Expert Real Estate Development for Residential, Commercial, and Mixed-Use Properties

This phase identifies the facility’s big-picture needs, such as the goals that will be achieved by building the structure, where it will be built, and the people and businesses that will benefit from it when it is finished. During this phase, the team that will be responsible for the entire development process.

Actions and outcomes

• Feasibility study finished
• Programming plan and initial architectural renderings done
• Market analysis and business plan complete
• Funding strategy created

Conducting a feasibility study

The feasibility study is an assessment of numerous factors, including economic, technical, demographic, legal, competition, and organizational capacity, to assess the strengths and weaknesses of a proposed project based on its cost and value.

Working with the architect during concept planning

After the feasibility study is complete, the first step in creating architectural drawings for the project is called site programming. Some owners complete this work on their own, but it is more typical to work with the architect. This work is an “add-on” service to the standard contractual agreement with the architect. At this point, your goal is to determine the scope of work to be designed.

For acquisitions: Site selection begins

Conduct due diligence.

If you are purchasing a property, you will need to make sure the selected property can meet the project goals. Due diligence is the research conducted before engaging in an acquisition transaction to determine the associated risks. It is a process with several defined steps and outputs.

In this phase, we will finalize your initial architectural fit study and initial site plan and address every issue and contingency that pops up before we start development of the detailed construction drawings. At this stage, all the core development team members (real estate attorney, architect, and construction manager) are contracted, the architectural drawings become schematic drawings, and all reviews and studies are finalized. This phase is usually the longest of the entire real estate development process.

Actions and outcomes

• Contracts with team members complete
• Environmental Review (Phases I & II) complete
• Proof of site control either by letter of intent, option, or purchase agreement
• Preliminary building plans and other schematic drawings complete

What is schematic design?

Schematic design, sometimes called concept design, is the first step of architectural design. In this phase, architects use rough sketches to produce more detailed drawings. These drawings show floor-by-floor and room-byroom dimensions, including common areas, hallways, entrances, and exits, and should include internal and external views. Additionally, the architect will begin to develop more detailed specifications about major components of the project. These include:

• Type, quantity, and quality of materials
• Systems such as electrical, plumbing, and heating, ventilation, and air condition (HVAC)
• Stairways, roofs, foundation, walls, and doors
• Landscaping, open space, parking, and traffic flow

The development planning phase begins with the architect and engineers creating the design drawings. It ends with completion of the construction drawings. In this phase, building plans are submitted to planning departments, a building permit is issued, a closing date or lease (site control) on the land where the building will sit is set, and an RFP is released to solicit general contractors. This phase takes approximately 6 months and involves hundreds of hours of detailed work by architects and engineers.

Actions and outcomes

• Final update of project schedule, scope, and budget with project entities and stakeholders before construction begins, and contracts reviewed
• Furniture, fixtures and equipment (FFE) package and interior design planning finalized
• Approvals from local agencies (fire, water, utilities) obtained

Acquisition begins as a process involving feasibility and due diligence studies of the physical property, performed by the buyer’s team. This team includes a brokerage company and real estate legal team. If the studies are positive, the legal team will send a letter of intent (LOI) outlining their terms of purchase. If the seller agrees, an escrow account is opened and earnest money is deposited. A more thorough due diligence and Physical Needs Assessment (PNA) is performed after the LOI. Once the Will Serve letter and other acquisition milestones are achieved, the closing transfers title and ownership to you.

Actions and outcomes

• Reports on the site, title, and any legal issues involving the property obtained
• American Land Title Association (ALTA) survey completed
• Will Serve letters from utility companies received

In the construction phase, the general contractor will sign on subcontractors at prevailing wage and manage reporting requirements. Upon issuance of the building permit, the owner (or owner’s agent) issues a Notice to Proceed, and the general contractor begins construction as defined in the contract. The construction contract negotiated during the acquisition phase will define the cost and duration of construction. Throughout the construction phase, the construction manager will serve as the owner’s representative per the terms of their contract and should prioritize keeping the site secure and safe to avoid accidents. Construction can easily make up 50–75% of a development budget, depending on a variety of factors.

Actions and outcomes

• Facility is readied for walkthrough and closeout
• All bills paid; no liens, no lawsuits, no accidents, no theft, no problems

Close out is the final opportunity for inspections, revisions, and corrections. It is the phase that confirms all details and quality standards are met. It occurs when the structure is 99% completed and the general contractor notifies you, the owner, that the building is ready for occupancy. Your construction project is complete when you receive a Certificate of Occupancy.

Actions and outcomes

• Receive a Certificate of Completion and become the owner
• Receive all paperwork, guarantees, manuals, and instructions for maintaining your property