January 24, 2019
What Affects Cost in Real Estate Development?
Numerous actions and activities are key to the success of a construction project and to real estate development in general. Two of these are good communication and good planning. The planning phase itself is absolutely critical to real estate development, especially as it pertains to everything that happens before the first nail is hammered or first block of cement is poured. A major goal of any development project is to avoid delays, cost overruns, disputes, unpleasant surprises and problems which in any manner can harm a development project.
Having a guide in hand to assist the principle members of a real estate development project (owners, lenders, project managers, environmental engineers, construction managers, etc.) can be tremendously helpful in the pre-planning and pre-construction phase of a project. And this is something Essel Environmental Engineering has created and provides, and which is the subject of this blog post.
The Real Estate World We Live In
A significant portion of most people’s wealth today is represented by the industry of real estate investment and purchase. This is not only true with those who invest in commercial real estate and skyscrapers and office buildings or government edifices, but true for residential real estate and homeowners throughout the United States. In a recent survey of consumer financing by the Federal Reserve, at least 65.2% of families in America own their own primary residence. Thus, the scale and size of today’s real estate market make just this sector of it a very lucrative and attractive business for investors.
As it is, the costs of real estate site development (also known as site improvement) can differ immensely depending on site location and conditions, and other factors (such as what work has already been done by the developer or seller). Factors affecting the pre-planning and initial stages of development can range from material, local labor, the cost of permits and hiring of vendors such as environmental engineers and land assessors, as well as the use of local contractors and others involved in the pre-development process.
Real Estate Development and Those Who Facilitate It
As a multifaceted business process, real estate development (or property development) can encompass a myriad of activities ranging from the release and renovation of existing structures to the purchase or sale of developed land or raw land to other parties. It is real estate developers and companies who coordinate and facilitate all these essential activities and transform ideas from paper to what becomes real property. However, real estate development is usually considered different from construction (or the construction phase of a project), although the construction process is often also managed by developers.
Financing real estate deals, buying land, constructing buildings or having builders built as well as cogitating, creating and orchestrating the whole process of development (from beginning to end) are actions and activities performed by the developer. Thus, they often take the greatest financial and material risk in the buying, creation and/or renovation of a real estate project; although they often also receive its greatest rewards. What the developer usually does includes purchasing a parcel of land, creating the marketing of it, masterminding the building design and program, acquiring the required approval and financing, then building the structures on it, and later renting out, managing and even eventually perhaps selling it.
Developers often work with a variety of different entities along every step of the development process, and these can include environmental engineers and other assessors, architects, city planners, attorneys, surveyors, inspectors, leasing agents, project managers and contractors.
But What Majorly Affects Costs in Real Estate Development?
At the very beginning of a real estate development deal or project, having a competent development team in place is of crucial importance to getting a development into becoming an actual project. A real estate company has to include numerous services integral to the process, which can include areas such as land assessment, architecture, environmental, material, engineering and an entire staff of real estate professionals to assist in every phase of the project. Issues to be addressed can cover a wide expanse and require professionals who can attend to each issue or component of the project. These can include economic, environmental, public, private, physical and political issues relevant to a development project.
Also required in the development process, are the skills of numerous professional experts, such as environment engineers, architects, site planners, chemists, landscape architects, legal experts, civil engineers, marketing consultants and general contractors and subcontractors. The general contractor will hire subcontractors, and this act alone is critical to cost, time and labor for a development project.
Our company, Essel Environmental Engineering, researched over 55 projects to determine the most common kind of requirements essential to development projects and how they can save money (and time and labor!) right from the beginning. The biggest concerns for real estate development are due diligence and the pre-development phase. Essel also discovered what are specifically the four most common types of development project requirements. These are broken down by percentages, and are Phase 1 ESA, the geotechnical survey, subsurface investigation and the hazardous materials survey.
We would like to show you our complete findings and the important data you need to know to get your real estate development started and moving forward. You need only visit our website at https://www.esseltek.com/ and download our complete guide to “What Affects Cost & Time On Real Estate Development?” It’s free to download, and Essel Environmental Engineering is available to provide you every service you require and need to move your project toward implementation and achieving the success you seek.