Real estate development does not happen accidentally. There are no “drive-by” shopping centers, office buildings, apartment complexes, residential neighborhoods, industrial plants or warehouses.
Introducing the metaphors. A real estate project is like a symphony, in which all the musicians must play the same song in the same key and on the same time-meter. It is like a top-level football team, in which the offense works together to move the ball to the end zone or the defense strives as a corps to prevent that same result.
Who is the center point of this community of coordinated conduct? (How is that for an affective alliteration?) Why, the developer, of course. 1 The developer is the conductor of the symphony. The head coach of the team. The analyst who assesses and hedges the risks and motivates a large, complex assemblage of affiliated professionals and trades to function as a well-oiled machine.2
Like most, if not all, successful business ventures, real estate development is a systematic, and even sequential, undertaking. 3 It is best if engaged using a checklist so that the many moving pieces stay in-sync and result in a physical presence for a neighborhood, city, or region to use and enjoy for a long time to come.
What is the sequence of activities that is undertaken by developers and their colleagues? It is the following five step-by-step categories, each of which has numerous “sub-steps.” Additionally, they are all imbued with a sixth element for good measure.
1. Conceptualization – First, the developer must identify a vision for a parcel of land or a pre-existing property. Can a vacant piece of land be converted into a useful and profitable asset? Should an existing structure be removed and replaced? Could a structure already in place be repurposed? 4 This step involves both imagination and a profound measure of common sense as to what can be transposed from the blackboard and actually be achieved.
2. Planning – Next, what has to be done to convert the vision to a working reality must be determined. This involves research: land use, financial, community sense, ordinances, building codes and technology, among many topics. And a network of partners and stakeholders in the public and private sectors must be attracted, educated, and maintained to guide the envisioned project through the political and regulatory approval and permitting process to an eventual “ribbon cutting.” In other words, to understand and engage in the art of the possible.
3. Design – Now, technology takes center stage. Once the vision is solidified in its “big picture” sense, the scientists and mathematicians, in the form of architects, engineers and surveyors, take the wheel. Plans are drawn, scrapped, revised, re-drawn, and re-scrapped, in what feels like an endless loop of time, talent and treasure until a unified image of something more-or-less related to the original vision emerges.
4. Finance – The vision does not occur for free; the land, materials, labor, permits, and professional services will require payment, with an eventual profit to the developer and investors. Certainly, cash can be used. But more likely, due to the amount needed, lenders or investors are involved. Rates of return are calculated. Interest rates set. Tax consequences predicted. Collateral identified and secured. Property acquired. Deals closed. Invoices processed. Lien waivers obtained. All to move the vision forward another step.
5. Implementation – It is finally the time to “break ground” and “go vertical,” whether that be one floor, multi-storied as high as the eye can see or park-like as wide as the horizon will afford. In come the trades and the vendors, who figuratively “break the eggs” to create a beautiful omelet of the buildings and improvements constituting the former envision and now actual development. They dig, level, pour, frame, wire, plumb, enclose, finish, landscape and make the original vision a 3D reality. And, the omnipresent sixth element.
6. Flexibility – Imbued through all of this, and encasing the five steps above, is an absolute reality that all partners in the venture must be resilient so as to allow the development to evolve as conditions change. Interest rates increase or decrease; inspectors approve or reject; materials and labor become scarce or available; and neighbors favor or support, all in an ongoing flow. Sometimes, it seems as if there is a pendulum of change at work. This requires the partners not only to be resilient but also to be simultaneously ever-vigilant to emerging conditions and reacting to those shifting seas of change seamlessly, continuously, and without a break so the development can finally effectively, efficiently and economically emerge from the vision to a concrete reality.
Real estate development is not easy. It is not a simple straight-line undertaking. And it is not for the faint of heart or the financially or legally risk-averse. Transporting a vision from the mind to the ground floor and beyond requires forethought, relationships, persistence and discipline. But, when done correctly, just look at the results. Eye-catching, functional, community-friendly places to live, work, shop and learn.
For more information, call Philip N. Kabler, Esq. of the Gainesville, Florida office of Bogin, Munns & Munns, P.A. at 352-332-7688, or visit boginmunns.com/gainesvillelawoffice, where he practices in the areas of real estate, business, banking, and equine law.
PHILIP N. KABLER, ESP. is an Incubator Resource for the Santa Fe College Center for Innovation and Economic Development (CIED), and has taught various courses at the UF Levin College of Law and at the UF Warrington College of Business Administration (undergraduate and graduate). He is also the current president of the North Florida Association of Real Estate Attorneys.