Real Estate Development

This chapter provides an in-depth analysis of the techniques utilized by a developer to determine the profitability of building an office project. It also provides an overview of the approval process, then presents an office development example. Developers identify new opportunities in two ways. The first is to identify an underserved sector of the local real estate market (e.g. moderate income multi-family, convenience retail, co-working office space). The second is to identify a site that is in search of a use. The first step taken by a developer is to demonstrate that the project is feasible on a “back-of-the-envelope” analysis prior to introducing it to the local authorities and going through the entitlement process. All financial and non-financial costs incurred during site improvement and building completion are shown. Funding of the budget is required in four different stages of development: pre-construction, construction, lease-up, and operations.