Real estate development is not for the faint of heart. It takes incredible amounts of vision and persistence to make a new development happen. At a time when real estate development is increasingly challenging, it’s common to have projects turn out less exciting than expected. Most developers would love to have their projects be a standout, but feel their budget and city requirements don’t allow for that.
After expending so much time, effort, and resources on a major development project, it’s difficult when you’re not excited about the result. It’s great to make money, but what about when you have no deeper satisfaction about your project?
Contemplate this common reaction to a new development project: “It’s not horrible.” Too often the general feeling about a new building is that underwhelming. It’s definitely not what you want to be saying about the results of your hard work!
What do you want to be able to say about your next project?
Build a Better Community
If it’s enough for you to just make a bunch money on real estate development, great. But most developers want to make a healthy profit and create something they’re proud of. You want to create places that add value to the community and really mean something to those who experience them. You want something that you can point to with pride and claim it as your work.
As you know, a lot of things need to line up and go right for that to happen. While some aspects of an extremely successful project seem to come by sheer luck, there are some key things you can do as the developer to increase the chances that you’ll end up with a project you can be proud of. Consider the following ideas as you begin strategizing:
Meet the Unmet Need
The projects that really stand out tend to be those with a compelling story. Pioneering developments that take strategic risks to pave the way for others to follow suit. Innovative responses to special zones or once-in-a-generation redevelopment opportunities. Projects that address social or environmental issues and benefit an under-served population. The list goes on.
What each of these examples have in common is the meeting of a previously unmet need. Our cities are full of neighborhoods that are missing key elements that would make them more livable. Find that missing piece, include it in your plans, and you have yourself a compelling story for the development of your project.
Often this narrative is essential in gaining the support of the community. Meeting the unmet need is not only the right thing to do, it raises the chances your project will be approved quickly and without a lot of stress. Because community buy-in can be hard to come by nowadays, a compelling story can help you save time and money. It can also foster good feelings between you, the city, and neighborhood residents. That is definitely something to be proud of.
Assemble Your Best Team
Real estate development is a team effort. Key players include developers, lenders, investors, contractors, designers, and city officials. You need to assemble an exceptional team in order to have the best chance at a successful, memorable development.
If you aren’t creating projects that get you excited, it may be time to evaluate the teams you’ve been selecting. If they aren’t up to par, you could do everything flawlessly on your end and still wind up disappointed at the ribbon cutting. Is it time to build relationships with more open-minded lenders and investors? Is it time to stop going with the low-bid contractor? Is it time to team up with a more capable design firm? Just as with anything, the best design and development team members will come at a premium. But, if you already know how to make money on a project, why not invest some in a better team and finally get results worth talking about?
Speaking of investing, how you allocate your budget will have a huge impact on your results. Without a realistic budget in place from the beginning, you’ll struggle to accomplish your goals.
Your investment will go toward three major types of expenses. First, are the hard and soft costs associated with every project – the bare minimum to get your ideas off the ground. This includes the price of the land, the basic structure of a building, permit costs, and so forth. In most cases, these costs have already been optimized and are generally well accounted for.
Second, there are the design features that you’ll need to include in order to meet the lowest expectations of the city and your target tenant demographics. Among other things, these can come in the form of building articulation and in-unit finishes and amenities. It’s important to have a very solid understanding of these costs to keep them from getting out of hand.
Finally, there are the extra add-ons that have the potential to make your project stand out from the rest. These are things that you don’t have to do, but that you want to do because they are exciting, meaningful, and rewarding. The more you can budget and plan for these pieces of your project, the greater the likelihood you will create something to be proud of.
The positive thing about budgeting for the “want to have” features of your project is that, although more costly, they do contribute to your ROI. They make your project rise above the rest and guarantee success.
It’s easy to dream about successful development projects that, besides making a ton of money, are huge standouts. What is more difficult, however, is actually getting a project to that point.
No matter how well you plan, there will always be unforeseen challenges. Obstacles will come up that make you question your resolve to keep pushing the envelope. But, you shouldn’t give up. Instead, integrate these challenges into your project’s story and leverage them to add meaning and value.
By following through with your commitment to meet the needs of the community, overcoming obstacles only adds to the emotional resonance of your project. With the right team in place, constraints are viewed as opportunities. And a detailed budget can help you pivot to an equally inspiring design solution, even as you trim down cost.
With the right approach, you can follow through on your aspirations to create something you are proud of.