Real Estate Consultant and the Development Process
For most projects, real estate development consultants guide owners and the development team through a five-step process. Since developing real estate is a cumulative process with each step forming the foundation for the next, it is important for the real estate development consultant to be hired by the owners as early as possible in the process. Decisions made, or not made, early in the development process can have a major financial impact later in the final result. Awareness of how early decisions impact segments of the project is one of the key skills that Daven Consulting Services brings.
During Step 1, the real estate development consultant helps the owner:
- Provide market/need/demand analysis
- Assemble the development team
- Identify the project’s goals and objectives
- Secure/define the property to be developed
- Develop an initial building concept
- Provide the initial feasibility study.
The real estate development consultant also assists the owner in assessing its own financial and operational capacity to undertake development of the project.
During Step 2 the real estate development consultant works with the owner to assess the project’s feasibility.
This step typically involves helping the owner with tasks such as:
- Preliminary designs
- Preliminary Pro Formas
- Preliminary capital and operating budgets
- Financing applications and negotiations
- Zoning/entitlements/development approvals
The goal of the feasibility stage is to help the owner determine whether it should proceed to the next stage of development.
Once feasibility has been determined Step 3, pre-construction, is the next step.
Deciding to go to pre-construction is normally a major step for an owner as it usually involves significant expenditure of funds for architectural and engineering services. During this stage the real estate development consultant’s goal is to:
- Negotiate an acceptable construction contract,
- Perform constructability reviews of the construction documents (plans & specifications)
- Arrive at a final capital cost budget
- Finalize construction related agreements
- Achieve all necessary approvals in order to proceed with construction
Step 4 is construction of the project.
During this step, the real estate development consultant participates in:
- Construction Meetings
- Helps the owner resolve any construction issues that arise
- Monitors accounts for all project costs
- Facilitates advances from financing agencies.
Depending on the project, the real estate development consultant may initiate and coordinate the marketing/pre-leasing/pre-sales process.
Step 5 is the final step in the real estate development process involves assisting the owner with:
- Setting up the on-going property management for the new development
- Initial move-ins
- Clearing-up construction deficiencies, i.e. punchlists
- Finalizing the project’s capital cost.
Depending on the situation, the real estate development consultant may also need to help the owner initiate staffing or negotiate the on-going property management contract.