Commercial development - get this done before signing contract

[Amit Dhawan]

Hi All,

I'll be pusblishing some quick tips and tricks as well as lessons learned as I start on a commercial development - a shopping center, my first time. Signed the contract for a 2Ac land in April, spent close to $10K in attorney fee, ALTA survey etc. and come to find out that there was a restriction on land that'd reduce the buildable area by 25%. So here's Tip#1:

- Hire a good real estate attorney first

- Once you've signed the LOI and starting on the contract negotiaitions, ask for any and all restrictions etc. (ECRs and REAs) especially if the land is next to a big box like Wal-Mart. They control a lot in terms of visiblity, types of tenants, access control, easements etc. Most sellers will provide that info. Don't wait until survey/title review to find these very basic issues.

- Review the restrictions yourself first and catch any basic issues. Ask your attorney questions if you don't understand something. You can use the seller's survey for this iinitial review with your attorney.

If you are able to do the above before you even sign the contract that'd save you time and money later.

Thoughts are welcome !

[Joel Owens]

Most lenders want shopping center 50% pre-leased before the construction loan starts for non-experienced developers.

The cost of construction per ft for a one off building is very high because the starting developer does not have the volume to save money ordering in bulk and have full time crews doing only their projects.

Additionally you might want to use certain building materials but the county or city dictates higher end finishes to approve the site plan which add about 25 to 30 bucks a foot more to overall build costs.