June 10, 2015
Three Steps to Development Success
Last week, I attended a graduation ceremony where the keynote speaker revolved her valedictorian speech around this Dr. Seuss quote. She advised on how they can go any direction they chose in life, and by being smart about their decisions, they can pass on paths that lead to dead ends, and opt for paths that will lead to success more quickly.
Tying this speech to my own personal life and career at Faith Technologies, when investing in new developments, this analogy could not be truer. Whether you are looking for the perfect building or expansion site, there are many roads you can go down, some good and some bad, and you need to be smart and disciplined about applying your metrics for success to areas like site location, site access and site quality.
- Site Location: If you get this wrong, your development will be dead in the water. You need to ask yourself questions like, “What is attractive about this location for the future tenants or users, or is it logical to build here?” The answer to these questions is very different for a convenience or retail outlet than it would be for a cellular communications tower or a multifamily development, for example. A convenience store needs high visibility and easy access; a cellular communications tower site needs high POPs (population base) in an area that has carriers clambering for coverage; and a multifamily development facility needs to be close to schools, parks and other family amenities. It’s important to consider strongly why future tenants would want to buy, rent or lease your space.
- Site Accessibility: This is weighted differently based on the needs of the user. Consumers of cellular services, for example, don’t want dropped calls and want to be able to stream video without interruption. If that means a cell tower will be located up on a hill a quarter mile off the road that does not matter to them – only the coverage does. That is just the opposite for the convenience store or retail outlet. They want to capture the consumer with flashy signage in an area that has been developed with easy access off a main thoroughfare, or busy highway to attract their customers.
- Building Site: Often one of the most overlooked metrics in development is understating the constraints of the building site. Phase 1 environmental studies and soil borings will expose a lot about the past use of the site, its limitations due to property line setbacks and land features, and the quality of the soils and subgrade required to build a foundation upon. What is discovered during these studies will not preclude you from starting a development (unless the site was an ancient burial ground or toxic waste dump), but they could add significant cost to your project that may drastically change your financial pro forma or building design.
Developing a list of metrics that will make your development or expansion a success is imperative before you begin a search for the right location. Always know what your exit strategy is and insure that your development plans fall in line with the future sale and long term use of the property.
Falling in love with a piece of property and not measuring it against the success factors is not using your “head full of brains” and could mean disaster for the development. Will you succeed? Yes, you will indeed! (98 and ¾ percent guaranteed) – as Dr. Seuss would say.