ABSTRACT
As the saying goes, real estate is all about “location, location, location,” although that axiom is really a shorthand for the required level of investigation to determine a suitable site for a particular project. Strategically locating a successful real estate project is dependent on three inquiries: demographics, market research and local politics. Developers can easily become deal junkies—chasing deal after deal without any real evidence to support their vision. Invest in research first. Collecting and critically evaluating market research on construction costs, rents, absorption timing for new units (how quickly they will be rented after completion and start generating income), operating expenses and proposed competing developments in the same submarket help to avoid the “build it and they will come” trap which can lead to a poor or disastrous financial outcome. Once a site is located and before putting the property under contract, an exploratory meeting with the city council person from the area and with the planning department will help uncover any bias against the proposed project, and they will likely require subsequent meetings with affected homeowner groups. Come prepared with renderings and a summary of how the project will benefit the community, and avoid being defensive. Even if the proposed project is to be developed on land zoned for the intended use, local officials have a number of political, bureaucratic and administrative means at their disposal to hamper or delay a project that is opposed by area homeowners, such as refusing to approve plats or site plans or requiring impact fees, traffic studies and infrastructure enhancements.
