Retail Development- New developer Help Please!

[Canesha Edwards]

Hello everyone,

Well a little background Information. My team has 7.6 acres under contract in a suburb of Atlanta,Ga. Currently, there are 4 homes on the property. However, after putting the land under contract, I discovered that the property would have to be rezoned due to a future land use code the county recently designated for the parcels. I know, mistake number one. I say this because given the extra expenses needed to rezone the property, our contract price is too high. I have some preliminary cost numbers for the rezoning process to renegotiate the price with the owners and a firm that is going to handle the rezoning. We have funding lined up for the construction, contingent upon the county approving our plans.

The development would be a low intensity commercial project. One anchor store, and 5-7 smaller stores. Now I’ve never done a retail development or any sizable development period. So, how would I go about underwriting the deal? How do I find anchor stores, tenants? I’ve just been calling real estate managers for big box stores to see if there looking for additional locations. How do I determine market rents for commercial properties?

I know this probably isn’t the typical first investment, and my team has made a lot of mistakes but, I feel this is a good deal if I can get the Price renegotiated, and I want to get the deal done.

Thank you in advance for any and all input.

[Joel Owens]

You can lose a lot  of money if you do not know what you are doing. Just because the county or city has slated an area with a certain current or future use zoning does not mean the potential national, regional, local tenants will find that location desirable.

The city or county is trying to do their thing and maximize property taxes and development how they want it to grow. The developers and tenants often have other plans. National tenants take sometimes 6 months to 1 year to commit to a site unless the site is a rare A+ site that comes available once every 5 to 10 years then they might jump on it. If it's a B to C site then usually the tenants are looking over 3 to 4 sites in the area and moving slower to make a decision. From the time to buy the land and construct it might be 2 years or more before fully stabilized. Lenders require some preleasing for inexperienced developers.

You might need a fee developer ( usually around 100,000 or more) to help learn the process. I do not offer those types of services but there are some companies in Atlanta who do.

Good luck.