Real Estate Development and Investment: A Comprehensive Approach

225 Pages·2009·5.69 MB·English

by  S. P. Peca

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Real Estate
Development
and Investment
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Real Estate
Development
and Investment
A Comprehensive Approach
STEPHEN P. PECA
John Wiley & Sons, Inc.
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Copyright#2009byStephenP.Peca.Allrightsreserved.
PublishedbyJohnWiley&Sons,Inc.,Hoboken,NewJersey.
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LibraryofCongressCataloging-in-PublicationData:
Peca,StephenP.
Realestatedevelopmentandinvestment:acomprehensiveapproach/StephenP.Peca.
p. cm.—(Wileyfinanceseries)
Includesindex.
ISBN978-0-470-22308-6(cloth)
1. Realestatedevelopment. 2. Realestateinvestment. II. Title.
HD1390.P43 2009
333.33—dc22 2008047052
PrintedintheUnitedStatesofAmerica
10 9 8 7 6 5 4 3 2 1
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Contents
Preface ix
Acknowledgments xiii
CHAPTER1
OverviewoftheDevelopmentProcess 1
EconomicPerspective 1
RelevancyofUniversalKnowledge 6
Ground-UpDevelopmentversusRedevelopment 14
TheSixPhasesofDevelopment 15
CHAPTER2
BusinessEthics 21
RelevancytotheRealEstateIndustry 21
LegislatedEthics 24
CHAPTER3
ProjectandDevelopmentTeams 29
TypesofDevelopers 29
FunctionalDisciplinesintheDevelopmentProcess 30
FactorstoConsiderWhenFormingaDevelopmentTeam 34
CHAPTER4
HistoricalPerspectiveofRealEstateDevelopment 38
TheBeginningsofRealEstateDevelopment 38
MajorEventsCausingChangeintheUnitedStates 45
CHAPTER5
MarketResearch 51
InceptionoftheIdea 51
Markets,MarketResearch,andMarketing
(AnalysisofDevelopmentPotential) 52
v
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vi CONTENTS
ConceptsThatDefineMarketing(andMarkets) 56
UsingMarketStudiesandPreparingforMarketability
Studies 58
SourcesofandMethodsforGatheringInformation 62
FlawsofaStudy 63
ValidatetheDataandtheImportanceofRevisions
andUpdates 64
CHAPTER6
MarketabilityStudies 65
ShowingThatYourDevelopmentConcept
CouldandShouldBeBuilt 65
ImportanceofMarketabilityStudiesRevisited 68
IdeaRefinementandtheApplicationofthe
MarketabilityStudy 69
TheProcessofIdeaRefinement 69
CHAPTER7
LandAcquisitionandControl 74
NonspatialandSpatialMarkets 76
ElementsofDesign 77
TargetMarketsandMarketShare 79
SiteControlandAcquisition 81
PublicandPrivateRestrictionsonLandUse 86
CHAPTER8
LandPlanningandSiting 91
ValueCreation 91
ProjectProgrammingandDesign 95
ElementsofDesign—Again 95
TalkingtoEndUsers 95
TenantMixandMarketability 96
ABriefWordaboutArchitecturalDrawings 103
CHAPTER9
EntitlementProcessandPublic-PrivatePartnerships 105
TypicalCommunityApprovalProcess 105
Public-PrivatePartnerships 107
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Contents vii
CHAPTER10
Budgeting,FinancialAnalysis,andCapitalStructure 113
PreparingfortheFinancialAnalysisandProForma 113
TheDevelopmentBudget 114
TheOperatingProForma 115
ReviewofCommonAnalyticalMeasurements 115
FinancingandtheCapitalMarkets 119
Short-andLong-TermFinancing 122
FinancingCycle—AnticipatingRequirements 126
ElementsofaFeasibilityStudyorDealBook 127
Guarantees 132
CHAPTER11
Contractors,Consultants,andConstructionContracts 134
BudgetingandScheduling 134
ContractorsandConstructionContracts 135
RiskManagementduringConstruction 136
PreparingforConstruction:BidProposalsandReview 138
ConstructionDocumentsandConstructionAgreements 139
RiskManagement:Part2 141
Scheduling 142
BondingandInsurance 142
ConstructionMonitoring:DrawMeetings,
ManagingChangeOrders 145
TenantImprovementsandCoordination 148
ConstructionCloseout 149
CHAPTER12
LeasesandHowTheyAreUsed 151
ValueCreation 151
WhatIsaLease? 151
CommonLeaseStructures 152
LeaseManagementandAnalysis 154
CHAPTER13
MarketingFocusofDevelopment 157
KnowYourTargetAudience 157
YourEssentialVision 160
TheImportanceofBranding 161
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viii CONTENTS
Image,Identity,andCommunication 161
ComponentsofMarketingCenters 162
CHAPTER14
InvestmentManagement 164
FunctionandGoalofPropertyManagement 166
FunctionandGoalofAssetManagement 167
FunctionandGoalofPortfolioManagement 168
PropertyLifeCycle 169
CHAPTER15
TheFuture 171
RecentHistory—WhereWeLeftOff 171
ApparentFutureTrends 173
GreenDevelopmentandSmartGrowth 174
SocialResponsibilityandEthics 177
Glossary 179
Index 201