Wisconsin Basic Economic

Development CourseReal Estate Development and Reuse

SLIDE 2

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Real Estate Development

and Reuse

•Overview

•Types of Real Estate Development

•Basic Development Process

•Dealing with Environmental Contamination

•Public Participation

SLIDE 3

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Types of Development

and Redevelopment

Wisconsin Basic

Economic

Development

Course

Madison, WI

Sept 8 – 11, 2015

•Four primary types

•Build-to-suit

•Speculative development

•Greenfield development

•Redevelopment

SLIDE 4

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Build to Suit

•Business retains a contractor or developer to build a

customized structure

•Needs of the end user guide the design

•Difficult to find next users of specialized building

SLIDE 5

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Speculative Development

•Built prior to securing a tenant

•Financing may be difficult to come by when credit

market is tight

SLIDE 6

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Greenfield Development

•On large tracts of previously undeveloped land

•Industrial parks

•Technology parks

•Commercial development at highway interchanges

•Lifestyle centers

SLIDE 7

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Redevelopment

•Taking property to a higher and better use

•Prevents sprawl and removes slum and blight

SLIDE 8

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Example: Before

SLIDE 9

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Example: After

SLIDE 10

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Basic Development

Process

Wisconsin Basic

Economic

Development

Course

Madison, WI

Sept 8 – 11, 2015

Predevelopment

Market, financial and political feasibility

Site and engineering analysis

Financing

Contractor negotiations and public approvals

Construction

Marketing

Building occupancy and management

SLIDE 11

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Predevelopment

Includes site/location selection

“Quick and dirty” analysis of project

Size

Potential timeline

Other considerations (logistics, resources, etc)

Obtain control of the site

SLIDE 12

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Feasibility

•Market analysis

•Products

•Demand

•Timing and phasing

•Competitiveness

•Financial feasibility

•Including sources and uses of funds and gap

financing

•Political feasibility – time is money

SLIDE 13

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Site and Engineering Analysis

Result in a development plan on paper

Consider:

visibility and access

natural conditions and contamination

site infrastructure (including utilities)

off-site planning and development

Shovel ready – what does that mean?

SLIDE 14

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Financing

Challenges to financing

magnitude of capital requirements

risky nature of real estate investments

land is durable, buildings are depreciable

Debt capital

bank/public sector/other gap financing

Equity

owner/developer must have skin in the game

SLIDE 15

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Contractor Negotiations and Public

Approvals

•Major public approvals

•Zoning

•Subdivision

•Site plan review

•Building permits

•Major private development agreements

•Joint venture agreements, land acquisition

contracts, lender commitments, A/E agreements,

construction contracts, lease/sale agreements

SLIDE 16

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Construction

•Actual development including site prep:

•Environmental remediation

•Demolition

•Infrastructure

•Building construction

•Tenant improvements

•Preleasing

SLIDE 17

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Marketing

•Begins prior to construction

SLIDE 18

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Building Occupancy and

Management

•Includes marketing, leasing maintenance, and tenant

relations and services

SLIDE 19

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Dealing with Environmental

Contamination

•Common Land Contaminants

•Solvents (paint thinner, dry cleaning fluid, parts

degreaser)

•Heavy metals (lead, chromium, cadmium, arsenic,

mercury)

•Petroleum (gas, diesel, motor oil)

•Pesticides (DDT, weed killer)

SLIDE 20

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Steps to Brownfield Clean-up

•Site assessment and reuse options

•Understand state programs

•Identify other interested parties

•Ease of remediation

•Feasibility analysis

•Negotiate and structure the deal

•Make the deal (purchase or sell real estate)

•Cleanup

•Monitor (Covenant not to sue (CNTS) or No further

action (NFA)

SLIDE 21

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Private Sector Players

•Developers

•Investors

•Lenders

•Architects, engineers, contractors, attorneys

•Property managers

•Tenants

SLIDE 22

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Public Sector Players and Roles

•Regulator

•Planning and zoning depts.

•Public works

•Building inspectors

•Facilitator

•Facilitating regulatory approvals

•Providing partial financing

•Providing infrastructure/streetscape

•Implementing façade improvement program

•Initiator

•Redevelopment of specific property or area

•Political will to withstand the risks of development

•Have resources and expertise to develop property

SLIDE 23

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Example of City as Initiator

SLIDE 24

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Ways to Facilitate a Deal

•Reduce the development cost to reduce the amount that

has to be financed.

•Reduce mortgage / financing costs

•Reduce operating costs to improve the cash flow of a

project

•Facilitate the process of redevelopment through

programs and policies.

•Others?

SLIDE 25

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Summary

• Every deal requires a unique solution

• The public sector has a variety of roles and levels of

involvement in real estate development

• Some projects won’t get done without public sector

assistance

• Financial assistance may be required in some deals, but

others may be accomplished with technical assistance

• Almost every deal will require some combination of time,

money and political capital

SLIDE 26

Wisconsin

Basic Economic

Development

Course

Madison, WI

Sept 13, 2017

Contact Info

Name: Kristen Fish, CEcD, EDFP

Address: 211 S. Paterson St. Madison, WI 53703

Phone: 715-581-4339

E-Mail: kfish@redevelopment-resources.com

Web URL: www.redevelopment-resources.com