Where to start
By Tony Ozelis

Wouldn't it be nice, if developing real estate for most restaurant and retail uses came with simple step-by-step assembly instructions? That way, you'd know everything you need to know up front, including how much the finished project will cost and how long it will take to build? Although it would be nice, in reality, it's probably not going happen that way ...but it's a nice thought, none the less.

The truth is there are way to many variables involved in building things and even the people that do it on a daily basis, for some of the biggest companies in the world, get it wrong a pretty high percentage of the time. Unexpected things always seem to happen during the course of building a project and yours will probably be no exception (we'll spare you the horror stories). The real trick, is to plan for it.

However, there are logical steps that many successful projects do seem to follow and understanding them, especially for those of you just starting out, is going to be very important. Above all else, please do not ignore the first four points, because this is usually where the most basic development mistakes are made.

The real estate development process

1). Know your business - This is not our area of expertise and not knowing you, your dreams or your business, we can’t help you with this, but hopefully you’ve done your homework…

2). Identify your customer – Amazingly enough, most people (and many companies) don’t take this step far enough. Skip this and all the demographic information in the world, will mean absolutely nothing.

3). Create a realistic development budget - Making sure to include all of your anticipated costs associated with finding, inspecting, negotiating, permitting, building and fitting out your space.

4). Do a Market Development PlanProper preparation when deciding where to build is critical in designing for success.Even if you know the area well, pretend you don’t, start fresh...you’ll be surprised at what you discover.

5). Site Selection – At this point; you should understand your customer, where they live, work and shop and, most importantly; where you don’t want to be. Try to consider as many good sites as possible.

6). Site EvaluationOK, it’s a nice site…or is it? You’ll never know what it’s going to cost you unless you kick the tires on the place. “Live” both the insides and the outsides of a location as much as possible with a critical eye. A “Good Site” is a relative thing and the bad ones don’t come with warning labels.

7). Review Your Budget – This is where the rubber meets the road, kids. Review your occupancy costs, construction costs and FF&E budget BEFORE you commit to making an offer. Stay within your budget.

8). Contract Negotiations – Use a good real estate attorney. A little understanding, some simple preparation and an experienced lawyer, makes this step a lot less intimidating than it seems.

9). Design Your Space - This could be as simple as a sketch on a piece of graph paper (which you can download  here) or, if you have lots of equipment or need utility upgrades and/or structural changes to the building, chances are that it may be a job best left to the professionals.

10). Obtain a Building Permit – Use our National Resource Map to find the correct municipality, contact them and see what their process entails (and always try to get a realistic timeframe from them).

11). Review your Final Budget – By this time, you should have a good working understanding of your construction costs, occupancy costs and development fees. Stick within your budget.

12). Hire a General Contractor – Choosing wisely will help you keep your expenses in check and the hair on your head.

13). Order your furnishings, fixtures and equipment (FF&E)  - You should do this in concert with your GC if possible, because it’s their job to schedule who does what, and when.

14). Start Construction – It will be the most exciting part of the whole process…try to enjoy it.

15). Punch List / Certificate of Occupancy – Finish the things that need to be finished and get your final approval (the “C of O”) from your local municipality.

16). Open for business – ‘Cause campers, that's what it’s all about!

So, how long will this whole process take you? We don't know...as we said before, it really depends on a lot of things (some of which, will be way outside of your control). The one thing we have learned however, is that it usually takes longer than we first expected, so just try to be prepared for it. For more information and details, feel free to surf around the Island...that's why it's here and,if there's anything that we can do to improve it, please let us know. We're learning everyday as well!

 

Welcome and Happy hunting...

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About the Author: Tony Ozelis is a real estate development consultant and frequent contributor to LocationIsland.com.  Mr. Ozelis' 23 year career has primarily been focused on restaurant and retail development throughout the United States where he has served as a Director of Real Estate for companies such as Pizza Hut, Inc., Boston Chicken, 7-Eleven and Wendy's International.

With well over 700 successful projects completed to date; he has been at the forefront of incorporating new technologies into corporate real estate development and regularly teaches on subjects such as; Strategic Market Development Planning, Contract Negotiations and incorporating Green Technologies into site design.

Mr. Ozelis is a member of both the International Council of Shopping Centers (ICSC) and the United States Green Building Council (USGBC).

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