Commercial Real Estate and Construction
Polls show that real estate agents rank just above used car salesmen in public opinion, which is troubling for a professional Realtor. A common belief is that all an agent does is put up a sign, fix themselves a beverage, and then sit back and wait for the closing. Members of the “anybody can do it club”, do not understand how a house or a building gets built.
Anyone talking to government workers or tax collectors would walk away thinking they literally own all the land in their jurisdiction. It’s feasible, although ironic, that they can actually make a case to support their attitude. 1. The land has been there since God made it. 2. You cannot do anything with it – without their permission. 3. You cannot build anything or even clear the land without their permit. 4. They tell you how much you can build. 5. They tell you where it can be placed on the lot. 6. They tell you what type of structure and design you can build, and even how you may use it. In other words – you sort of own it!
When a construction project is conceived the developer (any person or entity who is paying to have a structure built) must have a clear understanding of land use and local government. Building codes are similar in all jurisdictions, but not only are the laws not identical, they may have different names.
A competent commercial real estate practitioner will have a thorough knowledge of the industry, including zoning, future trends, building codes such as environmental rules, local endangered species restrictions and roadblocks in the area, density requirements, plans for the development of streets, roads, and other projects, as well as local and state government incentives. And if that’s not enough, a seasoned professional in this business must be up to date on moderate taxation requirements (such as capital gains, opportunity zones, Tax Increment Funding, IRS Chapter 1031 exchanges) and utility availability which can quickly become a major obstacle to beginning a project.
Building an enviable reputation as a “go-to” real estate advisor is greatly enhanced by being familiar and experienced with competent builders, companies you can trust with a modicum amount of certainty to whom you can refer your clients, members of the construction and engineering community who, in addition to having reputable skills, are honest and competent.
Site selection is critical. How many times do you hear location, location, location? There’s a reason for that. I see relatively new buildings, especially chain restaurants, that open and close very quickly. Generally, it is not due to a lack of customers who desire to use the restaurant, it’s due to a lack of customers. When a building does not have easy access and/or sufficient parking in a given area, people will choose one that does.
There is no substitute for local knowledge and expertise. Does the commercial realtor build the building? No. Can a developer have too many advisers? Acquisition of the entitled (government permission granted) land will be much smoother and less costly with the help of a qualified commercial real estate practitioner on the team in the very beginning. Mistakes are always costly in the construction process. Don’t be fooled by thinking that the construction process begins with the first shovel of dirt.
Randy Krise, CCIM is the broker/owner of Krise Commercial Group, LLC in Fort Myers, FL and can be reached at 239 633 8672 or [email protected]