The Power Of Reliable In-House Construction Management

When we started RockStep Capital, we were doing ground-up development. I’m talking about buying raw land, installing utilities such as water, wastewater, storm, electricity, and natural gas to the site, and then collaborating with architects and engineers to design a comprehensive shopping center. At that point, I was doing it myself. I’d work directly with a civil engineer and architect to get everything moving.

But as the business grew, it got to a point where I couldn’t do it all. There were too many projects, too many moving parts. It became so much that we had to have construction management.

Now, our in-house construction management team plays a central role in almost everything we do. From getting tenants into existing spaces to building brand-new spaces, they ensure the job gets done right, on time, and budget. And honestly, I think it’s one of the biggest reasons we’re able to execute as effectively as we do.

And I’ll tell you—having construction in-house is one of the best decisions we’ve made.

What Our Construction Team Actually Does

Construction management usually starts with a letter of intent from the tenant. That letter outlines something we call “landlord’s work,” which is our responsibility to prepare the space. 

If it’s second-generation space, you often have to overhaul it to meet the tenant’s prototype completely. This can include redoing the façade, raising ceiling heights, replacing the HVAC system, updating the flooring and lighting, and reworking the plumbing. You’re asking questions like, “How many bathrooms do you need? Where is the stockroom wall? What kind of electric service do you need?”

Once you know what’s needed, the construction manager must put a price on it. A construction manager must price out the work and, in some cases, assist the leasing manager in negotiating with the landlord.

From there, you should assess whether the economics still make sense. If they do, you can proceed to lease execution, and then the real work begins—coordinating with the tenant’s construction team, resolving outstanding items, and ensuring that space is delivered.

And I’ll tell you this: oftentimes, the more national the tenant, the more difficult and challenging that construction management piece is. They’ve got specific requirements and strict standards, and you have to be on your game from start to finish.

Why We Keep Construction In-House

People ask me all the time why we keep this function in-house. The short answer is that it works better.

It’s faster and lower cost, and you can control quality better. That’s the biggest thing. You’re not waiting around for an outside firm that has its own priorities. You’re not getting billed for things that don’t make sense. You’ve got your own people on the project, focused solely on your portfolio, and creating the best results for your team.

If we didn’t have our own team, we’d be relying on someone else. It could be an architectural company with a construction management component, or a firm that specializes solely in construction management. They work for numerous real estate investment firms, but we have never found one that is the perfect fit for us, which is another reason we keep construction in-house. 

With our own team, we own the process. We can anticipate issues, make adjustments quickly, and avoid the need to navigate multiple layers of communication to resolve a problem. And “if you own it, you have better control.” That applies across the board.

The Advantages Of Having Our Own Team

Keeping construction in-house gives us flexibility, speed, and alignment. Here’s what that actually looks like:

• It’s faster and at a lower cost: there’s no back-and-forth with outside vendors.
• You can control quality better: we don’t cut corners because it’s our asset.
• It’s our own money: that makes us more disciplined with spending.
• The client is yourself: our team works exclusively for us across all our sites.

Coordinating Across Markets

We’ve got properties all over the place, so we deal with a wide range of city codes and permitting processes. Our properties are geographically diverse, and that adds a layer of complexity. You’re dealing with different city construction planning and permitting departments and different city codes.

That’s where the value of having our own people really shows. You can build relationships with local officials, learn what’s expected in each market, and adapt quickly. You have to make sure that you have good relationships with the city and that you adhere to all of the requirements of that city.

When you’re relying on third parties who don’t know the market or the players, you’re taking on unnecessary risk. I don't suggest doing that.

Created Value At The Asset Level

When you’ve got control over construction, you can make smarter investment decisions. You know what it’s going to take to get a space ready. You understand the timing. And you can underwrite deals with more confidence.

Plus, you have the opportunity to be creative. You can especially get creative on value-oriented deferred maintenance, especially on older assets. That creativity translates into savings, and that makes a real difference on the bottom line.

Speed, Adaptability, And Efficiency

Our team is also key to helping us modernize our portfolio. We’re always looking for opportunities to improve efficiency and lower costs. 

In-house construction teams also helps with adapting space for different uses. Being able to adapt space for all types of use is an important part of our go-to-market strategy. That includes medical, wellness, and other non-retail tenants who have very specific buildout needs.

And expectations are changing. Retailers, developers, and investors expect everything to happen faster, plain and simple. That means construction teams must respond quickly and accurately to leasing requests so we can negotiate letters of intent and finalize leases with confidence.

Final Thoughts On In-House Construction Management

Every now and then, someone will ask if in-house construction still gives us a margin edge. My answer is absolutely.

There’s no doubt that having in-house construction management gives RockStep Capital and companies like ours an edge because somebody has got to manage the relationship between the tenant and the landlord. That relationship is everything. You need someone who understands the deal, the property, the lease, the budget, and above all, knows how to deliver on all of it.

That’s what our team does. That’s why we built it. And that’s why we’ll keep it that way.