How to analyze potential site for first commercial development?

[Robert Rose]

I'm about to embark on my first commercial real estate development project.

I plan to buy a ~1acre property in Georgia to construct a 20,000sqft building with the following breakdown:

8,000sqft retail space

7,000sqft warehouse space

5,000sqft office space

I'll be using some of the office space and warehouse space for myself. The rest will be leased.

How do I determine and analyze a potential location for this development in terms of potential lease rates, vacancy rates, potential area growth, post construction value, etc?

[Robb Almy]

Here are some (not all) ideas to consider. As always, seek professional help local to you. 

Gather some market data- look for local market reports and engage a commercial real estate broker who can provide some great market insights.

Consider your site- what is the accessibility? surrounding amenities?

Work with the local experts- talk with local zoning officials, engage architects, and reach out to contractors to understand the cost and feasibility of your project.

Run your numbers- do some forecasting and layout some financial models to project costs, revenues, and returns.

Make sure you are utilizing your team- aforementioned real estate broker, financial advisor/ CPA, and lawyer and others as you go.

Best wishes and good luck.

[Jamie Hora]

There is a large piece that you didnt mention, the actual cost of the development. You may have a grasp on this aspect, but there are items to consider that can play a big factor when choosing your land such as topography, existing zoning & platted lot status, minimum/maximum requirements such as parking, detention, size of building, setbacks.  

Timelime of the project can be heavily impacted by which agencies are required for permitting. It is only within a county, or need City approvals, or possibly DOT approvals for driveway connection, etc. A local engineer can help understand all of these items.

Good luck on the project. 

[Henry Clark]

Look on loopnet or crexi. Both for sale and for lease.  Look for similar properties or usage.  Talk with the agent who has the most listings similar to your concept.  Determine both lease and sale value. 

Location and view is really dependent on the type of usage.  Plumber versus bagel shop.  Access to me is big. At turn lane or lights?  Turn lane?  Speed limit out front? Roads on two sides?  

[Darnell Lockett]

Hi @Robert Rose. Congrats on your first project. I'll echo what @Robb Almy said as it pertains to having the right LOCAL team in place, especially considering its your first project. That's a must! Things like feasibility studies, site surveys and site selection will play a part in the success of the project. Having a strong experienced team is critical. 

[Don Konipol]

Quote from @Robert Rose:

I'm about to embark on my first commercial real estate development project.

I plan to buy a ~1acre property in Georgia to construct a 20,000sqft building with the following breakdown:

8,000sqft retail space

7,000sqft warehouse space

5,000sqft office space

I'll be using some of the office space and warehouse space for myself. The rest will be leased.

How do I determine and analyze a potential location for this development in terms of potential lease rates, vacancy rates, potential area growth, post construction value, etc?

Sounds like you may be getting a little ahead of yourself.  I have always commissioned a feasibility study. I prefer someone holding the CRE designation to perform the study, although MAI designees are usually also qualified. 

[Simmy Ahluwalia]

@Robert Rose - agree with all of the above and also a Feasibility Study to gauge local demand.  We are ATL based and finance Owner-Occ new construction.  When you are ready, we are happy to review your loan scenario.  

Also, if you are able to secure LOI's with prospective retail/warehouse tenants, this always helps with the financing piece.