What is Development Management?
Real estate development is typically a long range, multi-step process that is complex and carries with it some attendant risk. At Primior we use our years of education, training, and real world experience to create projects that provide our investors with a variety of solid options to fit the specific needs of their portfolios.
In general, risk varies in a development project primarily as a factor of two considerations. The first is the essential nature of the project itself. For example, a project built purely on spec comes with a greater level of risk than one that is built-to-suit. The developer, who has a lease commitment, especially for a high profile anchor tenant, has dramatically reduced the risk for that particular project. Additionally, as the completion of the following stages of the project are reached, the risk continues to decrease.
Land acquisition search and proposal
It can be truly said that land acquisition for real estate development is part science and part art. Understanding the local market and all its variables is often a matter of experience and immersion, but not every developer has the same foresight. Most projects can be distilled down to two types: land first/vision second or vision first/land second.
Where there exists an opportunity or inroad to a particular property, there are likely various scenarios of development that hold potential. It is the greater risk taker and perhaps reward creator who first has the vision and thereafter seeks the appropriate property.
The artfully drafted proposal is where the science and art merge. The proposal needs to demonstrate and detail a thorough understanding of the existing market, provide information garnered from a full and complete inspection of the target property, and convey in a highly professional manner graphs, visuals, and other details of the project.
The actual acquisition and the entitlement process
When a project has proceeded to the proposal stage, it is appropriate to redouble one’s due diligence efforts to ensure no stone is left unturned in reviewing the multitude of relevant documents concerning site identification, financial feasibility analysis, entitlement, demographic analysis, and capital sourcing. Often, it is the entitlement process that poses the potential for the greatest delay in seamlessly moving forward.
Almost without exception, every governing jurisdiction has specific land entitlement guidelines that control and regulate not only the particular use of land but also the individual characteristics of the proposed improvements to be made to the land.
Managing the architectural design and construction of the building
The construction phase may be thought of as the final stage before actual operations can begin, and as such, the risk is now significantly reduced but certainly not eliminated. Among the primary concerns during construction is cost control. Many potential problems can be thwarted or their effects mitigated by weekly construction reports, promptly handling Requests for Information from contractors and architects who need the information to proceed, and maintaining involvement so as to be proactive in the permit process.
A development project offers the opportunity to bring a highly profitable product to the market in a different manner than has previously existed. Primior can show you how, when all things are considered, the potential for a new development project can exceed what is possible for an existing asset.