Summary: Will you be able to steer a project when it takes an unforeseen turn? Commercial real estate development setbacks are tough to handle. Having the appropriate partners, preparing yourself, and having the right attitude can keep you on track.
There are countless obstacles, roadblocks, and difficulties between where your project is today and where you want it to be. Will you be ready to steer a project back on track when it takes an unforeseen turn?
The development process is…quite the process, as we demonstrate here. It is extensive. It’s teeming with surprises. And getting from an idea to fruition involves overcoming a lot of obstacles.
A new development may be delayed or even put on hold due to time, money, and a challenging regulatory process.
To ensure it doesn’t veer too far off course, you frequently need to perform some deft maneuvering.
Use the Preparation You’ve Made
It is advised to be flexible. Or, some may say, “hope for the best, but plan for the worse.”
In a previous blog post, we advised ensuring you had the proper questions before beginning your next development project. Consider taking two steps forward. Be aware of the legal obligations in particular. Those could be some of the most significant growth roadblocks. The approval procedure could take months or even years to complete.
Consider that. Determine what to expect and when you believe it is best to stop trying. It’s okay that not every project that moves past the planning stage will be completed.
Utilize the Time and Money You Budgeted For
You did take this into account, right?
If a project’s opening date isn’t fulfilled, delays have a negative financial impact on the project and the tenant.
Think about weather delays, for instance. In the event of weather delays, the time limit is not automatically extended. Significant legal expenses are incurred yearly, demonstrating and refuting the relationship between those delays and “normal” weather.
All of that can be avoided by carrying out the necessary due diligence, research, calculations, and padding for unforeseen delays. You may minimize, or at least lessen, that unpleasant sensation by “hoping for the best but preparing for the worst.”
Learn Pivot Skills
Project proposals don’t always come to fruition. And that’s alright if you can pivot. If you find that an environmental or traffic study would strain your finances or throw your schedule for a loop, your only choice might be to start over from scratch.
Putting metaphors and analogies aside, setbacks in the commercial real estate development process are challenging to handle and not what you want to go through. In the end, working with the appropriate people, getting ready, and adopting the proper strategy will help you stay on course.
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Come join us! Email me at mark@dolphinpi.us to find out more about our next real estate investment.