professional real estate development the uli guide to the business

51 Pages·2015·0.63 MB·English

Richard B. Peiser and David Hamilton | THIRD EDITION

PROFESSIONAL REAL ESTATE
DEVELOPMENT
THE ULI GUIDE
TO THE BUSINESS

Copyright 2012 by the Urban Land Institute
Printed in the United States of America. All rights reserved. No part of this book may be reproduced in any form or
by any means, electronic or mechanical, including photocopying and recording, or by any information storage and
retrieval system, without written permission of the publisher.
Urban Land Institute
1025 Thomas Jefferson Street, NW
Suite 500 West
Washington, DC 20007-5201
Recommended bibliographic listing:
Peiser, Richard B., and David Hamilton.Professional Real Estate Development: The ULI Guide to the
Business.Third Edition. Washington, D.C.: Urban Land Institute, 2012.
Library of Congress Cataloging-in-Publication Data
Peiser, Richard B.
Professional real estate development : the ULI guide to the business / Richard B. Peiser and David Hamilton. – 3rd
ed.
p. cm.
eISBN 978-0-87420-277-9
1. Real estate development. I. Hamilton, David. II. Title.
HD1390.P45 2012
333.3068–dc23
2012016521
ULI Catalog Number: P101
About the Urban Land Institute
The Urban Land Institute is a nonprofit research and education organization whose
mission is to provide leadership in the responsible use of land and in creating and
sustaining thriving communities worldwide.
The Institute maintains a membership representing a broad spectrum of interests
and sponsors a wide variety of educational programs and forums to encourage an open
exchange of ideas and sharing of experience. ULI initiates research that anticipates
emerging land use trends and issues, provides advisory services, and publishes a wide
variety of materials to disseminate information on land use development.
Established in 1936, the Institute today has nearly 30,000 members and associates
from some 92 countries, representing the entire spectrum of the land use and
development disciplines. Professionals represented include developers, builders,
property owners, investors, architects, public officials, planners, real estate brokers,
appraisers, attorneys, engineers, financiers, academics, students, and librarians.
ULI relies heavily on the experience of its members. It is through member
involvement and information resources that ULI has been able to set standards of
excellence in development practice. The Institute is recognized internationally as one
of America’s most respected and widely quoted sources of objective information on
urban planning, growth, and development.
_______________
Project Staff
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Senior Vice President
Education and Advisory Group
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Project Director and Editor
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Managing Editor
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About the Authors
RICHARD B. PEISER
Richard B. Peiser, PhD, is the first Michael D. Spear Professor of Real Estate
Development in the Department of Urban Planning and Design at the Harvard
Graduate School of Design (GSD) and director of the university-wide Real Estate
Academic Initiative. Before coming to Harvard in 1998, he was associate professor of
urban planning and development at the University of Southern California where he
founded and directed the Lusk Center for Real Estate Development, and the Master of
Real Estate Development Program.
At Harvard, he founded and directs the Advanced Management Development
Program and coordinates the other executive education programs in real estate at
GSD, as well as joint real estate programs with Harvard Business School. He directs
the Master of Urban Planning Concentration in Real Estate and cochairs the Master of
Design Studies Program in Real Estate and Project Management at GSD.
Peiser has published over 100 articles in academic and professional journals. His
primary research focuses on developing an understanding of the response of real
estate developers to the marketplace and to the institutional environment in which
they operate, particularly in the areas of urban redevelopment, affordable housing, and
suburban sprawl. His current research is on urban modeling using Los Angeles as a
test case, and nonperforming loan resolution. His other books in progress are on high-
end luxury retail development and on the economics of new towns around the world.
He teaches real estate development and finance as well as field studies on complex
urban development problems.
Professionally, he has developed affordable housing in Texas and California as well
as land and industrial properties. From 2004 to 2007, he served as a founding partner
of the China Real Estate Investment Company and its Shanghai-based subsidiary
KaiLong REI Project Investment, investing institutional capital in real estate projects
in China’s major cities. He is also a valuation and economic-damage expert for
litigation with respect to apartments, land, office, and retail development projects and
portfolios.
Peiser was born in Houston and grew up in Dallas. He received his BA from Yale
University, his MBA from Harvard University, and his PhD in land economy from
Cambridge University. His first teaching appointment was at Southern Methodist
University in Dallas. He has held visiting appointments at Stanford and Cambridge
universities, Seoul National University, the University of Ulster, and the University of
Regensburg. He is a former trustee of the Urban Land Institute and former coeditor of
the Journal of Real Estate Portfolio Managementand currently serves on the board of
Berkshire Income Realty, Inc., a publicly traded company based in Boston, and on the
