Dr.부동산
[부동산개발론] Real Estate Developement 5th Edition CH.12 요약 본문
CH.12 Stage Two : Idea Refinement
OBJECTIVES OF STAGE TWO
- Creating a plan
- Controlling the Site
- (Figure 12-1) Activities Involved in Refinement of the Idea
A MORE DETAILED SCAN OF THE ENVIRONMENT : GOVERNMENTS AND COMPETITORS
URBAN GROWTH MODEL
+ CASE STUDY : Irvine Tech Center at Stage Two
|
IRVINE TECHNOLOGY CENTER Location: Irvine Technology Center, Irvine, CA Transaction Highlights: Purchased an off-market, redevelopment / land assemblage opportunity with an institutional capital partner At the time of acquisition, the project was 100% occupied with varying lease expirations Initial purchase included 12 buildings and 250,000 square feet of flex-office situated on a 20 acre site located at the highly visible corner of Jamboree Road and Campus Drive (less than 1 mile from the John Wayne Airport, and the University of California at Irvine) From 2005 to 2013, the property was leased and provided sustainable cash flow for investors. During this time, Greenlaw navigated through the re-entitlement process to allow for development of up to 1,600 residential units and supporting retail. In December of 2012 Greenlaw acquired the adjacent 3.5 acres site for $12.5M which brought the total assemblage of the project to 23 acres In 2013, Greenlaw agreed to sell the entire project to a national apartment builder in a two-phased closing at $81,000 per door resulting in a total sale price of $129.6M. Phase 1 of the sale closed in 2013, which included 10 acres of land and 5 buildings Phase 2 closed in May 2015, which includes 13 acres of land and 7 buildings Upon closing, Greenlaw Partners and its institutional partner are obtained a net profit of $57M. |
CHOOSING THE SITE
- Types of Buyers
- Types of Sellers
- The Deal
- Information Sources
+ Preliminary Due Diligence Checklist
The Site's Physical Characteristics
- Usable Area
- Geology
- Hazardous Materials
- Cultural Resources
- Infrastructure
+Moving the Needls of Sustainability
The Site Development Rights
+ CASE STUDY : Shortbread Lofts at Stage Two
+ Woodward's : A Site Looking for Use
INITAL FEASIBILITY
NEGOTIATING FOR THE SITE
STAGE TWO PARTICIPANTS
- Contractors
- End Users
- Property Managers
- Lenders
- Inventors
- The Public
SEGMENTING THE MARKET AND DIFFERENTIATING THE PRODUCT
FINANCIAL FEASIBILITY
+ULI Credo
+ Site Eveluation Factors
RISK CONTROL DURING STAGE TWO
SUMMARY
TERMS
REVIEW QUESTIONS
--- Contents :
Stage Two : Idea Refinement
The ideas formulated in stage one come in different packages. They may be a new type of development or a refinement of an existing product. Retail developers adapt their product to shifting consumer demands, and homebuilders update their models to reflect current tastes. In such situations, a developer may encounter a site with unique location or economic charateristics, perhaps a site that has been vastly underutilized. Montage Laauna Beach, for example, is a high-end resort on a spectacular ocean-front site in Lanuna Beach, California, that had been a trailer park. This was a site looking for an idea.
Most ideas do not survive even stage one. For qualitative or quantitative reasons, they cannot rise to fulfill the original version, or they die in red ink on the back-of-the-envelope figures show promise. When that happens, the process moves to stage two : idea refinment.
One of the biggest challenges at this point is effective communication of the project concept. Once built, real estate is tangible, and most people can relate to an example of an existing building. In the concept stage, the project exists only in the mind of the developer and is expressed in spreadsheets, drawings, and studies. These media are often inadequate for communication to all but experienced professionals, and the communication hurdles are even greater for projects that lack a direct market analogue. At this point, the developer is usually not willing to spend a great deal on sophisticated computer simulations or graphic communication devices, so the advancement of the concept falls to his ability to convey that the project's merits to portential team members. This is a key skill; in the ears of the listener, there is fine line between effective communication and shallow promotion.
In stage two, ad developer can solicit input to refine the idea. The object at this point is to indentify the critical assumptions, modify them as appropriate, and prepare them for validation through the due diligence process. Idea refinment is complex because many activities are carried out simulataneously and interactively. Essentially, all of the disciples and considerations that go into the determination of feasibility move forward at similar pace (Figure 12-1 attempts to capture this complexity.) The answer to the overarching question - is this idea feasible on this site? - is conditioned on the answer to multiple questions posed at about the same time but not always answerable quickly, completely, or at all.
OBJECTIVES OF STAGE TWO
Considering the complexity of stage two, the phrase "refining the idea" os deceptively simple: the developer's idea either evolves into a feasible concept ofr a specific piece of land or is abandonded before marking large, unrecoveralbe expenditures. The developer moves from, for example, the idea of an office building for tech firms in a particular geographic submarket to the preliminary design for a 100,000-sqare-foot, four-story office building with specific characteristics.
Finding and contolling the right site while marking and initial determination of a projects's feasibility are premary tasks of stage two Associated with these primary physical tasks are marketing, financial, and construction management discilplines, which combine with the site selection to allow the developer to feel reasonably confident at the end of stage two about the project's feasibility. This comfort level permits a significant increase in resource commitment by the developer during the next stage. In stage two, it is the developer who must be convinced of the projects's feasibility because it is largely his own funds that will be put at risk during stage three to convince the other participants of the projects's viablity.
