Real Estate Development, Explained
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Date: 2023-08-26
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Comments and reviews: 19
Al
For all the whinging and whining planners do about the built environment and how evil developers are, it shocks me how few of them understand development or the fact that developers are the ones that actually make the built environment.
When I was going through grad school (for urban planning, I took a real estate development course offered by the business school that was a pretty even mix of MBA students, architecture students, and planning students. The prof had what he called the Circle of Risks, a series of 15 things that could completely scuttle a development project (and if you made it to the end/beginning point of the circle you had a successful development and were in a position to start again on a new one. Of the 15 things in that circle, he made a point of highlighting the fact that there were three things of the 15 that planners had any influence over, and those didn't come up until 7, 8, and 9 in the circle.
The places with planners that understand the whole development process and the potential pitfalls tend to be successful places. The ones that don't find themselves consistently passed over by developers as hard to work with.
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For all the whinging and whining planners do about the built environment and how evil developers are, it shocks me how few of them understand development or the fact that developers are the ones that actually make the built environment.
When I was going through grad school (for urban planning, I took a real estate development course offered by the business school that was a pretty even mix of MBA students, architecture students, and planning students. The prof had what he called the Circle of Risks, a series of 15 things that could completely scuttle a development project (and if you made it to the end/beginning point of the circle you had a successful development and were in a position to start again on a new one. Of the 15 things in that circle, he made a point of highlighting the fact that there were three things of the 15 that planners had any influence over, and those didn't come up until 7, 8, and 9 in the circle.
The places with planners that understand the whole development process and the potential pitfalls tend to be successful places. The ones that don't find themselves consistently passed over by developers as hard to work with.
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Cristal3
This is giving me a headache, because I am trying to look at it from an accessibility perspective. How does the market address the needs of disabled people in a system like this? The ability to find and retain a job are correlated to the ability to find suitable housing. No housing, no job. No job, no housing. So disabled people will inevitably get the short end of the stick. What I do see is that some housing (usually social housing) gets reserved for disabled people, but I don't find a lot of enthusiasm for universal housing codes (where accessible building standards are enforced nationwide. However, I see the later as a great tool to guarantee all homes are accessible to disabled people.
PS. I am Dutch. So maybe the ADA already addresses this problem.
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This is giving me a headache, because I am trying to look at it from an accessibility perspective. How does the market address the needs of disabled people in a system like this? The ability to find and retain a job are correlated to the ability to find suitable housing. No housing, no job. No job, no housing. So disabled people will inevitably get the short end of the stick. What I do see is that some housing (usually social housing) gets reserved for disabled people, but I don't find a lot of enthusiasm for universal housing codes (where accessible building standards are enforced nationwide. However, I see the later as a great tool to guarantee all homes are accessible to disabled people.
PS. I am Dutch. So maybe the ADA already addresses this problem.
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Chandler
Great video. It really gives some good insight into what work a developer does even before a project becomes public knowledge. I would be very interested in hearing more about the difficulties that can arise between developers and cities.
I have recently reviewed a proposed development where the developers wanted to bend a lot of the standards the city has in place in order to allow for more homes to be built.
The project is still being studied before the city council votes on it but many worry about the precedent it could set. If the city is willing to waive some of its requirements for this development, what about others in the future.
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Great video. It really gives some good insight into what work a developer does even before a project becomes public knowledge. I would be very interested in hearing more about the difficulties that can arise between developers and cities.
I have recently reviewed a proposed development where the developers wanted to bend a lot of the standards the city has in place in order to allow for more homes to be built.
The project is still being studied before the city council votes on it but many worry about the precedent it could set. If the city is willing to waive some of its requirements for this development, what about others in the future.
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kopshi
I'd been researching real estate development and developers a lot recently and it really bothers me to see so many people so vindictive about them and their role in the market. By and large, they are bound like string by the whims of NIMBYs and municipal legislation, are the riskiest ventures in the entire real estate industry, and work off of the impossibly thin margins of modern construction expectations. The fact that it's so common for people to dismiss them or outright call for their disbanding when they are the most critical element of housing is disheartening.
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I'd been researching real estate development and developers a lot recently and it really bothers me to see so many people so vindictive about them and their role in the market. By and large, they are bound like string by the whims of NIMBYs and municipal legislation, are the riskiest ventures in the entire real estate industry, and work off of the impossibly thin margins of modern construction expectations. The fact that it's so common for people to dismiss them or outright call for their disbanding when they are the most critical element of housing is disheartening.
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Trevor
I guess this is part of the point, but what struck me as unrealistic here was the presence of an already suitably zoned plot, so no need for re-zonning.
In my city at any rate, there are plenty of residential developers who want to build, but all the empty lots are either zoned for agriculture or some kind of comercial/business.
Now the city is pretty cool with them putting mixed used in those commercial plots, but the developers are all residential specialists so either shy away or try to pull shenanigans were it's mixed use on paper, but not really.
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I guess this is part of the point, but what struck me as unrealistic here was the presence of an already suitably zoned plot, so no need for re-zonning.
In my city at any rate, there are plenty of residential developers who want to build, but all the empty lots are either zoned for agriculture or some kind of comercial/business.
Now the city is pretty cool with them putting mixed used in those commercial plots, but the developers are all residential specialists so either shy away or try to pull shenanigans were it's mixed use on paper, but not really.
