New commercial development ventures are exciting not only for the cities and communities who welcome them, but the developers who pioneer such efforts. Before plans are laid out or a ribbon cutting scheduled, the key to success lies in the very early, initial planning stages with four simple, yet critical questions.

Realistically, is this project workable?

Will there be enough space to grow in the next two, ten, or twenty years? Do I, as an owner or developer, have full control over the design of the development, facility, or streetfront? Is the facility safe or cost-effective to renovate?  Each of these examples are early questions that should guide commercial real estate decisions regardless of location or community. As designers, looking into these questions – a process the industry calls “site due diligence” – helps identify both challenges and opportunities before investing too much time and money in the project.

To do this, it’s important that all parties agree to a high-level evaluation of the proposed site and/or facility as soon as possible.

Determining up-front site constraints, involvement from government agencies, and estimated schedules and costs are critical to determining the proper next steps.

It is also important to develop with expandability in mind as to accommodate ever growing populations and/or reflective success of the business. Creating an affordable location and facility to expand can be critical to maximizing future returns and satisfying customer demand.

How quickly can the development or business get up and running?

In the world of real estate development “speed to market” is more than just a hot buzzword. It’s undeniable that developers and real estate brokers who purchase lots that can be developed quickly are those reaping the greatest rewards. However, to truly hit the ground running takes deliberate, up-front planning and a keen eye for hidden trip-wires along the way.

For developers, this means having a firm understanding of site entitlements and due diligence with as much done up-front as possible. Doing so allows for a swift and speedy approval process rather than a cumbersome project starting line.

While front-loading efforts will result in more homework and planning on the onset of a project, finding a proactive partner experienced with overcoming common development obstacles streamlines projects processes and helps businesses open their doors quicker; thus, generating revenue faster.

Take wetland regulations, for example. Not only do wetland permits have long lead times, but in cold states like Minnesota delineation can only take place between May and October in any given year. Finding out late in the game that these services are needed and potentially unavailable can result in several months of delay.

What outside forces will shape the facility or site?

Some of the most influential due diligence process elements impacting speed to market involve a review of city code, zoning, and land use ordinances. For example, before kicking off any of the various downtown projects along Riverfront in Mankato, it was important to consult the City of Mankato’s Land Use Ordinance – a document which provides a framework for developing commercial areas. A portion of this Ordinance outlines what is called Gateway Overlay Districts, or real estate located in areas of the City that are major entryways. These high-profile areas have special zoning characteristics that create a favorable first impression, including specific regulations on building placement and distance from major roadways. This point and process translates to cities and communities throughout the state.

Zoning ordinances also provide design guidelines for building materials and landscaping requirements, such as screening for large parking areas.  Together, these guidelines reinforce an enhanced city image and more cohesive design thematic throughout each specific area.

As Jeremy Wiesen, Project Architect at ISG, explains, such documents can include clauses that cover site design expectations and dictate building design requirements.

“Developer teams need to be aware of potential design-related clauses that often appear in purchase agreements, development covenants, or other such documents that are part of a sale/purchase of a property.”

These clauses present unique challenges to not only meet such requirements, but also develop a style that is welcoming for visitors and cost effective.

What can be done for the owner to capitalize on the real estate investment?

No surprise here, cost effective site and facility design is important to the success of commercial developments – or any development, for that matter. What may be surprising, however, is that long-term costs can be hidden in plain sight or in the fine print of unsuspecting design technicalities. Case-in-point: stormwater management.

Along with the local Gateway Ordinance in Southern Minnesota, stormwater regulations have changed significantly over the past several years. While commercial gateway areas may be prime real estate for such developers, they’re also some of the most expensive available urban land. To get the best bang for your buck, minimizing areas dedicated to stormwater management on-site is critical to maximizing parking areas.

“To capitalize on real estate investment, forward-thinking designers evaluate underground stormwater detention chambers, which provide stormwater treatment and storage out of sight and off valuable square footage,” notes Chuck Brandel, Principal and Senior Civil Engineer at ISG.

Take parking lots, for example. A must-have to support commercial development visitors, these flat surfaces provide the perfect conditions for underground stormwater management. It’s a win-win: capitalize on available space, and do so without compromising accessibility or site compliance.

And of course, time is money. The quicker a business is up and running, the sooner owners start making a return on the investment. If parties fail to perform proper due diligence and get hit with a significant delay period, that’s revenue lost which could’ve been easily avoided with the right foresight.

With so much to consider in commercial real estate, it’s important to have a professional, trustworthy team that knows the industry, recognizes the complex factors at play, and understands both the short and long-term goals of the business. Commercial developments are a group effort requiring support across a myriad of city and community stakeholders, and the best way to ensure it’s a win-win for all is to have the right team behind the project.

This article was published in March 2017 for the Southern Minnesota Connect Magazine on pages 58 and 59: http://connectbiz.com/

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Brian Gjerde

Meet Brian Gjerde

Brian Gjerde’s career at ISG began in Mankato in 1996 and has since evolved into managing partner and leader in several markets, including commercial. Over the years, Brian has been...

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