It has been awhile since I have posted here and that is largely because there has been little to say. Mostly our team has been occupied getting the bid packages ready for distribution to our select list of general contractors which we are still trying to select.
Huh?
Actually, we currently have a list of about seven general contractors which includes Conlan Construction, Glen Arm Construction, Kinsley Construction, Atlantic Builders Group, and DPR Construction. The objective is to winnow this list down to five who will actually receive the bid packages.
In the meantime, General Growth Properties sent out a Request For Proposals (RFP) for Parcel E-1 in Emerson Corporate Commons which is a 5.2 acre site adjacent to ours. This parcel could accommodate a 60,000 to 65,000 square foot office building. The RFP called for bids to be in by August 25th.
Our development team was very interested in acquiring this land. We envisioned it a natural extension of our project and we had even given it the working title of "E2." The challenge for us was that the floor to area ratio (FAR) was not as good as Emerson One. This made it difficult for us to justify paying the same amount (or more) as we did for the Emerson One site. At the end of the day the cost of the building and land dictate what rent you need to achieve in order to generate a return that justifies the risks.
In other words, one year later we ended up bidding less for the site next to us which was not exactly what GGP was looking for.
We just found out yesterday that we did not win the bid. Apparently our bid "was significantly under" the winning bid.
Needless to say, we are disappointed. We are also anxious about who and what will be building next to us. GGP won't disclose the winning bidder until they have finalized a purchase contract with them.
Stay tuned.
Wednesday, September 12, 2007
Wednesday, August 22, 2007
Day 22 : Falling Into Spring
Our schedule leak has turned into a six month delay on the construction start. While we originally intended to break ground this October we have now decided to wait until March. We could actually begin sooner if we had to but since we don't have a tenant that is clamoring for us to finish we can wait.
As it was, we were already pushing the schedule to get the foundation in before the ground froze and we found ourselves dealing with winter conditions. The rejection of our initial Site Development Plan made an October start unlikely and even a November start iffy. Now we can avoid the costs and delays associated with winter construction and be ready to go as soon as the weather breaks.
This translates into the building being ready for tenants around January 2009. I need to change that leasing sign!
As it was, we were already pushing the schedule to get the foundation in before the ground froze and we found ourselves dealing with winter conditions. The rejection of our initial Site Development Plan made an October start unlikely and even a November start iffy. Now we can avoid the costs and delays associated with winter construction and be ready to go as soon as the weather breaks.
This translates into the building being ready for tenants around January 2009. I need to change that leasing sign!
Friday, August 17, 2007
Day 17: Schedule Leakage
We were sitting in a development team meeting the other day discussing the development schedule. Bob Hofmann, the architect, indicated that that there may be a leak in the development schedule.
A leak?
I have to say that this was a new term to me but I kind of liked the metaphor. Early on in the process we had developed a schedule of critical dates leading up to tenant occupancy of the building. The schedule is constructed using past experience on things like getting the Site Development Plan submitted and approved. The only problem is that while these schedules are generally conservative, they tend to anticipate things going rather smoothly. When they don't you get a "leak."
Have you ever driven by a real estate development and seen a sign that says something like "Available Fall 2006" and it is now Fall 2007 and the ground is still covered with tumbleweeds?
That would be a project with a schedule leak.
Our schedule leak occurred when our Site Development Plan was rejected last week. The reason it was rejected is because the county has decided that they want us to treat the Whiskey Bottom Road extension as if it were a public road even though this particular portion of the road will remain private. There is no way we could have anticipated this requirement change since the county does not normally require this. These are the types of things that cause a schedule to leak.
Is there a plumber in the house?
A leak?
I have to say that this was a new term to me but I kind of liked the metaphor. Early on in the process we had developed a schedule of critical dates leading up to tenant occupancy of the building. The schedule is constructed using past experience on things like getting the Site Development Plan submitted and approved. The only problem is that while these schedules are generally conservative, they tend to anticipate things going rather smoothly. When they don't you get a "leak."
Have you ever driven by a real estate development and seen a sign that says something like "Available Fall 2006" and it is now Fall 2007 and the ground is still covered with tumbleweeds?
That would be a project with a schedule leak.
Our schedule leak occurred when our Site Development Plan was rejected last week. The reason it was rejected is because the county has decided that they want us to treat the Whiskey Bottom Road extension as if it were a public road even though this particular portion of the road will remain private. There is no way we could have anticipated this requirement change since the county does not normally require this. These are the types of things that cause a schedule to leak.
Is there a plumber in the house?
Friday, August 3, 2007
Day 3: Is It Leased Yet?
"Is it leased yet?"
The partner asking this question already knew the answer. The partners will know before anyone else when we secure tenants for the building. They just like to keep some "friendly" pressure on the guy who is responsible for getting the building leased.
That would be me.
Leasing efforts for a project like this begin the day the land purchase contract is signed. Even before the design is complete efforts are made to identify potential prospects and make sure the local commercial brokers are aware of the project. EmersonOne was highlighted in this years Core Tour of commercial developments in Howard County. The Core Tour is held every 18 months and is sponsored by the Howard County Economic Development Authority. When the four buses of brokers and bankers were driven by the site in April all they saw was the leasing sign and a large empty lot.
In this business no prospective tenant is going to start taking a project seriously until they see the building actually being built. Everyone knows and understands this but that still does not keep the partners from asking the question, "Is it leased yet?"
The answer is no. Until that answer is yes I won't sleep well.
The partner asking this question already knew the answer. The partners will know before anyone else when we secure tenants for the building. They just like to keep some "friendly" pressure on the guy who is responsible for getting the building leased.
That would be me.
Leasing efforts for a project like this begin the day the land purchase contract is signed. Even before the design is complete efforts are made to identify potential prospects and make sure the local commercial brokers are aware of the project. EmersonOne was highlighted in this years Core Tour of commercial developments in Howard County. The Core Tour is held every 18 months and is sponsored by the Howard County Economic Development Authority. When the four buses of brokers and bankers were driven by the site in April all they saw was the leasing sign and a large empty lot.
In this business no prospective tenant is going to start taking a project seriously until they see the building actually being built. Everyone knows and understands this but that still does not keep the partners from asking the question, "Is it leased yet?"
The answer is no. Until that answer is yes I won't sleep well.
Wednesday, August 1, 2007
Day 1: Welcome
I have been excited about construction and development ever since I was a kid playing with my Tonka trucks in the backyard. With the exception of brief (and somewhat disastorous) foray into high technology most of my professional life has been in commercial real estate. I have worked with raw land, regional shopping malls, warehouses, flex buildings, and office buildings.EmersonOne actually started a year ago this month. That is when General Growth Properties (GGP) put out an RFP (Request for Proposals) for a 10.633 acre site in the Emerson Corporate Commons. GGP is the developer of the 570 acre planned community of Emerson. Well located business sites are rare in the heavily developed Baltimore Washington, D.C. corridor along I-95 so there was a great deal of interest among developers for this site.
The development team of Ryan Development and Emory Properties was selected by GGP in early September of last year and the property sale was closed in December.
One year later we are finally getting ready to "move some dirt" and begin the process of getting the building built. We are awaiting Site Development Plan approval from Howard County and with any luck we will begin grading the site this October.
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