same thing.
[52:19] Drywall guy, framing and drywall guy, same thing. Painters, same thing.
[52:23] We have to self perform every trade in the factory.
[52:27] So I need, you know, and if the material’s not there as that box is moving down the line, well then that box is stuck. And now I’m that subcontractor that has my workers standing on the factory floor not being able to do their job right.
[52:42] So I’m just burning man hours.
[52:44] So one of the most challenging aspects to what we do is the submittal, the approval of the material to the licensed consultant in the US Procuring that material and having it in the factory dovetailed together with the production schedule so that all the material’s there and we don’t run out of it.
[53:04] I mean it’s very challenging. There’s been failures in the space and this is one of the main reasons, I would guess why.
[53:13] So with that,
[53:15] you know, kind of said all of that, right, has to happen.
[53:19] And then you get into saying,
[53:22] okay, now these processes are micromanaged, right,
[53:27] Every step of the way. Where in conventional construction your building inspector maybe comes once a week max,
[53:34] and he’s got the next building he has to go to and he has to drive in his car from building to building,
[53:40] where I have full time QA QC management team that we have four or five people that just walk from station to station and observe and have detailed checklists that those processes are being adhered to and that if there is something defective, there’s A sticker put right onto the work that is defective or not per the plan,
[54:05] that then there’s a further investigation by our,
[54:08] by the rest of our architecture team or,
[54:11] you know, production team to effectively checks and balances every single step of the way.
[54:18] Right. And we touched on change orders and some unscrupulous contractors, which I’m not saying there’s a lot of great contractors out there believe.
[54:27] Kevin Choquette: Absolutely.
[54:28] Damien Farrell: I have great relationships with plenty of subcontractors that are just great guys and want to see the projects be successful as well.
[54:37] But.
[54:38] But sure enough,
[54:40] you know, there are guys that do want to cut corners and save money and make their, you know, their contract more profitable. And when that, when that inspector’s not there, are they going to cut that corner or is there some.
[54:54] Is their employee a little lazy and doesn’t want to go get that extra piece of material and they’re just going to splice something together and wing it?
[55:01] Yep. Yeah, probably going to happen. So, you know,
[55:05] under our, in our facility, that does not happen. No corners are cut and no stone is left unturned on the inspection process.
[55:12] Kevin Choquette: And another question that’s just for the listener because I think I got this answer too. But, you know, how does this thing not fall apart or rattle to pieces as you put it on a truck and bring it to a site?
[55:25] Damien Farrell: Yeah, again, that’s all the steel construction. Right. We’re designed to take a 7.0 earthquake in California. So each one of our individual boxes and again, wood. When you ship those wood modules, a lot of times there is a lot of cracking and deflection of the structure itself just because wood is flexible.
[55:47] We design each box essentially independently to be able to take that earthquake.
[55:55] So again, I don’t think any of the roadways would mimic a 7.0 earthquake. 7.0 earthquake.
[56:04] Yeah. That’s the easy way to look at it logically is just that like everything’s tons of welding in the facility,
[56:11] although on site we have no welding. Our system is designed with all bolted connections that are obviously all seismically approved as well.
[56:19] But that’s something unique. The chassis is welded, but then when we put the life size Legos or erector set together on site,
[56:29] it’s all just bolted connections. So again, cost savings on certified welders and deputy inspections to make sure those welds are done correctly on site gets very costly.
[56:41] We intentionally designed our system to just have bolted connections.
[56:45] Kevin Choquette: I keep wanting to get personal on it, but there’s one more question I got which is I know capital is not infinite.
[56:52] Um, and yet, like, as I listen to your experience and the processes you’ve put in place,
[57:00] this is more an academic question because I understand capital constraints are real.
[57:05] Why wouldn’t you be vertically integrated enough to control the site and then just start dropping,
[57:12] you know, I’ll just say model A, model B, model C. Oh, here’s a 12,000 square foot site that we bought on a hard corner in this location. Here’s another 12,000 square foot site on a, a different hard corner in that location.
[57:27] Here’s a third hard corner and you guys take it.
[57:30] You know, I mean, I know the development side has got. Yeah. Yes.
[57:34] Damien Farrell: Yeah, yeah. Well, that’s where I’m going.
[57:36] It’s like I’m very much a,
[57:39] a walk or crawl, walk, run type of guy and, or, you know, again, I think with our, with our modular fabrication,
[57:47] you know, now we’re starting to implement facade systems and different aspects to do more in the factory. Right. To even cram down that timeline even more.
