Development converts land and capital into buildings that serve a market. It is a sequence of decisions, each reducing uncertainty and raising commitment.
The stages
Idea and market study, site control, feasibility, entitlements, design, financing, construction, lease-up or sale, and stabilization.
The developer’s role
Orchestrating capital, consultants, contractors, public agencies and tenants. The developer owns the risk and the vision.
Risk over time
Early stages cost little and carry the most uncertainty; later stages commit large sums as uncertainty falls. Structuring options and contingencies manages that curve.
Common mistake
Falling in love with a site before the market supports the project. Market first, site second.
Key Takeaways
- Idea and market study, site control, feasibility, entitlements, design, financing, construction, lease-up or sale, and stabilization.
- Orchestrating capital, consultants, contractors, public agencies and tenants.
- Early stages cost little and carry the most uncertainty; later stages commit large sums as uncertainty falls.
Check Your Understanding
Before moving on, explain in your own words how the ideas in “How Development Works” apply to a property or deal you know, and name one number or document you would need to check.
Action Step
Map the development stages on a timeline for a hypothetical small project and note the largest expense and largest risk at each stage.
This course is educational and does not provide legal, tax, financial, investment or appraisal advice, and does not issue any license, certification or credential. Real estate law, tax rules and licensing requirements vary by state and change over time; consult a licensed attorney, CPA, appraiser or your state regulator for your situation.