Asset Approach to Land Development

June 26, 2017 by Vanessa McElroy, P.E.

A good approach to the design in land development is to “treat the project like an asset to sell”. We should always act as an agent on behalf of our clients.  The most cost effective design or efficient use of land does not always leave the client with a desirable product to sell.  Treating your development as an asset can be applied in all disciplines of land development from single family to light industrial development.  This is also applicable in all phases of development: preliminary land planning and site layout, entitlements, and construction documents.

The developments in light industrial are often owned by real estate investment trusts (REIT) and not the end user.  These REITs sell the developments to acquire and upgrade their assets in their portfolio.  The assets generate rent income.   The goal is to make a development that is appealing to all potential tenants.  Although the site development costs of the project are small, the effect on tenant appeal is quite large.   For example, deepening the sewer service to the site to make it serviceable to all potential space partitions in the warehouse.

Questions to ask your client:

  • How do you want to divide your warehouse space? Do you want separate utility services for each potential partition?
  • How will truck circulation around the building work? How will it be affected by tenant partitions?
  • Does each tenant need a secure space? How does the guardshack affect truck queueing?
  • What are the operating hours? Limiting the operating hours can affect future tenant possibilities and asset sells (this is something to consider during due diligence, zoning and other entitlement processes).
  • Does building to the minimum building setback make the site access and truck circulation inoperable?
Source: Premier Handling Solutions

Potential answers for your client to consider:

  • Is it in the best interest for the viability of the access to ask for variances to land use and building codes? For example, a variance for driveway spacing may be essential for a single loaded warehouse with a truck court in the rear of the property.
  • Truck entrance driveway access in front of the building instead of the building side yard can make the site impossible to maneuver for large trucks.
    • What can the engineer and developer do to make the site accessible to truck traffic?
    • Can you get the adjacent property owners to agree to a driveway close to their property and driveway?
    • Would a smaller building be more desirable than having an un-accessible building?   In due diligence and construction document preparation phase of the project, it is advisable to weigh the immediate cost savings and rentable square footage versus the long term maintenance costs, aesthetics, and future rents.

This approach can apply to single family development.  Can saving money by reducing retaining wall heights limit the homebuilder’s ability to sell lots?  Does an open drainage system appeal to the potential homeowners and home builders?  Does the cost savings of the open drainage justify the decrease in lot price?  In achieving the desirable lot yield for the property, does the cost to obtain that yield outweigh the infrastructure improvement costs?  Will the lot be desirable to homeowners and builders after the extensive improvements?   Can the developer sell his lot?

In conclusion, an asset approach to land development engineering can yield our clients larger returns on their investments by increasing end user satisfaction with the development product.  This satisfaction results in faster and more lucrative asset sells for both light industrial and single family developments.

Written by Vanessa McElroy, P.E.

Vanessa McElroy, P.E.

Vanessa is a Commercial Team Leader based in our Dallas office. She is a registered Professional Engineer in the State of Texas. Vanessa attended Texas Tech University where she earned a Bachelor of Science in Civil Engineering.