Q&A with Project Management Advisors’ Roger McCarron on the Evolving Role of the Commercial Real Estate Project Manager

The complexity of the commercial development process was already increasing even before 2020 complicated nearly every aspect of a real estate project, from the approval process to the sources of capital, and now even supply chain considerations. Projects are becoming more technical and under pressure to adhere to tighter schedules while staying under budget. That’s where professional service firms like Chicago-based Project Management Advisors (PMA) come in, to wrangle the many stakeholders and navigate around potential roadblocks, addressing issues even before they arise.

Connect Media spoke with PMA president and CEO Roger McCarron for insights into the trends driving complexity in commercial real estate development.

Q: What trends are driving adoption of professional services like project management among real estate owners?

A: A few trends are converging that make turning to an owner’s representative for project management a compelling choice. First, many development projects are growing more complex in terms of their partnership structures, the local approval processes, and the compressed timeframes in which clients expect delivery. While that’s true for different reasons in sectors like life sciences, healthcare and technology, it’s not limited to those industries. Even our traditional developer clients have embraced a hybrid staffing model, whereby they maintain a high performing core staff internally, complemented by our staff, where we bring product type expertise and relevant data from 150 other active projects. Additionally, economic uncertainty has often caused owners to reduce their internal staff, which contributes to knowledge and communication gaps. An outsourced provider can become the critical source of continuity, even as the owner’s team fluctuates, while also providing insights and innovative thinking developed on other projects.

Q: What are the biggest challenges facing development projects under consideration or underway?

A: 2020 has brought great uncertainty, and it’s permeating everything from financing to workforce availability. Putting the partners together, especially financial partners, is the primary challenge for all developments, at every stage right now. We are seeing financial partners in some previously unstoppable sectors, like student housing, retreat to the sidelines. Some projects that are in the planning or pre-construction are paused, and we don’t expect them to re-start until at least 2021.

Projects further along in development have fared better, but there are still risks. The pandemic caused disruptions to budgets and schedules that impact project agreements, and it’s not over yet. We have to think more critically, act quickly and keep the lines of communications open to mitigate any future risks or delays, which left unchecked could be quite expensive to resolve. We continue to advise our clients to confront the issues of delay and potential costs now, and not kick the can. Certainty, even in the face of bad news, is beneficial for the project’s long-term best interests.

Q: Are there any project types or regions that have better weathered recent challenges related to COVID-19 and the economic downturn?

A: For us, life sciences and technology have been less volatile, but even those sectors have had to manage the impacts. In terms of geographic markets, demand in these sectors remains healthy in Boston, San Francisco and San Diego. The increasing demand for innovation in pharmaceuticals, especially now, has helped maintain an investment pipeline in these projects. From the project management perspective, these are complex projects that have a considerable speed-to-market challenges, increasing their reliance on us to manage the intensity and intricacy of their development.

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