You own undeveloped land or an underperforming commercial building. This commercial real estate asset could be producing much more income. Development Advisors starts with a strategic plan, creates financial projections, then executes a vertical development, so your commercial real estate asset can realize its highest potential income.
Why Hire Development Advisors?
An Investor would hire Development Advisors because he/she:
- Owns undeveloped land or an underperforming commercial building.
- Desires to convert underperforming commercial real estate asset into a higher income producing investment.
- Has little or no experience developing commercial real estate.
- Have no additional time to devote to the full-time responsibilities of developing commercial real estate.
Highest and Best Use
Development Advisors will help you determine the highest and best use for your undeveloped land or underperforming building so that you can achieve the highest income possible for your asset. Here is an overview of the process.
Likely Land Use. Developco starts by understanding the current zoning and its allowable development. We consider the likely potential success of various property types (office, retail, industrial, multi-family, senior housing, medical or other specialty uses). We consider adjacent land uses and current development trends. We consider the access, visibility, traffic counts and area amenities.
Building Concept. Developco utilizes our working relationships with architects, land planners and civil engineers, to conceptualize a future new ground-up or building redevelopment project. We meet with key stakeholders including elected municipal officials, municipal planning staff, neighborhood leaders and others we identify, to predict whether a redevelopment and rezoning scenario would ultimately be approved.
Test Marketing. As part of creating a concept plan for the property, we actively seek out the input of potential tenants, real estate agents and vertical developers to affirm that the evolving concept plan maximizes the value of the property. We estimate the rent that a potential tenant user might we willing to pay at this location depending on the use.
Developco has a sophisticated, yet flexible financial model that considers both likely rental scenarios matched against total horizontal and vertical project costs to show cash flow after debt service, cash on cash returns, yield on project costs, internal rates of return and many more.
The key determinate of future asset value comes from the preparation of a proforma financial model. We first estimate the new value of the property “as developed”. We then engage a general contractor to estimate the likely total project cost (land, soft, hard, financing for the concept. We then insert likely future rents and the likely debt scenarios and finally arrive at net operating income and critical returns on investment.
Our Investor clients generally have a high net worth, may already own multiple CRE assets, appreciate the benefits of CRE ownership, desire to take reasonable risk to enjoy higher returns on invested capital, have an interest in design, and desire to create a permanent “place” legacy. If this fits our profile, let’s explore your vision together.