Spotlight On: Flint McNaughton, CEO & Founding Partner, SunCap Property Group

Spotlight On: Flint McNaughton, CEO & Founding Partner, SunCap Property Group

2022-07-12T04:17:10-04:00December 30th, 2021|Charlotte, Spotlight On|

SunCap Property Group2 min read December 2021 In an interview with Invest:, CEO and Founding Partner of SunCap Property Group Flint McNaughton talked about the development sector’s performance throughout the pandemic and specifically in Charlotte. McNaughton also talked about the global issues of supply chain and how the company has been handling the national labor shortage. 

What are some main takeaways from the past 18 months?

In the initial 30 to 60 days of the pandemic, we had all kinds of contingency plans in place because we were not sure what was going to happen in the marketplace. What we didn’t expect was to be shot out of a cannon around April 2020 with clients calling and needing, in some cases, much more warehouse and manufacturing space. Eighty percent of what we do is industrial development and the bulk of that is in supply chain logistics and package delivery systems and manufacturing. 

With so many people staying home and purchasing goods online, e-commerce volume and demand rose drastically. Our business volume has tripled since 2020 and we have over $1 billion of awarded projects in our pipeline; typically, we are a $300-$400 million a year company. 

It feels like (and I hope) we are on the tail end of the pandemic and the economy is rapidly expanding again. So we are bullish on where we sit. Amazon, FedEx and even the postal service are slammed with growth. 

The supply chain is still pretty gummed up and demand for raw materials is unprecedented in the industrial world. One of the primary challenges we have faced has been hiring qualified folks who are accretive to our teams, our culture and our projects. There are huge inflationary issues that we’ve been seeing since before it was headline news. Costs of steel, copper, lumber and other construction materials have been way up and it’s been a challenge to lock in pricing, to pre-order materials and budget projects. 

How has demand for your services changed in the past year?

SunCap is predominantly a development company and we largely invest off our own balance sheet. Sixty percent of what we do is build-to-suit work, 25% is industrial spec and the remaining is multi-family. From a development standpoint, we go wherever our client asks us to go. We’ve built in 30 states across the United States.

We were formed in 2009 with an “account” or “corporate services” based mindset toward development services and that remains our core competency to date. No one could have foreseen the current demand but it is out there and it is challenging. We invest in the projects we do and we invest in our partners, so we call ourselves an investment company. We invest and develop multifamily projects too and hold those on our balance sheet. We don’t provide traditional advisory services for free, but we find ourselves advising clients, customers/brokers every day with due diligence, development and investment advice. It’s advisory in the way we help our clients make quick and informed decisions and provide them with the tools and resources to move forward and execute those decisions in the form of development. 

Most people would say that developers need to do three primary things. You have to develop on time, at a competitive budget and do so with good quality. If you don’t do that, you are basically out of the corporate service world as it relates to repeat work. What makes SunCap different is that we proactively advise our clients through the entire process and drive decisions ahead of time and develop trust in the process. Everything we do centers around communicating well with our clients, and our employees are talented and well trained to work as a team and collaborate. In essence, it’s doing the right things at the right time for the right reasons. Every project has challenges. The key is anticipating those challenges and to work proactively to communicate solutions so informed decisions can be made.  In order to survive and thrive through the inevitable swings in the economy, we are betting on a diverse client base spread across different geographic locations to protect us. 

What are the most in-demand areas of the city in terms of development?

Charlotte has tons of companies and employees moving to the area every day, creating demand across all sectors. As a result, there has been a huge run-up in land costs and pricing. But we love the market here. Currently, It’s a landlord and developer’s market. That will swing back in time. But the good news at the moment is that greater Charlotte is a huge greenfield market with limited barriers to entry. So, growth should be able to be accommodated here in a meaningful way for the foreseeable future. That’s not to say developing in rural communities around Charlotte is easy. The lack of infrastructure and entitled land can be challenging. But, we don’t have barriers to entry like Miami, New York, San Francisco and many other large established markets do. 

What challenges have you faced with the labor shortage?

It’s a tough recruitment market! But, one of our advantages is that we have multiple office locations which allows us to find good people from around the country to service our national projects. We don’t have to recruit someone from Charlotte; they can be anywhere and work effectively. During the pandemic, training young employees to know the multiple components of development has been hard because they haven’t had the same in-person experience, but we have operated effectively so far. 

How have you been impacted by supply chain disruptions?

Steel, copper and lumber prices ran up with shortened supply and high demand during Covid and much of it remains today. Locking in pricing and procuring timely delivery of materials has been difficult. We’ve seen relief in pricing of some materials, but with many manufacturers still working limited shifts and with supply chain issues, we don’t see prices returning to 2018/2019 levels. 

What is your near-term outlook for the company and the development sector as a whole?

My outlook for the next 12 to 24 months is bullish and there continues to be unprecedented demand in the industrial sector across the United States. That is going to drive a lot of growth and put a lot of demand on the marketplace. SunCap is very well positioned. However, we are watching a tremendous amount of industrial products being delivered across the country. And, that supply is unprecedented and likely to outpace demand in the next year or two. 

Our priorities going forward will be hiring people across a number of roles and making sure the corporate culture is maintained, getting out and seeing clients to maintain our relationships and to ensure repeat customer relationships. 

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