Theme of Unit: When a property can become more valuable through development or renovation, the property manager’s job is to serve on the development / renovation team to help identify operational problems that could be addressed in advance, minimize disruptions to existing tenants and keep them informed of progress, protect building users and visitors against unnecessary risks, and maintain a stable cash flow. Reading:
Professional Real Estate Development
The ULI Guide to the Business (2nd Ed. 2003)
Chapters and case studies to be selected and reproduced with permission from ULI. Assignment for Site Visit: Visit a property in the company’s portfolio where renovation is planned or underway. Write two double-spaced pages describing five conditions that show why renovation is necessary or desirable. These conditions could include market factors like demographics or competition, or physical factors like visibility, access, parking, lighting, landscaping, architectural style, or deferred maintenance. Suggested Lecture Outline: [Instructor should feel free to rearrange and elaborate, adding materials and illustrations from experience]: The Vocabulary of Renovation / Redevelopment (adapted from ULI Handbook)
Market Analysis |
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Macroeconomic |
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Current and expected market conditions and effect on supply and demand |
Rates of return |
Local Market |
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Supply and demand overall and in submarkets |
Market study |
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Comparison of site with other sites in this and nearby submarkets |
Marketability Study |
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Prices, sizes, functions and features required to keep and build market share |
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Financial Analysis |
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Project Summary |
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Physical characteristics and assumptions for analyses of redevelopment and operations |
Development and construction cost estimates |
Cash flow during development and operation |
Key Financial Ratios |
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Debt coverage |
Cash-on-cash return |
Break-even occupancy |
Expected property value |
Sensitivity analysis for changes in rent or occupancy |
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Existing Conditions Analysis |
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Building code violations and grandfathering |
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Sprinklers |
Stairwells |
Hazardous materials |
Accessibility |
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ADA |
Building Systems |
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Mechanical, Electrical, Plumbing |
Phone and Computer |
Structural |
Floor loads |
Seismic upgrades |
Façade |
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Watertight |
Energy efficient |
Aesthetics |
Roof |
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