From uli.com, members of ULI’s Small-Scale Development council speak about the advantages small-scale developers have and the challenges and opportunities they face in the current economy. Highlights:
- David Chandler of Faison in Charlotte, North Carolina: "Small-scale developers know the markets and the municipalities better, and they can probably see trends faster than someone from outside their area."
- Mac Chandler of Regency Centers in Los Angeles, California: "In this economy, you have to go really small, and small projects aren’t easy because you have to do a lot of them. But small-scale developers can navigate approvals easier because they are not perceived as an open checkbook. In the retail sector, tenants are expanding in the infill markets, and they are actually having trouble filling the pipeline because they sense a lack of quality product."
- Bob Lalanne of the Lalanne Group in San Francisco, California: "There are many more small and medium-size buildings and infill sites than large, and therefore many more opportunities. The Federal Reserve doesn’t seem as interested to protect the smaller lenders, so we are finding opportunities where smaller lenders and smaller borrowers have finally cried uncle and need to get all-cash deals and close within weeks."
- John McNellis of McNellis Partners, Palo Alto, California: "We’re not competing with institutional players that often pay significantly more than an individual using his own money would. Just in the last six months, we’ve started seeing a number of projects in the $1 million to $5 million range that one can purchase, add value, and create a fair profit. In other words, they are accurately priced."
- Dan Petrocchi of the Evergreen Company in Sacramento, California: "Small mom-and-pop retail franchises are the group of tenants most in danger in this economy. I have seen municipalities become kinder to tenants, so to the extent that the tenant and the developer interact, they are kinder to the developer."
- Keith Ulstad of United Properties in Bloomington, Minnesota."Municipalities don’t have the capabilities to extend sewer lines or public transportation routes, so they have turned their focus toward redevelopment and infill. That’s where small-scale development shines."
Full article here, requires ULI membership.