[58:01] With that said, I am a licensed general contractor in the state of California.
[58:05] I do though,
[58:07] know my limits, right. I can’t be in the factory and on the site at the same time. So I do try to right now get the factory side of it perfect.
[58:18] Educate some GCS and some quality subs. Like I said, I’ve been in construction here in California, California for over 20 years. So I used those relationships to bring guys to the factory, to show them what they’re going to get when they’re on the site,
[58:30] to kind of COVID that construction management side of things. So we don’t have scope gaps really.
[58:37] You know, I bring general contractors and subs and I use this to help benefit relationships or benefit developers that, to make sure we have a successful project from A to Z.
[58:50] But I really want guys that want to get into the space, that want to learn it, that don’t say, I don’t know what this is. I just want to price it the way I always price it, you know, So I use my, my career relationships, let’s call it, to bridge those gaps,
[59:06] to get groups that want to work with us.
[59:09] Ultimately we will start doing turnkey solutions where we just handle everything from architecture and design all the way through the cfo.
[59:21] But for right now, it’s about creating that bigger pie sooner. So I can’t, you know, do that for everyone, everywhere without scaling. So it’s kind of,
[59:32] let’s do it with the strategics now. Let’s start taking on, you know, a couple projects a year where we do A turnkey while still using the strategics.
[59:42] Because you did ask, you know, how big our facility is. At full capacity we can put out about 3,600 modules a year, which would equal,
[59:53] you know, a couple thousand apartments, 1500 to 2000. Because when you start playing Tetris with the Legos,
[01:00:00] sometimes it’ll take two modules to make a one bedroom and you know, studios can be done as a single unit. But it’s essentially a game of Tetris we play laying out our boxes on a, on a site, like you said.
[01:00:13] And the idea is that yes,
[01:00:17] once we get enough of a library of, let’s call it that, virtual twin buildings and those buildings fit on, you know, a lot of even commercial lots are pretty typical in Southern California, you know, across the whole country, really.
[01:00:34] You know, you got your 7,000, 15,000, 20,000. And you know, the more that we can then have repeatability with not just the module itself, but the entire building. And we do have some developers that own multiple equal size lots.
[01:00:53] And the idea is that we do copy and paste the building from lot to lot,
[01:00:58] however,
[01:01:00] still bring a different facade and a cladding system and potentially glazing so that we have this unique look and feel. And we’re not sterilizing a neighborhood with, you know, 10 of the same exact buildings looking like, you know,
[01:01:18] a communist kind of.
[01:01:20] Kevin Choquette: Right, right.
[01:01:21] Damien Farrell: You know,
[01:01:21] the projects.
[01:01:23] Yeah, or. Yeah, yeah, projects, exactly. And we, you know, we have some of those in New York as well,
[01:01:29] the Mitchell Lama housing that was built back in the, in the 70s.
[01:01:33] But yeah, we don’t want to do that. You know, I, I do have, you know, high design experience. I’ve designed three four star, four plus star hotels. So it’s, it’s bridging that, it’s bridging,
[01:01:45] you know, the cookie cutter.
[01:01:48] That’s something else that I could touch on. We don’t want our buildings to look modular at all. I know you talked about the quality of it, but we don’t even want from interior or exterior.
[01:01:58] We don’t want anyone to be able to notice that it was modular.
[01:02:01] Kevin Choquette: Yeah, yeah. I think you mentioned yesterday you guys are just going to move away from that whole label. Right module.
[01:02:09] Damien Farrell: Yeah, that’s right, that’s right. Because it’s really not, it’s just a different means and methods of delivering construction.
[01:02:17] Kevin Choquette: Yeah, it definitely seems like the future.
[01:02:20] Let’s shift to the personal.
[01:02:22] I know you’ve got time constraints and we can probably go for another hour, but mentors or other relationships you’ve had on Your career journey, who, who might you have run into that’s been highly influential and, and you know, any thoughts on like things you’ve lost, learned along the way or guys you might debt of gratitude to for kind of bringing you along?
[01:02:45] Damien Farrell: Yeah,
[01:02:47] well,
[01:02:47] going back, I’ve always been a self starter,
[01:02:50] but certainly my work ethic I think comes from my dad who he, you know, worked two, three jobs and just, you know, always was putting food on the table for the family.
[01:03:03] So I think I get my work ethic for him from him and,
[01:03:07] and just growing up like that. And then ultimately then in my career, you know, I had some great partners.
