REQUIRED READING: In today's turbulent economy, any organization looking to start a new construction project faces certain challenges. Choosing the right commercial real estate developer and designer/builder can make the difference between a successful project and a bona fide disaster.
With the glut of service providers floundering in this space and willing to cut deals – and corners – it is imperative for commercial real estate professionals to take a few fundamental considerations into account before signing on the dotted line.
A commercial construction project usually involves one overriding factor: the bottom line. While certainly a critical factor in the decision-making process, budget should not be the only one. When cost alone is the primary focus of a project, serious repercussions are likely to follow – poor service, delays, hidden costs, changes orders and non-existent follow-up – to name just a few.
When vetting commercial developers and designer/builders, it is important to consider each and every aspect of the project life cycle, from the prospective vendor's vision to the post-project completion period. Here are a few key life-cycle-based hiring considerations.
Budget. Understanding precisely how financial limitations will impact the related financing process at large is far easier when partnering with an organization knowledgeable about commercial construction finance and can walk the customer through each and every step. While most developers and designer/builders will simply refer their customers to a bank or other lenders for financial advice, it is best to seek a higher-caliber, full-service firm that provides such financial planning consultation in-house.Â
Service scope. The commercial developer and designer/builder industry is fragmented, and there is little service standardization. The majority of companies offer only a portion of services required in the entire project life cycle and do not provide the comprehensive oversight that allows clients to disengage from the construction project and maintain focus on their other business development and growth initiatives. It is optimal to retain a commercial developer and designer/builder an end-to-end project management approach, which offers the benefit of single contact-point project control and accountability.Â
Image. If the proposed project is out of reach due to image reasons, a reputable developer and designer/builder organization should be willing and able to help resolve the issue. This may involve postponing the project for as long as necessary and assisting the organization in corrective measures, such as an image change.
Additionally, appearance is everything with local and regional authorities, who can also impact a project. To best ensure necessary municipal approvals are granted, hire a developer and designer/builder that can position and project the company's image in a way that's accurate and a benefit to the community.
Industry experience. Whether the commercial property is a medical office, a church or an office park, each type of business has specific needs that not all developers and designer/builders are prepared to meet. It is essential to hire a company with the ability, experience, and expertise necessary to plan and execute the project so that it meets both the vision of the client and realistic financial restraints. Companies that are suited for a given project will not only have the technical expertise to build a new facility to the desired specifications, but will also have the client's best interests in mind throughout the entire process.
Development. Many would-be project developers learn the hard way that it takes a specialized skill set and years of developer experience to do the job effectively. While development is viewed as exciting and challenging, it's usually underestimated from a time and experience perspective.Â
When developing in the commercial realm, it is important to hire a firm that has a demonstrated track record of working in partnership with high caliber architects, engineers and subcontractors with synergistic philosophies to deliver a high-quality product.
Land and property acquisition. The most critical step in a successful land acquisition is a properly structured agreement. While this may sound elementary, all too often, organizations forego consultation and enter into a land agreement that doesn't provide them the protection they need when faced with unforeseen circumstances. This can include land that ultimately does not meet their requirements, needing more time to complete governing approvals or, worse, the project failing altogether.Â
Thus, it is crucial to ensure the developer and designer/build firm you hire has direct experience formulating land agreement documentation. Also, be sure to cover a variety of ‘what if’ scenarios as the paperwork is being prepared.Â
Architecture. This aspect of a project can make or break the budget if clarity is not achieved in the organizational phase. Problems arise when organizations circumvent organizational and financial assessments and go right to the architect, which can lead to multiple plan changes throughout the designer phase or a floor plan that does not meet organizational needs. Â
A qualified developer and designer/builder will work very closely with the architect, along with professional subcontractors who will be performing the work, to ensure project parameters are crystal clear and maximize the chance of the project's being completed to spec, on time and on budget.
Engineering. A veteran developer and designer/builder will partner with an engineering firm based on three criteria. The first is an exceptional relationship with town, borough or city personnel to better ensure required township approvals are secured.Â
The second is their size. Usually, bigger firms come with higher costs and longer work turnaround times. While this isn't true with all large firms, it does happen more often than not.Â
Third, an engineering firm must have an in-depth understanding of state, county and local agency requirements. A well-rounded engineer understands all aspects of project interpretation.  Â
Legal. Hiring legal help is very similar to engineering with respect to relationships and understanding requirements of state, county and local agencies, including laws and ordinances. Legal counsel that knows the players within a particular township can make a project much less turbulent.
It is also important that legal representatives have adequate experience in land-use law, as the right counsel will know when a governing body is operating outside its jurisdiction. As a course of businesses, a full-service commercial developer and designer/builder will identify and manage such legal aspects of project to readily work through the red tape.    Â
Construction. Once the designer, development and other front-end aspects of a project are approved, it's time to build. Having a developer and designer/builder on board from the vision stage through project completion means that you don't have to go through the bid process yet again when it's time to break ground.Â
It goes without saying that the development and designer/build firm you hire should have extensive experience serving as project manager and general contractor for commercial construction projects of similar size, scale, scope and complexity – optimally in the same industry. Be sure to take on-site tours of buildings the company has helped designer, develop and build, both new and old, as you'll want to ensure the buildings stand the test of time.
Client service. Development and designer/build companies, like any other organization, operate for profit. The most desirable of these, however, are aware that their own success hinges upon that of their clients.Â
Be sure to assess a firm beyond photographs in a project portfolio. Look for a company that has verifiable examples of how they provided solutions when unexpected problems arose. Experienced firms will have a well-honed protocol to minimize surprises and to keep a client duly informed. Â
Much is also said about providing outstanding client service throughout the course of a project. But what about after final payment has been rendered and a project is complete? Will the level of service change? It is important to thoroughly interview past clients of the development and designer/build firm under consideration, and to specifically ask about post-project interactions. Stellar referrals in this regard will speak volumes about a company's integrity and character.
Use this project life-cycle-based checklist when hiring a commercial developer and designer/builder and you'll be well on your way to a successful outcome that not only meets, but may very well exceed, expectations.
Ryan Regina is co-founder and owner of Big Sky Enterprises, a commercial real estate developer, designer/builder and finance firm based in Voorhees, N.J. He can be reached at (856) 424-6244.
