Download IDL Cottage Site Disposition Process

November 30, 2010
The Importance
of Thinking
Strategically
Tribal Development Seminar
Steve Walker, Managing Director
Heartland, LLC
Pursuing development strategically includes
employing a rigorous methodology to evaluate and
manage the develop process. The most successful
developments are visionary, creative, carefully
planned and effectively implemented.
Real estate development plans are business plans and
should function as a road map, stating what the
destination is, describing the process to get there, and
anticipate and prepare for when roadblocks arise and
detours are required.
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Thinking Strategically

Context

Clear Vision and Project Objectives

Measurable Goals

Due Diligence/Feasibility Process

Design and Development Team

Implementation Process

Management Tools
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Context
Past development practices:

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Design of infrastructure and building systems
predominantly by engineering community.
Focus – optimizing efficiencies of land plan, roads,
utilities and buildings.
Market, operations and financial analysis and
aesthetics often secondary.
Overriding emphasis on costs, sourcing financing and
construction.
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Context
Forward development practices:
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Development focus broadened to address social,
cultural, economic, ecological, community and
lifestyle issues.
Financial performance – initial, mid-term and longterm
Approach requires leadership vision, a holistic
methodology and decision making process and
multidisciplinary design and development team.
Management tools to quantify and measure these
evaluation metrics.
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Context
As a society we are increasingly focused on
understanding the limits of our natural resources, the
threat of climate change, and more recently the
social and economic repercussions of this recession.
Sustainability has become more than just the
latest buzzword - a reset button has been pushed,
a paradigm shift has occurred. Sustainability is
now one of the core values and filters that people
view development.
We are increasingly thinking seven generations in the
future.
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Clear Vision and Project Objectives

What is the purpose for this development?

Who is it for?

What is the market demand that it will fulfill?
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Why is this the right place?
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What is the right project for this location?

What is the development aesthetic?
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Why will people come here and how will they use
this place?
How is success to be measured – financial,
sustainability, community, and lifestyle
performance?
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Measurable Goals
Like any business plan, the development plan should:


Establish the desired outcomes.
Identify measurable goals for the specific project
and the metrics of how these goals are to be
evaluated throughout the stages of
predevelopment feasibility, development phases,
leasing, operations, and sale(s) (if applicable).
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Measurable Goals

Financial Performance
What are the “financial” metrics that the project should be
evaluated to?

Community
What are the “community” project goals during predevelopment,
horizontal development, vertical construction and operations?

Lifestyle
What are the “lifestyle” project goals? How will people interact and
experience this place? Why will they return? Why will they live, work
and recreate here? Development is more than buildings it is the total
place 24/7.

Sustainability
What are the “sustainable” project goals during predevelopment,
horizontal development, vertical construction and operations?
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Measurable Goals
• Growth Projections
(5,10,15 Year Estimate)
• District Growth
Potential
(5,10,15 Year Estimate)
• Financial Feasibility
Sub-Model
• Topic Area
Sub-Models
Transportation
Water
Energy
Solid Waste
Sustainability Strategy
• Alternative
Scenarios for SubModel Roll Up
Growth Scenario
Performance
Benchmarks
Cost (Uses)
Revenue (Sources)
Identify Optimum
Sustainable Strategy
EXTERNAL FACTORS
+
INTERNAL FACTORS
Partnerships
• Performance
Benchmarks
Baseline (BAU)
Good
• Financial
Performance
Better
IRR/ROI
Best
Payback Periods
Benefit per Cost
Net Cash
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OPTIMIZED
SCENARIO
Due Diligence/Feasibility Process
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Opportunities and Constraints Analysis
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Financial Pro Forma and Sensitivity Analysis

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Evaluate project alternatives
Sensitivity of financial performance to changes in project assumptions
Realistic and Flexible Program

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Physical
Market
Political
Regulatory
Alternative Analysis
Flexibility in types of uses, densities, sizes, heights, parking and phasing
Flexibility in land plan to respond to changing market conditions
Phasing to Manage Cash Outlay and Product
Diversification to Maximize Absorption

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Phasing – land plan, infrastructure plan and building plan
Phase Cash Outlays - match near-term absorption and revenues
Maximize Breadth and Depth of Uses and Products – accelerate absorption
and revenues
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Design and Development Team
Integrated Design and Development Team that
gets it:
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Design and Project Management
Architecture
Land Planning
Engineering
Landscape Architecture
Science Disciplines
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Design and Development Team
Assembling the right design and development team
upfront and providing it with the right leadership and
direction is the most important step in achieving a
successful development.
The least
cost/maximum
ability to positively
affect the financial
cost and
performance of a
potential
development is
during the initial
planning stages.
Performance
Cost
Initial
Planning
Stage
Construction
Phase
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Implementation Process
• Vision
• Preferred
Vetted
Program &
through
Strategy
Feasibility
• Project Team
Assignments
• Concept
Development
• Land
Development
• Operations
• Design
Development
• Construction
• Sales
• Construction
Documentation
• Commissioning
• Entitlements
• Financing
Collaborative Process
Critical Thinking
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• Leasing
Management Tools
The extent and complexity of the tools to
manage a development project vary with the
demands of each project.
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File Management System
Contact List
Due Diligence/Feasibility Check List
Pro Forma (including detailed integrated budgets for
predevelopment, development, vertical construction, operations
or operating subsidies, financing, revenues and sensitivity
analysis)
Critical Path/Timeline
Building Budgets for Specific Vertical Building Projects
Critical Path for Specific Vertical Building Projects
Sustainability Performance Model
Community and HOA Budgets
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We live in a very challenging and exciting time. New
thinking, innovation and informed risk taking are core
ingredients to moving forward with successful
developments.
No one has all of the answers, the goal is to know
what are the critical questions to ask.
Strategic Thinking
Clear
Vision
Measurable
Goals
Due Diligence/
Feasibility
Methodology
Design &
Development
Team
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Implementation
Plan
Management
Tools