[01:03:13] James Brennan, back when we were doing the hospitality stuff.
[01:03:17] And then when I went to la,
[01:03:20] Grant King and Richard Heyman gave me the opportunity really to flourish in building high rise buildings.
[01:03:27] So,
[01:03:28] so those guys were great.
[01:03:29] On the financial side, you know, I have an uncle that was a senior VP at PNC bank on the east coast for his majority of his career.
[01:03:38] So he’s really helped shepherd me through to the cash flows of operating these businesses and, and just you know, kind of understanding the corporate finance side of, of things.
[01:03:51] And then more recently since we started this B business,
[01:03:55] you know, my partner is Kevin Washington.
[01:03:58] His family are,
[01:04:00] I guess you would call them industrialists.
[01:04:03] They’ve, they’re big in all types of shipping and construction.
[01:04:08] But his, his dad, Dennis Washington set up a phenomenal board structure and I do have the ability now to tap into those guys for, for advice and, and kind of mentorship.
[01:04:21] And then there’s the likes of developers like Dean Oliver from here in San Diego and,
[01:04:27] and just, you know,
[01:04:30] those are the main guys that I, I really, you know, kind of have absorbed stuff from pretty solid crew.
[01:04:37] Kevin Choquette: Did you say Grant Keane?
[01:04:39] Damien Farrell: Yeah. Grant King. Yes.
[01:04:41] Kevin Choquette: Oh, King. King. Okay.
[01:04:42] Damien Farrell: Yeah, I have.
[01:04:47] Kevin Choquette: Look, you’ve, you’ve touched on a little bit, but clearly you’ve got a lot of agency. And I heard you your father was a concrete and firefighter guy. Probably the other things your father was crane operator.
[01:04:59] You kind of went into the trades at least a bit in the early years, but certainly at some point you could have went into beverages or tech or a myriad of other things.
[01:05:13] What of all the things you do, like what keeps you in, or could do, I should say, what keeps you in? Commercial real estate.
[01:05:20] Damien Farrell: Yeah, I just, I love development.
[01:05:22] I love, you know, going back to doing all those restaurants.
[01:05:26] The thrill of saying, hey, we have to open on this date and we’re doing the grand opening party and you know, that stress and that pressure, I,
[01:05:36] you know, a lot of people don’t like it. I kind of thrive on it.
[01:05:40] And, and then that feeling of kind of,
[01:05:46] I don’t know the word I’m looking for jubilation or just like the excitement leading up to that and then the accomplishment of turning over that building, getting the cfo just, it’s just, it’s what drives me.
[01:06:01] Right now I’m doing a 22 unit multifamily building myself or as the developer with our modular system in la. And you know, it’s really just that completion and the coordination and just the team effort and collaboration,
[01:06:18] it just, it’s, you know, it’s really fun. And that sense of accomplishment for me when, when you complete these like big projects has been what I think keeps me in the space.
[01:06:30] Kevin Choquette: Yeah, I’ve had a conversation with some good friends of mine about the gratitude you can have around being an entrepreneur in that you get to get on the field and be in the game every day.
[01:06:45] That’s what I’m hearing. You, you say yeah, yeah, I love it.
[01:06:48] Damien Farrell: I mean, it’s stressful. I’ve got a young family too.
[01:06:51] Was kind of got married a little bit when I was a little bit older, in my late 40s and, and we chose to have two kids.
[01:06:59] How old are you in?
[01:07:01] I got a one year old and a soon to be five year old.
[01:07:05] Kevin Choquette: You and I have something in common. It’s a little late start.
[01:07:08] Damien Farrell: Yeah.
[01:07:09] Yeah. I wouldn’t trade it for the world though. I mean, it definitely,
[01:07:14] you know, pull stretches me a little thin sometimes. I don’t get a lot of personal time anymore, but that’s okay. I had a lot of that with getting married late in life, so I got a lot out of my system, I think,
[01:07:25] you know,
[01:07:26] up to my late 40s when I got married.
[01:07:28] Kevin Choquette: So I tell people it’s work out, work, hang with the kids for a little bit, sleep, repeat.
[01:07:37] Damien Farrell: Yeah, that’s literally it.
[01:07:39] Kevin Choquette: There’s not much else.
[01:07:40] Damien Farrell: My one year old hasn’t really allowed me to get that workout in.
