You're evaluating a commercial real estate development project. What factors should you prioritize?

The project's location significantly impacts its success, dictating demand, competition, and regulatory considerations. Thorough market research into local conditions, demographics, trends, and opportunities is essential. Evaluate accessibility, visibility, and connectivity, along with the availability of infrastructure, utilities, and amenities. A comprehensive understanding of these factors ensures informed decision-making and maximizes the project's potential for success.

Esta es la máxima en Real Estate, pero ojo, la ubicación implica más que estar en un lugar bonito o demandado. Cada ubicación lleva consigo factores como: el riesgo, los costos asociados o las regulaciones, por ejemplo.

-Location is everything. Ensure you're fully informed about each corridor and sub-market so that you're underwriting with real #'s. Does the surrounding area support/need a development such as this, is there competition now or will there be in the future? -Diligence: Verify zoning/variances, any encumbrances, Phase 1's, soil tests. -Underwriting: Maintain conservative underwriting- account for all holding costs, possible delays, and get all construction priced out. -Construction: Operate with an embedded sense of urgency. All permit/application materials need to be reviewed to avoid error and submitted asap. Execute quality construction with quality materials- crucial if you plan to keep it. -Leverage the best agents/agencies for lease-up.

Conducting a financial analysis for the project entails estimating costs, revenues, and returns. Prepare a comprehensive budget, cash flow, and pro forma statement, encompassing all expenses and income sources. Calculate key financial indicators like net present value, internal rate of return, and debt service coverage ratio to gauge profitability and risk. Thorough financial analysis informs decision-making and ensures the project's financial viability and success.

Financial Feasibility - Conduct a thorough financial analysis to determine the project's feasibility and potential return on investment. This includes estimating development costs, projected rental or sales income, operating expenses, financing terms, and projected cash flows. Calculate key financial metrics such as net present value (NPV), internal rate of return (IRR), and return on investment (ROI) to assess the project's profitability.

The design and construction phases significantly influence the quality, functionality, and appeal of the property. Evaluate architectural, engineering, and environmental aspects of the design, along with construction materials, methods, and standards. Consider project timeline, scope, and quality control, addressing potential risks, challenges, and contingencies. Comprehensive evaluation ensures adherence to standards, minimizes risks, and enhances the overall success of the development process.

The legal and regulatory compliance of the project involves ensuring that the project meets the requirements and obligations of the relevant authorities and stakeholders. You need to review the zoning, planning, building, and environmental laws and regulations that apply to the project, as well as the permits, licenses, and approvals that are needed to proceed with the development. You also need to assess the legal risks, liabilities, and disputes that may affect the project, and how to mitigate them.

Lo que puedes o no hacer legalmente es una condicionante fundamental a revisar antes de embarcarte en cualquier proyecto. Por ejemplo, por mucho que adquiera un inmueble para colocarlo en el "short-term", si la zonificación o el edificio no te lo permiten, tendrás que cambiar de estrategia comercial.

Have your legal team in place early doors. Understand your position and options early doors. Have your trusted advisors on hand throughout the process

Mi recomendación es apoyarse en un manager que se encargue de gestionar todo lo referente a la promoción y arrendamiento del inmueble. Evidentemente es un porcentaje que debes tener en cuenta a la hora de hacer el cálculo financiero de tus posibles retornos.