A panel of experts gathered to chat about the development process from many different angles: architect, economic development and banker. The event, which MEREDA hosted in Auburn on April 15th, was titled “Real Estate Development 101: Plan Your Work – Work Your Plan” and was modeled after a highly successful event of the same name hosted in Portland earlier this year.
Stephanie Lull, principal at SRL Architects, was the architect on the panel alongside both Lincoln Jeffers, the City of Lewiston’s economic and community development director and Richard Littlefield, senior vice president at Camden National Bank. Each was given a 10-15 minute window to present on their areas of expertise and how they fit into the development process. Here’s what we learned:
“Developer” is Synonymous with “Conductor”
Jeffers outlined what he felt was a list of essential skills a successful developer must have. He suggested that a developer is truly the “conductor” of the deal whose traits should include, among other things: vision, flexibility, persistence, communication skills and the ability to multi-task.
He shared a number of fascinating stories from real-world transactions. The general theme is that most development deals, regardless of size or location, are inherently challenging. Jeffers quoted one Lewiston developer of saying his deal was like getting a “weekly 2x4 to the head” but, he continued, it’s your ability to get back up and push forward that makes or breaks your success.
Project Scope and Size Have Direct Correlation to Financing Complexity
Littlefield, who’s financed as many 10-figure real estate developments as anyone in this state, went through his own checklists of development requirements from a bank’s perspective. He made it clear that there are tiered expectations from most banks depending on the size of the deal and the level of complication involved. A small, residential developmental lot under $250k has relatively simple requirements to get financed. On the other hand, a large, downtown mixed-use project can be exceedingly multi-faceted. He shared a story about a deal he financed for a Boston hotel project that required over 30 permits and a 309-page application. In his experience, he’s also run up against something called a “navigational servitude easement” (something to do with tall buildings near airports… my head hurt just thinking about it).
Get Rid of the Monsters Under the Bed
Lull echoed Jeffers in stressing the importance of team-building on the developer’s part. “It takes a village”, she said. She then outlined the list of possible team members including an attorney, lender broker, architect, engineer, contractors, and more. She strongly encouraged developers to engage civil and site engineers early on the process to “eliminate the unknown and get rid of the monsters under the bed!”
She explained that unexpected pitfalls can derail or delay any project, so regular team communication, establishing reasonable timelines and staying on top of your financing options are paramount. Timing, of course, is always a key as well. In down markets, she explained, there may be more opportunity for well-priced deals but the risk is higher. Timing the market is like a roller-coaster, knowing when to get on or off is a skill that is hard to learn and not something that can be found in a book.
Seated alongside me at our table were two bankers, a civil engineer, a commercial investor, an attorney and myself, a commercial real estate broker. Such a diverse group is typical of these events and really inspires a myriad of topics of conversation. It occurred to me that perhaps our table should band together and create a project – we had almost every personality and skill set recommended by Lull just at this one table!
Like most MEREDA educational events, the program wrapped up with a lively round of Q&A with the audience and panel. By all accounts, the panelists were informative (and entertaining) and, as always, MEREDA added value to its members through educational and networking opportunities.