1. Real Estate Development
Lecture 18
Real Estate
Development

2. Development
Land Development: The improvement of land with utilities, roads, and services, which makes the land suitable for resale as developable plots for housing or other purposes
Real Estate Development: Deals with the improvement of usable buildings on a specific site, for a specific user or user-type

3. Land Development Process
Identifies Market Needs and Buildable Sites
Secures Proper Zoning, Concurrency, etc.
Determines Most Feasible Way to Divide Land for Development, and Files Use with Municipality
Clears and Grades Land
Installs necessary utilities, and makes them available to divided sites
Installs curbs, gutters, paved streets, and other items to make divided sites accessible
Markets sites to builders, investors, etc.

4. Members of the Development Team
Lecture 18
Members of the Development Team

5. Development Team Public Sector Regulators (Government)
Market Researcher
Real Estate Lawyer
Equity Investors and Debt Lenders
Landscape Architect/Land Planners
Architects
Construction Firms/Subcontractors
Brokers
Engineers
Appraisers

6. Rewards of Real Estate Development
Lecture 18
Rewards of Real Estate Development

7. Rewards of Real Estate Development
1. Successfully satisfy the end-user’s needs
2. Successfully coordinate the talents of a wide array of individuals into a well-functioning development team
3. Profit obtained (entrepreneurial incentive)
4. Networking opportunities
5. Indoor and outdoor work

8. Risk Management in Development
Lecture 18
Risk Management in Development

9. Risk Management Strategies
Evaluate Internal Strengths/Weaknesses
Keep Investment Low
Repeatedly Evaluate Economic Feasibility
Include Team Members
Define Exit Strategies
Use Additional Risk Control Techniques

10. Determination of Economic Feasibility
Lecture 18
Determination of Economic Feasibility

11. Economic Feasibility 1. Determine Property Value After Completion
Potential Gross Income (PGI)
Less: Vacancy/Collection Loss
Effective Gross Income
Less: Operating Expenses
Net Operating Income
Divide: Capitalization Rate
Property Value

12. Economic Feasibility 2. Determine Project Costs Site Acquisition Costs
Plus: Improvement Costs
Project Costs

14. Economic Feasibility 3. Evaluate Feasibility Develop: Value > Costs
Do Not Develop: Value < Costs

15. The Development Process
Lecture 18
The Development Process

16. The Development Process
Pre-Construction Stage
Construction Stage
Post-Construction Stage

17. Pre-Construction Stage
Market Analysis
Economic Feasibility Analysis
Land
Soft Costs
Hard Costs
Site Selection and Analysis
Site Control
Plan Preparation and Permit Approval
Marketing and Sales
Financing

18. Construction Stage
Construction
Marketing and Sales

19. Post-Construction Stage
Marketing and Sales
Property Management

20. Current Restrictions in Development
Lecture 18
Current Restrictions in Development

21. Current Development Restrictions
City of Jacksonville Tree Ordinance
Concurrency (Growth Management)
Environmental Sensitive Property
Land Use, Zoning

22. COJ Tree Ordinance Initiated in November, 2000
Designed to combat the loss of mature and maturing tree species during clearing for land development
Tree loss/destruction must be mitigated by one or more of the following:
Planting of replacement trees of the same caliper-inches
Off-site mitigation (planting and nurturing at another site in Duval County)
Paying a monetary contribution to the City of Jacksonville’s Tree Protection and Related Expenses Trust Fund

23. COJ Tree Ordinance
“Tree Conservation Credits” available for trees preserved on the development site and identified for preservation by the developer on a registered tree survey
Effect of COJ Tree Ordinance: Developers are willing to pay less for those properties requiring significant mitigation costs versus those w/ low or no mitigation costs

24. Concurrency
Initiated by the Growth Management Act of 1985 (Florida State Legislature)
Requires all State counties and municipalities to devise their own “Comprehensive Use Plan.”
In 1990, COJ implemented an initial concurrency program
Developments that exceeded trip capacities were NOT allowed
Created “urban sprawl” as developers were having to move to areas of under-capacity

25. Concurrency In 1995, COJ adopted the “fair-share contract”
Charges developers impact fees when proposed developments create over-capacitated areas
Concurrency is determined and assessed by the Jacksonville City Council
Fees paid by developers are targeted to a specific use that will benefit the development and surrounding area
Credits allowed to developers for providing improvements that benefit both the development AND surrounding area (traffic lights)
Required fees NON-negotiable, and can be arranged on a payment schedule (typically 3-5 years, 10 years on larger developments)

26. Concurrency “Fair Share”
City Council & Planning Dept. study 2-mile radius of proposed development
Jacksonville considered “restrictive” in its concurrency requirements
Other Florida municipalities have created “exception areas,” where no concurrency requirements exist (follows zoning and land use only)
“Internal Capture” - Created from synergy between developments
Time period for concurrency approval restricted; developers can submit “performance schedules”

28. Environmental Sensitive Property
Jurisdictional Wetlands (SJRWMD, COE)
Mitigation
Habitat for Endangered Species
Flood Plains

29. Zoning and Land Use Comprehensive Land Use Zoning Districts
Relatively Impossible to Amend
Zoning Districts
Variance, Zoning Category Change
Planned Unit Development (PUD)

30. National Property Trends
Lecture 18
National Property Trends

31. Environment and Safety
Green Design
Sustainable Development
Terrorism

32. Office Property Market
Parking
Energy Supply
Communication

33. Other Property Markets
Warehouse
Retail
Single-Family
Multi-Family