How much value add is from raw land to land with approved plans?

[Prithvi Sri]

There is a property of 8 acres costing around 3.5M (approx 10$ or less per sqft for the raw land). I am pitched by the developer that if we can get the approvals for 180k sft area warehouse on the plot (the land cost then would be approx 24$ per sqft of constructed area) , we can sell the approved plans for approx 40$ per sqft.  Is this a reasonable assumption? Will a builder pay 40$ for something that cost only 24$ but without approvals? How long does it take to get the whole project (of getting approved plans)? 

[Chris Seveney]

@Prithvi Sri

1. Approved plans hold considerable value over law land. Why? Raw land the buyer is taking the risk that what they want to do may get rejected or reduced in size or the county may add additional requirements to project (like upgrade other infrastructure in the area).

With approved plans, it reduces the buyers risk.

Depending on project you can spend a few hundred thousand to over $1M on plans. You will need a land use attorney, civil engineer and architect at a minimum.

Depending on jurisdiction I would target 18 months - 2 years.

If it’s something you have not done before, I would sell it as raw land.