[01:07:45] Yeah, I had to kind of sacrifice that, but I just, you know,
[01:07:50] started to kind of get back on the exercise bike in the, in the garage.
[01:07:54] Not even enough. An extra 15 minutes to drive to a gym, but,
[01:07:58] but we’ll get there, we’ll get there.
[01:08:01] Kevin Choquette: What about any challenges? I’m sure on the journey you’ve had,
[01:08:06] you’ve been knocked down. How do you, how do you think about adversity and, or failure and how have you responded in tough times?
[01:08:15] Damien Farrell: Yeah, I Mean, it’s, it’s funny, I’ve had this conversation with a few people. You know, it’s, it’s, it’s how you get back up, right? And I think we.
[01:08:25] Kevin Choquette: One of the.
[01:08:26] Damien Farrell: Most recent challenges we had was building three hotels having Covid and cost overruns in the middle of, you know, we were building three hotels during COVID So you can imagine how when you had some cost overruns and needed additional financing,
[01:08:43] when the world was shut down and there was no one staying in hotels, right? How challenging that could have been.
[01:08:49] So we got into some call it loan to own kind of notes and that presents some challenges to the financial viability of,
[01:09:01] of the, you know, the developments. And,
[01:09:06] but that was all the money that was out there, right? There wasn’t any other options. So,
[01:09:11] so you know, those hard, that hard work and then all that, you know, feeling of accomplishment, you know, obviously you,
[01:09:18] you hope that there’s a financial reward at the end of that rainbow too.
[01:09:22] And sometimes those evaporate on you pretty quickly. So it’s,
[01:09:27] you know, it’s just, it’s just never giving up and, and, and having that drive to just, you know, do it again and just not as you said, you know, we, I’ve experienced it whether it was different hospitality venues that weren’t quite as successful as we hoped and you know,
[01:09:42] you shuttered the doors and just move on hopefully with being able to take some of those employees into the next, you know, operation. And, and really that’s what I look to, is to try to keep my teams intact and,
[01:09:57] and even if the, the, you know,
[01:10:01] the daily team is not there, trying to stay in touch with people and still keep that network of people that, you know, are like minded and just have that drive to get up every day and, and just,
[01:10:14] you know, crush it.
[01:10:17] Kevin Choquette: I mean, look, you sound curious. Like I don’t know how many people would, would start with, okay, I’m interested with about modular. I’m gonna go fly to the Baltics, into China and other parts of the world and actually put boots on the ground and kind of do that level of diligence and,
[01:10:33] and you know, that along with dealing with adversity clearly are growth opportunities. What else might you do? I get it. When you have small kids, it’s like bro, one foot in front of the other.
[01:10:45] But what else might you do to keep learning and sharpening this all?
[01:10:51] Damien Farrell: Yeah, I think I was more of the execution guy at the groups where I was at where I didn’t do as much of the financial side of the businesses,
[01:11:03] obviously we had reporting on these construction loans and I had a kind of update the budgets and make sure that there was transparency and real time reporting on those aspects, but not really the full,
[01:11:15] you know, kind of piece of,
[01:11:17] you know, that was it. I was like managing the construction and some of the soft cost budgets. But, but really just also now,
[01:11:24] you know, I’m kind of unique where I know construction really well or I consider myself an expert.
[01:11:31] I know development, entitlements, permitting really well.
[01:11:36] And then ultimately now the last piece is kind of gelling all this together with the money. So. So again, just the other headwind in modular is getting lenders comfortable with the factory and just this new means of construction and educating them on that.
[01:11:56] It’s actually like less risk. Right. As after what we talked about.
[01:12:01] But it’s really that now is I’m moving more into the financial side of things and making sure that developers can get the construction loans approved that they need or coming up with creative ways through lines of credit or letters of credit to get the project built for them and then ultimately,
[01:12:19] you know, have the construction lender take it out.
[01:12:22] Kevin Choquette: Yeah,
[01:12:24] it will take us 30 minutes if we start peeling that onion. So I’ll leave that on the table. The whole chattel versus real estate financing and the complexities there,
[01:12:34] you know, message for either the seasoned entrepreneur who’s at the top of the game or maybe is getting their guts ripped out or the, the you know, college kid with a spark in his eye who might be a bartender downtown.
[01:12:52] Like what sort of, what sort of thoughts might you want to share with the entrepreneurs?
