As a real estate developer, it’s important to consider the best site for your new project. The choice of location could have more influence on the success of your development venture than any other single factor. Some of your options include infill, existing, and new development. Each has its own benefits and drawbacks in terms or regulatory oversight, fiscal considerations, and environmental impact. The best decision is one that achieves the greatest balance of positive consequences for the environment, the community, and the profitability of the project.
Some of the best places to consider building are lots within urban limits that are vacant and either undeveloped or developed at some point in the past and currently under-utilized. These types of opportunities can represent the best and most undervalued properties for acquisition. In many cases the ownership of these properties may be in question and outstanding property taxes or other liens in place, offering room for creative negotiations and acquisitions strategies. In addition to favorable acquisition potential, infill lots benefit developers by reducing the need to build new infrastructure to support the development. Transportation expenses for materials, inventories, and labor is reduced as well when developments are placed within the urban environment.
Akin to infill development, existing buildings provide opportunities for efficient and environmentally conscious development. Renovating existing structures rather than breaking ground for new builds dramatically reduces the need for raw materials, reducing construction costs, time, and labor. The greater the scale of the project, the more fossil fuel and natural resources consumed in the production of materials and transportation to the job site. Additionally, existing buildings reduce the total project time and allow capital to be recovered more quickly, reducing economic risk and holding costs. Working with exist structures minimizes the time required for zoning and planning approval.
Regulatory, Zoning, and Tax Benefits
An added benefit of existing and infill developments are financial incentives provided by local, regional, and national regulatory agencies. Check with applicable agencies to determine what tax breaks and credits may be available for infill and restoration projects. Incentives are also available in many jurisdictions for sustainably designed and managed developments. Zoning is another issue involved in the selection of development site. Existing and infill developments have established zoning regulations that make it easier to start operations. New developments require a lengthy planning and approval process that can take from 6 months to 2 years for final approval. Planning commissions and environmental authorities have much greater involvement and oversight in new developments. Bureaucratic practices and politics has the potential to bring developments to a full stop, permanently is some instances.
Impact on the Natural Environment
Opting for infill and existing developments reduces impact on the environment not only by reducing emissions, but also by protecting undeveloped landscapes. Even the most sustainable developments will displace indigenous species and interfere with the natural hydrology of the site. New development is particularly important to restrict near bodies of water and regions with endangered or underpopulated species. The runoff by built developments generally finds its way into neighboring water ways and subterranean reserves. New development requires roads and utilities to be built, many times obstructing natural migratory paths, creating waste, pollution, and contributing to depletion of natural resources.
As opposed to new developments, especially those outside the urban center, infill projects take advantage of existing transportation, energy, water, waste, and other systems provided by municipal subdivisions. Infill developments additionally allow tenants to take advantage of existing demand for products and services, as well as local distribution channels. For retailers and service providers, the existing foot and automobile traffic afforded by existing developments provides immediate demand for new operations. The existing transportation and utility infrastructure is also attractive to commercial and industrial tenants looking for the advantages of growth-driven submarkets.
Labor and Materials Availability
Another advantage of existing developments is the access to an established labor force for construction and operations. New development necessitates the import of labor and materials from neighboring communities and regions, incurring additional transportation, housing, and travel expenses, wasting money, fuel, and creating excess pollution. Attracting and maintaining a qualified and reliable labor force is a key challenge for nearly any business looking to relocate to a new market or community. Developments that offer prospective tenants the greatest access to needed resources will experience the highest demand and command the highest lease rates. Existing developments shorten recruiting times and provide access to ample skilled labor.
Selecting a strategically effective location for your development will allow the venture to be completed in the shortest time-frame and generate the highest returns. Choices that are beneficial for the environment also provide financial and operational benefits for developers and business owners. Existing developments reduce construction and renovation costs and result in less carbon emissions and waste: a mutually beneficial approach for investors and natural habitats.