Approvals often Underestimated

The design and approval process in all mixed use deals should focus on the future, specifically as it relates to potential development options. This doesn't mean to just carve off sections of the site not being developed immediately and identify potential uses. It means to consider stacking, parking lot development, and alternative building uses in every site plan and approval, and stretch for the stars when getting your approvals. In doing so however, it is imperative to have the appropriate professionals to make sure that you do this thoughtfully and appropriately so you still design and approve something that is marketable.

There is no doubt that approvals will only get more difficult and expensive over time, and processes involved will only continue to be prolonged. Getting these approvals on the front end will set a precedence for development and impact the projects ability to be flexible and implement improvements as the market demands, instead of being reactionary and in waiting with municipalities.

Milhaus was involved in a project several years ago that is a perfect example of undershooting the potential for a project. This project should have been approved for around 1500 - 2500 units over the next 15 - 20 years, instead, it was approved for approximately 300 units. Much of this had to do with the fact that we came into the process very late, and were not able to backtrack, an instance I am sure the original developer greatly regrets now. Milhaus is now preparing to expand the current product, and we should be moving forward even in the midst of this very difficult market, however, these very basic approvals of product that is almost identical to that already approved only on a larger scale requires an approximiately 24 month process, making it difficult to move forward on the project. What a big loss for the developer who could be bringing in a significant cash injection with our purchase of the land.

Another caution however is to don't just do this for approval sake, as if the approvals are not thought through, they can be as negative as positive. We often run into commercial based developers who go ahead and get residential developers without a residential developer on board. We were recently involved in a situtaiton where a developer shot and got an over approval by about 400 units about 7 - 10 years ago which was great foresight, as teh project is a great project that we are ready to rock and roll on. However, the approval was gained with a requirement that every building had to have retail in it, and therefore, the project is infeasible without going back in and getting new approvals. Once agin the developer can't be happy with himeself, as if he would have consulted us at the time of his original approvals, our product really has not dramatically changed, and we would be closing on the project and moving forward, instead of what looks to now be a closing a year later than it could have been.

Regardless of the project, to try to ensure long term viability, it is a good practice to ensure that you design and approve for flexiblity and project growth for a long period, as the future of mixed use developments have long term horizons, and the process and costs of these developments will only increase over time.