Board of Overseers for the New England Wildflower Society.
DAVID HAMILTON
Trained as an architect, David Hamilton has managed innovative real estate
development projects on a variety of scales, ranging from medical and university
campuses to award-winning high-tech office and R&D spaces. As a codirector of the
Cambridge Innovation Center, he managed the design and construction of a widely
acclaimed private sector incubator for technology-related business. As a principal of
Qroe Farm Preservation Development, Hamilton led project design, entitlement, and
construction efforts for Bundoran Farm in Charlottesville, Virginia, widely regarded
as a model for sustainable development. He speaks and writes on the role of private
sector development in the management and preservation of large-scale working
landscapes, and the implications of exurban development on agricultural land uses. As
chief operating officer of Qroe’s affiliate Geobarns, he has been recognized as a
leader in the development of new models of sustainable, affordable homebuilding and
light commercial construction.
Hamilton has contributed to various ULI publications on topics ranging from inner-
ring suburban regeneration to conservation development strategies. He teaches
introductory real estate finance and development courses and advises design students
on project economics at Harvard University’s Graduate School of Design. He is a
graduate of Middlebury College and Harvard University, where he cowrote The
Harvard Project on the City: Lagos.Hamilton lives in Middlebury, Vermont.
Authors
PRIMARY AUTHORS
Richard B. Peiser
Michael D. Spear Professor of Real Estate Development
Harvard University Graduate School of Design
Cambridge, Massachusetts
David Hamilton
Principal
Qroe Farm Preservation Development
Boston, Massachusetts
CONTRIBUTING AUTHORS
Sofia dermisi
Professor of Real Estate and Pasquinelli Family Distinguished Chair
Walter E. Heller College of Business
Roosevelt University
Chicago, Illinois
Alex duval
Director
Portman Holdings
Atlanta, Georgia
Nick A. Egelanian
Founder and President
SiteWorks Retail Real Estate
Annapolis, Maryland
PRIMARY CONTRIBUTING AUTHORS, PREVIOUS EDITIONS
Ken Beck
Senior Vice President
ASW Realty Partners
Woodland Hills, California
Anne B. Frej
Real Estate and International Development Consultant
Santa Fe, New Mexico
Dean Schwanke
Senior Vice President
Urban Land Institute
Washington, D.C.
Frank Spink
Principal
Spink Consultancy
Annandale, Virginia
ADDITIONAL CONTRIBUTORS
James McCandless
Vice President
Streetsense
Bethesda, Maryland
William Shewalter
Principal
Vistacor Development Company
Boca Raton, Florida
Paul Vogel
Executive Vice President
RDR/SiteWorks
Chicago, Illinois
ULI STAFF CONTRIBUTORS
Adrienne schmitz
Senior Director, Publications
Ronnie Hutchinson
Intern
REVIEWERS
Heather Arnold
Director of Market Analysis
Streetsense
Bethesda, Maryland
Ryan Beible
Senior Construction Manager
First Potomac Realty Trust
Bethesda, Maryland
David Falk
Senior Fellow
School of Public Policy
University of Maryland
College Park, Maryland
David Farmer
Managing Principal
Keystone LLC
Naples, Florida
Roy Higgs
Chairman Emeritus
Development Design Group, Inc.
Baltimore, Maryland
Nick Javaris
Cofounder
Terranomics Retail Services
San Francisco, California
Jeff Kingsbury
Managing Principal
Greenstreet, Ltd.
Indianapolis, Indiana
Steven LaPosa
Assistant Professor, Finance and Real Estate
Colorado State University
Fort Collins, Colorado
Tom Moriarty
Principal
The Eisen Group
Washington, D.C.
H. Pike Oliver
Senior Lecturer in City and Regional Planning
College of Architecture, Art and Planning
Cornell University
Ithaca, New York
Yaromir Steiner
Chief Executive Officer
Steiner + Associates
Columbus, Ohio
STUDENT REVIEWERS
Jeremy Hoffman
J. Matthew Ritz
John sheff
Carolina Uechi
Graduate School of Architecture, Planning & Preservation
University of Maryland
Contents
Preface
Acknowledgments
1 | INTRODUCTION
What Is a Developer?
The Book‘s Approach and Objectives
Requirements for success
Paths for Entering the development Field
Finding the First deal
A Use Looking for a Site
A Site Looking for a Use
Improving the Chances of Successful Development
Managing the development Process
Real Estate Cycles
Getting Started
Stages of Development
Conclusion
2 | ORGANIZING FOR DEVELOPMENT
Forming Partnerships
The Firm‘s Organization and Management
Organizational Life Cycles
Organizational Structure
Compensation
Strategic Planning
Choosing Consultants and Contractors
Locating a Consultant
Selecting a Consultant
Rates
Working with Consultants
The Design/Construction Team
Architects
Landscape Architects
Land Planners
Engineers
Soils Engineers
Environmental Consultants
Surveyors
Parking and Traffic Consultants
Asbestos Abatement Professionals
Construction Contractors
Real Estate Service Firms
Market Consultants
Appraisers
Attorneys
Title Companies
Surety Companies
Brokers/Leasing Agents
Public Relations and Advertising Agencies
Property Management
Lenders
Sources of Financing for Real Estate Projects
Commercial Banks
Savings and Loan Institutions
Insurance Companies
Pension Funds
Foreign Investors
Syndications and Real Estate Investment Trusts
Private Equity Investors and Joint Ventures
The Bond Market and Commercial Mortgage-Backed Securities
Credit Companies
Mezzanine Debt
Construction Lenders
Mortgage Bankers and Brokers
Permanent Lenders
Conclusion
3 | LAND DEVELOPMENT
Overview
Subdividing Land
Land Development versus Building Development
Project Feasibility
Market Analysis before Site Selection
Site Selection and Acquisition
Market Analysis after Site Selection
Regulatory Process
Financial Feasibility Analysis
Design and Site Planning
Evolution of Subdivision Design