ABSTRACT
This chapter proposes two straightforward economic and financial techniques that can account for interactions between project design, development, and regulation: cost driven analysis and market-driven analysis. Although real estate markets are not very efficient, it is rare that cost-driven analysis will generate rents below current market rents or that market-driven analysis will provide sufficient cash to cover the asking price of the land. For preliminary analysis of a development project proposal, the static approach of market-driven and cost-driven techniques can show whether the project concept is in the ballpark. The development program explains the nature of the proposed project, including its type and size, its site, the applicable development regulations, its design, and salient budget issues. Those who comprehensively preview the impacts of a project and then revise components interactively to improve feasibility before final decisions are made increase their chances of satisfying design, development, and regulatory feasibility requirements.
