Land 101: The first step to Flex Space development

Acquiring land is the first and most important step of flex development. Finding the right land makes the difference between a successful development and a failed project. Keep reading to see how to acquire land that is best suited for your flex development.

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Identifying The Right Land

The first step in a flex development is identifying the right piece of land. Remember, you’re considering the land for a flex development, so the most important question is whether the land is best suited for that type of project. I always keep in mind the WHO and the WHY- who am I building these office warehouses for and why. Developing what I call a “tenant profile” is helpful in keeping track of the who and ensure you are choosing the land accordingly.

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When searching for the right piece of land, first identify the parameters. Take into account the location and setting of your land before proceeding. Next, understand your own financial abilities. What is your budget for the land? Will you be taking out a loan or paying cash? Determining your financial capabilities will help narrow your options, and you can then begin searching for your land. You want to look for a location that will fulfill all of the criteria you just considered. Start with land in your physical location before expanding your search outwards. You can drive to different land locations, do online searches, and seek the help of a broker.

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Due Diligence

Once you’ve identified a potential land, you will need to do your due diligence - this is the process of evaluating a property to determine its legal, financial, and physical condition. This includes a thorough review of documents, records, and physical inspections to ensure the property is a sound investment. There are four types of due diligence to consider before finalizing your investment: legal, financial, physical, and market. These range from the property’s legal ownership, market potential, operating expenses, building codes, and more. I thoroughly review all available information about my land to make sure the land is suitable for my development project.  

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You will want to make some considerations before putting your land under contract. However, most of the due diligence will be done post-contract. Once your land is under contract, you are agreeing to buy the land, pending due diligence.

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Acquiring Land

Once you’ve completed your due diligence and believe the land is right for you, the last step is purchasing the land. To close, you will fund the transaction, or pay for your land. You will also transfer the title from the owner to you, the buyer. Your broker will assist with the acquisition process.

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Additional Considerations:

You want to make sure the land you are purchasing matches the size of deal you want to develop. Underwriting will help you determine this, as it involves analyzing a multitude of factors to determine the potential income of the property. Also consider how much of the land is buildable, what the risks and challenges are, and the potential return on the land.