Real Estate Development & Reuse Flashcards
Why is Real Estate Development important?
Provides local jobs
Increases investment
Sustains the tax base
Serve as a catalyst to revitalize urban & rural areas
What are the 3 basic strategic approaches to economic development?
1- Business-Oriented approach - focuses on direct assistance to business
2- Place-Oriented approach - focuses on the community’s physical resources
3- Resident-Oriented approach - focuses on helping local residents participate & advance in the workforce
the goals of real estate development
Creating & retaining jobs
Attracting & creating new or expanding businesses
Enhancing the local tax base
Stimulating nearby real estate improvement
Improving the appearance of a neighborhood
What are the major factors driving industrial development?
Price Location Available financing Supply Demand
What is Smart Growth?
Development that serves the economy. Answers the question of ‘how’ & ‘where’ new developments should be accommodated.
Mixed Use Development refers to
Combining multiple land uses in a single district or multiple uses in a single building
Common tenants of mixed use development are
Inclusion of office, hotel, retail, housing space
Inclusion of desired urban conveniences in a pedestrian friendly environment
Promotion of vertical vs, horizontal development
Consideration i]of environmental costs/gas prices
Incorporation of multiple forms of movement into a single development (autos, walking, biking, transit)
What impacts have the technical revolution had on development?
Companies can locate where land & office space is cheapest
Increased greenfield & suburban development
Moving operations overseas to access lower wages & highly skilled labor
Brought new jobs in computing, network-building, information technology
What drives the growth of Green Buildings?
Environmental awareness
Bottom line of building costs (energy savings)
Increasing cost of nonrenewable resources
Local incentives to spur growth of green building industry
Greener workplaces attract talent
Lower occupancy operating costs
What are the 4 primary types of Development & Redevelopment?
Build-to-suit
Speculative development
Greenfield development
Redevelopment/Reuse
Build-to-Suit
Business retains a contractor or developer to build a customized structure; the needs of the end user guide the design of the facility
Speculative development
When a facility is built prior to securing a tenant; provides a marketing tool
Greenfield development
Occurs on large tracts of previously undeveloped land in rural & suburban areas; I.e. industrial parks, technology parks, commercial development at highway interchanges
Redevelopment & Reuse
Processes for taking previously developed property or areas to a higher, more productive use
What are the 8 phases of Real Estate Development?
Predevelopment Market, Financial & Political feasibility Site & engineering analysis Financing Contractor negotiations & public approvals Construction Marketing Building occupancy & management
Phase I. Predevelopment
Developer / Business considers possible sites or building sizes & uses; quick analysis of fatal flaws; if favorable site is secured.
Phase II. Market, Financial & Political feasibility concerns
Sufficient market demand
Sufficient return on financial investment
Public sector approval
This phase determines the feasibility of a project - its costs, risks and benefits - before any major investment is made.
Market feasibility does what?
Identifies development opportunities
Forms a realistic development plan
Determines if project will satisfy lenders to provide loan
What questions does market feasibility answer?
What products are appropriate for this market?
What will tomorrow’s customers demand?
What is the appropriate timing & phasing for this project?
What is the appropriate quantity & mix of uses for this project?
Are there financial considerations that the market alone will not bear?
How can this project be best positioned in the competitive marketplace?
What are the key components to any quality market analysis?
Subject Site Analysis Economic & Demographic Analysis Competitive Supply Analysis Demand Analysis Development Recommendations
Financial feasibility addresses
Questions directly related to the level of investment that a project is likely to receive, or the variety of metrics that real estate investors use to evaluate multiple real estate deals against each other
What are 3 financial feasibility testing models?
Residual Land Value
Discounted Cash Flow
Rates of Return
What’s the purpose of political feasibility?
To determine if the public sector will approve a viable project in a reasonable amount of time
Phase III - Site & Engineering Analysis is intended to
Result in a development plan that can be discussed with or officially submitted to appropriate planning agencies.