10 KEY TO SUCCESSFUL REAL ESTATE PROJECT FROM THE ARTICLE

PROJECT DEVELOPMENT; SUCCESS OR FAILURE? BY RICHARD

S
TOOLKIT
SORENSON

Location Analysis

Project managers should analyze existing competition,Data,

accessibility,
trafficResource
Work and
patterns, the desirability of the location, and ensure that the proposed use is
Management systems
compatible with the environment.

Site Analysis

Size, soil characteristics, topography, frontage, utilities, and zoning are

components of the site that must be considered when developing a project.

Improvement
Analysis

The improvement must meet the criteria for highest and best use; that is, they
must be physically possible, appropriately supported, legally permissible,
financially feasible, and embody the most profitable use.

Demand and Supply

Analysis

A market analysis is a study of market conditions for a specific type of property,

the purpose of which is to assess current and future demand and supply in the
particular trade area.

Feasibility
Analysis

Feasibility analysis involves both the financial operating statement and cost
analysis, and consists of a study of the cost-benefit relationship of an economic
endeavor.
Decision support &

continuous improvement 2

Goverment Approval
Process

Developers must not underestimate the number of procedures and the amount of
time required by the approval process. The outcome of any government approval
process is never certain, because hostile out side parties may be able to stop a
viable development by identifying a seemingly innocuous oversight.

Capital Market
Analysis

Rising interest rates often lead to declining or, at best, stable real estate values,
thereby removing the lenders loan-to-value and debt service ratio safety cushions.
Obviously, trends in real estate value are extremely sentitive to changes in capital
market.

Timing

Uneconomic
Purpose

Inept Ownership

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Proper timing in real estate project development, as in all types of investment

activities, is an important element of success. Good timing, whether caused by
luck or superior economic forecasting skills, can make a success out of an
otherwise marginal or mediocre project. Poor timing, on the other hand, often
defeats an otherwise viable developments.

Fundamental real estate valuation principles must be respected, as must the

principles of anticipation, change, supply an demand, competitions, substitution,
opportunity costs, balance, and conformity.

Examples of the harm that can ensue from inept ownership: poor planning of a
project, weak administration, inexperienced management or leasing, poor
negotiating skills, internal conflicts, problems with partners, weak financial
structure, incompetent personnel, understaffed teams, inaccurate construction
estimates, and excessive cost overruns.

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