[01:12:57] Damien Farrell: Yeah, on the, on the, the seasoned entrepreneurs, I think like if we’re going to stay on the modular topic, it’s really,
[01:13:05] if you have a development that you want to do,
[01:13:08] you know, you kind of design with modular in mind from the beginning and then it’s easier to pivot to conventional construction if for whatever reason modular doesn’t work because modular is not great or it’s not perfect for every site.
[01:13:22] Right. Whether it’s a power line or it’s a hillside.
[01:13:25] You know, there’s some things that just say can’t be modular.
[01:13:29] But really seasoned entrepreneur, I mean, it’s just pay attention to the money and the cash flow and the burn because that’s really, you know, what causes most failures in the space.
[01:13:42] And always raise more than you think you’re going to need.
[01:13:46] And also,
[01:13:47] you know, manage every dollar like I do with my investor money. Like we didn’t come up with some private equity kind of fund money.
[01:13:57] We.
[01:13:58] It was a seed round of friends and family that we.
[01:14:03] I treat that money like it’s my own. You know what I mean? To watch every penny, every penny counts. Make the sacrifices.
[01:14:11] Don’t over hire too early before you, you know, before you don’t need positions, you know, wear multiple hats as the,
[01:14:18] you know, as the founder, you know, the,
[01:14:21] the principal there,
[01:14:23] you got to do multiple jobs, you got to be willing to put in the, put in the hours, you know and, and for the young guys,
[01:14:31] you know, that’s coming out of college,
[01:14:33] it’s just attention to detail and follow up. Right.
[01:14:37] Especially in development.
[01:14:39] The more you just pay attention, the more organized you are, the more checklist you have with detailed follow ups.
[01:14:46] You know, I’ll give a shameless, well not shameless but a plug to like the ClickUp software and you know, Microsoft I think bought them now and it’s a lot of applying,
[01:14:56] you know,
[01:14:57] AI and the organization that AI can certainly bring to just have your detailed checklist. And it’s that muscle memory of just wake up every morning,
[01:15:07] have your highest priority checklist in front of you,
[01:15:10] get those done,
[01:15:12] then move on to the next phase. And you know, I, I tried to on Sunday evenings after putting the kids down,
[01:15:20] still hand write out my week and literally block out times where I’m going to focus on the most important things to the business. Because as an entrepreneur it’s so easy to get sucked into minutia that isn’t really that important.
[01:15:37] So if I take goal for the week and I block out three different two hour blocks and just say that’s it, it’s time to do that work. Because if this doesn’t get done, it’s detrimental to the company.
[01:15:51] It’s finding that time and, and having that, you know, again. I think we all know time is the most important thing in life. It’s the only thing you can’t buy more of essentially.
[01:16:00] So you know, you just have to manage it and treat it preciously because you know that without time management you often just spin and focus on things that aren’t too, aren’t that important.
[01:16:15] Kevin Choquette: I think it was Bill Walton actually.
[01:16:18] Never confuse activity for achievement.
[01:16:22] Right. Like that message of being effective and being organized.
[01:16:27] We have,
[01:16:30] I’ve had some experience with younger guys and there’s definitely a part of it which is just learning how to work.
[01:16:37] Damien Farrell: Right? Yeah. What you’re talking about prioritize, right? Prioritize. Have that detailed checklist. Did I get this done today? If. Why not? What do I need to do to get that done and trying to stay focused on that.
[01:16:49] Yeah.
[01:16:50] Kevin Choquette: On the topic of time, I am going to respect your calendar.
[01:16:54] Damien,
[01:16:55] thank you very much for taking to the time to the listeners, you know, like the show, follow the show, do that stuff for us. It goes a long way. And Damian,
[01:17:05] microphone’s yours for any.
[01:17:06] Any closing statement, but thank you for the time. Much appreciated.
[01:17:10] Damien Farrell: Yeah,
[01:17:11] yeah, no, just closing statements.
[01:17:14] Let’s bring more, you know,
[01:17:16] affordable housing to help ease the rents in Southern California and give people a better quality of life. And, you know, let’s try to clean up the streets and get some of these homeless people the treatment they need to just have a better quality community throughout, you know, Southern California.
[01:17:36] Kevin Choquette: Yeah, and make a place where our kids can actually buy a house.
[01:17:39] Damien Farrell: Yeah, exactly. Exactly. Yeah.
[01:17:42] Kevin Choquette: All right, well, have a great weekend. Thank you, Damien.
[01:17:44] Damien Farrell: Okay, you too.
[01:17:46] Kevin Choquette: Appreciate it.
