A shift in land strategies among developers

In today’s challenging market, developers and speculators are establishing very different identities for themselves; in the more robust times of recent years, the difference between developers and speculators became quite cloudy and intermingled.

As a result of a “thinning crowd,” the remaining developers have become substantially more selective of the projects they are willing to undertake, and they are taking little to no speculative risk. Capital is very tight, and developers are not willing to tie up their scarce funds for an uncertain deal. The time frames are too unpredictable and could extend well beyond their expectations, thus destroying their pro formas.

One of the most logical and most commonly utilized means of controlling land today is an extended opinion with little option money down. Sellers are starting to realize that there is a significant investment that developers make in preparing a property for the end users. This can include land planning, surveys, wetland engineering, civil work, soil studies and in some cases, actual earth work.

We are also seeing instances where developers and land owners are working together to achieve preferential status among the end user community by shortening time frames to development once users return to the market. It is a fair and prudent strategy for a land owner or developer to position the property to be readily available with short development times in anticipation of the next cycle of development.

Land owners who had locked in price expectations or wanted cash quickly will be sitting on the sidelines until the users begin to arrive. The properties that will go first are the ones that have a great deal of the preliminary work completed. It is quite a paradigm shift for the remaining developers who can now dictate their terms rather than the seller dictating.

About Cushman & Wakefield/NorthMarq

​Cushman & Wakefield/NorthMarq is a joint venture formed in September 2011 by NorthMarq Real Estate Services and the Minnesota operations of global real estate services firm Cushman & Wakefield. By combining the talent of both organizations at the regional level with the global platform of Cushman & Wakefield, we offer clients the best combination of regional strength and global capabilities. The result: the leading commercial real estate firm by all measures in the Upper Midwest.
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