In October 2017, I sat down with Architect & Developer Peter Guthrie of DDG in New York, New York. See more information about DDG at their website.
Peter Guthrie: So I was in Brooklyn. I knew I couldn’t find the perfect client. They weren’t just popping up. How do you do that? Find the perfect client that is. That is when the development thing kicked in. The thought of, “why not just buy a lot and make a building?” I just kept running that through. I was talking to more people in Brooklyn and some developers. I sorta got the basics of it. It was utterly simple.
Fast forward, I am talking to a friend at a party and saying that I was interested in real estate. He was interested too. Great. I hustled and found a project. I brought it to him. There is this convent. We can buy a convent with two empty lots on either side and it looks like the math works for it. He said, “Let’s do it.” What do we do? Well, I guess we should talk to a bank. So we talk to a bank. So now we need to put numbers down. It is so basic. If you have the desire, you can find the money. You’ve got to have a business plan. But dumb it down. You buy it for this, you build it for that, and you sell it for X.
James Petty: Was this your pro forma?
PG: Yes, essentially, though I didn’t know that word. I didn’t know the myriad of risks. But my background working at Peter Gluck prepared me for taking risks. To me, it seemed like the least risky thing because I didn’t have a client. I just had to be smart, stay within the rules of the city, and stay within the confines of the pro forma. Just by triangulating and getting good information, we designed a building that won the best building in Brooklyn for that year from the Chamber of Commerce. The bar was low. I’m not giving myself too much of a pat on the back. Fedders air conditioning units were coming through the wall. Terrible craftsmanship. The bar was utterly low. That made it so attractive. This looked easy. How do I just get the same amount of money that these guys are spending and do something better with it?
JP: You were trying to make a better product for the same amount of money other developers were spending?
PG: Yes, that was the basic premise. That still is the basic premise. You can’t do it any other way. Everybody works off a pro forma. Investors, and banks. The banks aren’t going to lend if your pro forma is way out of whack and you are spending a ridiculous amount of money or not the appropriate amount of money for that project. I like that. I like that challenge of the fixed budget and fixed time frame. There is building X over there, can you do any better?
JP: Did you know construction costs?
PG: I did crazy estimates. Basically, you can use a lumberyard to do your estimating. I did take-offs for framing, sheetrock, and everything and then did the job through them. That coupled with ordering with McMaster-Carr Supply trained me. I had that desire and confidence that you can just go and figure out how much everything is. It is actually there. There is a book full of screws that you can buy. I tried to do it as best I could. After that, I found partners and formed DDG. I would be the Head of Design & Construction and Chief Creative Officer. The first building we did together was 41 Bond St. I had done a building down on Warren St. that was 8-stories. This one was double the width, but it wasn’t radically taller. I had enough confidence. I had already built a bluestone building of all things in Manhattan, and it was standing.
JP: You have a more diversified mix of staff here compared to other Architects & Developers. It isn’t just architects here.
PG: Well that is what happened when forming DDG. The decision to join forces was to do just that. My other two partners have finance and private equity backgrounds. This allowed us to go to that scale. We built an acquisitions department, an accounting group, a development group, a construction management group, a design group, and a property management group. All things we were doing even separately before forming DDG, albeit on a much smaller scale. By combining, we were able to build those divisions. If you keep it simple, all those things were part of the process of making the buildings in Brooklyn with just us. When you scale, you need more people and clear divisions.
JP: You guys are also the construction manager and build your projects, right?
PG: Yeah. It is challenging. There is a tendency when you are doing it all yourself not to make that drawing. I mean you are telling yourself and your friend Marty to build it. We found that we did skip some steps. That made it really hard as we grew. We would bring in someone new and they didn’t know the shorthand. They hadn’t been here long enough. The information got lost. We realized that we had to get back to drawing standards. We overdraw to figure it out for ourselves. I’m proud of this. We have great conversations about how to find interesting ways to communicate to subs to get the lowest price and to make it so utterly clear and simple. It is one in the same. If you can get that drawing to look the least technical… They don’t have time to read the thing. Then you can save money or at least get it built right.
Back in the day I would take my computer drawings out and draw over them with a sharpie in my conversations with carpenters. It made them realize that the drawings were not sacrosanct. We could amend the detail if they had a good idea. Maybe they don’t have a particular thing at the lumber yard today. That give and take with the sub is radically important. As we scale, it is a big challenge to get that kind of interaction and that kind of communication in the process. Mock-ups have become our weapon of choice to force this interaction.
For more on Peter Guthrie, see upcoming book Architect & Developer: A Guide to Self-Initiating Projects.