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travel
Cities/states need to take over.
This system was built by the landlord class.
We are failing to promote the general health and welfare of Americans by protecting the prospects of even greater wealth for would be lords. Enough already.
Cities/states should provide extremely low interest home loans to 1st time buyers and
rental income should be taxed at 90%.
This is war.
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Cities/states need to take over.
This system was built by the landlord class.
We are failing to promote the general health and welfare of Americans by protecting the prospects of even greater wealth for would be lords. Enough already.
Cities/states should provide extremely low interest home loans to 1st time buyers and
rental income should be taxed at 90%.
This is war.
reply
Gamarabi
I work I this industry and this is a great intro into the process. In general, the more predicable the process is, the more we can afford to pay for sites from locals and the less profit margin we need to consider a project viable.
Honestly, real estate development isn t that different than running a restaurant, you just cook and sell real estate instead of food.
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I work I this industry and this is a great intro into the process. In general, the more predicable the process is, the more we can afford to pay for sites from locals and the less profit margin we need to consider a project viable.
Honestly, real estate development isn t that different than running a restaurant, you just cook and sell real estate instead of food.
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Kareem_
I was friends with a developer in Canada who builds large apartment buildings for rentals. I asked him if he ever did any market studies before starting a new project and he said no. If he is able to get the loans, he builds.
I found it bizarre but he is very successful so I guess it works for him.
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I was friends with a developer in Canada who builds large apartment buildings for rentals. I asked him if he ever did any market studies before starting a new project and he said no. If he is able to get the loans, he builds.
I found it bizarre but he is very successful so I guess it works for him.
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elijah1370
It would be great to make a video about how affordable housing can be built in this process through public and private AH initiatives like tax credits and programs. This adds another layer of complexity to this process but is a necessary part of addressing the current affordable housing crisis.
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It would be great to make a video about how affordable housing can be built in this process through public and private AH initiatives like tax credits and programs. This adds another layer of complexity to this process but is a necessary part of addressing the current affordable housing crisis.
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elizabeth
Has anyone ever watched school of life video how to build an attractive city it s the only city planning video the ever done so I suspect it was a recap of a book. I would appreciate it if someone could tell me that videos original source material so I could read it
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Has anyone ever watched school of life video how to build an attractive city it s the only city planning video the ever done so I suspect it was a recap of a book. I would appreciate it if someone could tell me that videos original source material so I could read it
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Angry
Real Estate Developers don't build cities. Construction workers build cities. The developers collude with contractors to steal the vast majority of the value the workers create in exchange for pushing a few papers around. Glad I could clear that up for you.
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Real Estate Developers don't build cities. Construction workers build cities. The developers collude with contractors to steal the vast majority of the value the workers create in exchange for pushing a few papers around. Glad I could clear that up for you.
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Chris
I don't think I've ever heard anyone talk about a 3/1 or 4/1 building. 5/1 usually means it's Type V - Ordinary Construction over Type I - Non-Combustible Construction. The number of floors doesn't really matter. It's construction types that do matter.
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I don't think I've ever heard anyone talk about a 3/1 or 4/1 building. 5/1 usually means it's Type V - Ordinary Construction over Type I - Non-Combustible Construction. The number of floors doesn't really matter. It's construction types that do matter.
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kidnamedfinger
along with private developers, there should be a well funded state or federal owned housing development company in the united states if we ever want to help end the housing shortage. the profit motive won t end homelessness.
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along with private developers, there should be a well funded state or federal owned housing development company in the united states if we ever want to help end the housing shortage. the profit motive won t end homelessness.
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George
Great video! This was really interesting. I have a question. I live in Pittsburgh and there are a lot of abandoned houses and empty lots where houses use to stand. What does it take for these left behind parcels to get developed?
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Great video! This was really interesting. I have a question. I live in Pittsburgh and there are a lot of abandoned houses and empty lots where houses use to stand. What does it take for these left behind parcels to get developed?
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Hazmat0
It's easy! Step 1: Make as much money as possible by only building the maximally profitable type of unit as cheaply as possible, then charging as much as possible.
Step 2: There is no step two.
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It's easy! Step 1: Make as much money as possible by only building the maximally profitable type of unit as cheaply as possible, then charging as much as possible.
Step 2: There is no step two.
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Aaron
City Beautiful should do a video on the roadblock/huddles skyscrapers face. It's tragic that these incredibly space efficient buildings are so heavily regulated and restricted throughout the world.
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City Beautiful should do a video on the roadblock/huddles skyscrapers face. It's tragic that these incredibly space efficient buildings are so heavily regulated and restricted throughout the world.
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Major
5: 27 in North America maybe. I know of exactly 1 wood frame multi family building in my city and that's a new trendy high rise. Everything else is concrete or bricks
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5: 27 in North America maybe. I know of exactly 1 wood frame multi family building in my city and that's a new trendy high rise. Everything else is concrete or bricks
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burgerman
We need to build more housing, ban people from owning more than one property, and prevent people from having too many children to fix the housing crisis.
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We need to build more housing, ban people from owning more than one property, and prevent people from having too many children to fix the housing crisis.
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OwlBear33
the fact you use a Monopoly board as a way to represent all this is super funny, given the game started as a critique of the rent system
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the fact you use a Monopoly board as a way to represent all this is super funny, given the game started as a critique of the rent system
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