Creating a plan
For ideas that were not associated with a specific site in stage one, creating a plan for land acquisition is the first task of stage two. In the process of finding a site and specifying a proposed projects, developers undertake many, if not all, of the following tasks simulatneously:
- Analyzing the areas or neighborhoods in the market that might offer an appropriate site;
- Analyzing the competition - both competing developement companies and competing projects - and refining the idea to maximize the project's competitive position;
- Discussing the projects with elected and appointed officials and city planners to ascertain their interests and any possible constraints on the project;
- Determining initail design requirements for the sites;
- Analyzing potential sites to identify one that best satisfies the criteria;
- Negotiating for the selected site and stucturing a contract to secure the site; and
- Contiuing to refine finanacial feasibility - prriodically retesting the back-of-the-envelope numbers.
Completion of these tasks culminates in a decision to move idea to stage three (formal feaibility), rewok the concept, or abandon the idea.
Developers must tolerate some disorder and uncertainty as they bring an idea to reality. Each developement requires a slightly different approach, and the work does not provide the certainty of a manufacturing process. Sometimes devlopers press hard and commit substantial resources early in stage two. At other times, they let certain politial pressures "work themselves out" before proceeding. Still, at some point, the developer must acquire control of the land, make contract with other potential members of the development team, and undertake initail project design. There are often good reasons to deviate from the sequence outlined in the eight-stage model. For example, one site might be far superior to all others and the owner might wnat to sell only for ash. At the right price, the developer may be smart to close on the land without having done all the work described in stage two and three. Still, it is important to memeber that developers frequently incur penalties - throught increased risk or decreased reward - when tasks are completed too far out of the logical sequence of the development process.
Controlling the Site
In the accquisition process, risk and return considerations are critical. It is cometimes appropriate to acquire a site for cash at a lower cost; however, this potential savings conflicts with th desire to control the level of financial risk early in the development prosess. The dilemma: the developer should tie up a site before fully demonstrating its feasibiliy to capture the maximum profit on the band. But if the project proves infeasible, the developer may have to resell the land at a lower price and with significant transaction cost. Consequently, developers typically use some type of an "option to buy" to tie up a site during stage two. (see "Negotiating for the Site" in this chapter)
For each property type, there are geneal rules of thumb for how land should cost as a percentage of totla cost or as a per-unit cost. Still, there is no universal rule: the readiness of the land for development in terms of entitlements, infrastructure, and remediation are all factors that give reise to wide variances. Location is the most obvious consideration, but one that varies according to land use. One approach that developers may employ in stage two is a land residual analysis. This calculation arrives at land value by determining the value of the improvements to be consturcted on the land and deducting the direct and indirect costs constructing those improvements.
The public sector influences the developer's site selection decision. Regulations usually set forth a process by which land uses can be changed, but the costs(and likelihood of success) vary considerably from one jurisdiction to another.
A MORE DETAILED SCAN OF THE ENVIRONMENT : GOVERNMENTS AND COMPETITORS
Developers need to understand the ways in which evolving local politics and regulations are likely to affect the viability of their projects. They need to forge and maintain relationships with city officials, politicians, and the general public. Understanding the human and organizational sides of the public sector is as important as udnerstanding the physical infrastructure, interactive land uses, and urbna growth patterns.
Competition, regulation, and politics are all subject to contiuous change. A developer might find an apparent opportunity for development only to confront rigid opposition from the public sector. For example, a market of r apartments might exist simply because area residents successfully opposed previous project proposals. Or the local council or planning board might decide to limit aprment constuction as part of strategy for avoiding perceived advers impacts on a neighborhood. In other instances, constraints imposed through building coed could represent more subtle impediments to development. Lengthy projects reviews might prevent a developer from retaining site control at an affordable price. Infrastructure might appear to be adequate, but other projects scheduled for completion before the developer's proposed subject could consume available service capacity and lead to moratoriums on new development. New impact fees and exactions may reduce a project's profitabillity below the level needed, given its percieved riskiness.
It is essential that developers know the projects, financial depth, and political clout of thier competitors in the local markent. A developer might perceive an opportunity to build apartments in a submarket, only to find that an established apartment developer with solid political connections and a favorable public image is already planning such a project. Unless the new entrant can clearly distinguish its project from those of esablished developers, the newcomer might be well advised to find another submarket, as he could be at a regulatory competitive disadvantage relative to the locally established dveloper.
URBAN GROWTH MODEL
+ CASE STUDY : Irvine Tech Center at Stage Two
CHOOSING THE SITE
- Types of Buyers
- Types of Sellers
- The Deal
- Information Sources
+ Preliminary Due Diligence Checklist
The Site's Physical Characteristics
- Usable Area
- Geology
- Hazardous Materials
- Cultural Resources
- Infrastructure
+Moving the Needls of Sustainability
The Site Development Rights
+ CASE STUDY : Shortbread Lofts at Stage Two
+ Woodward's : A Site Looking for Use
INITAL FEASIBILITY
NEGOTIATING FOR THE SITE
STAGE TWO PARTICIPANTS
- Contractors
- End Users
- Property Managers
- Lenders
- Inventors
- The Public
SEGMENTING THE MARKET AND DIFFERENTIATING THE PRODUCT
FINANCIAL FEASIBILITY
+ULI Credo
+ Site Eveluation Factors
RISK CONTROL DURING STAGE TWO
SUMMARY
TERMS
REVIEW QUESTIONS
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