Florida, Winter Park, Orlando, aerial of Amtrak Sunrail Train Station and lake Virginia. (Photo by: … [+]
If you’re interested in real estate development, having experience can be helpful as you make decisions and execute projects. You’ll be able to draw on the past to mitigate risks and increase your chances of success for the next deals. While education can provide a foundation, spending time in the industry will help you to better work through the complexities of projects.
Consider the following as you gain experience in real estate development and pursue your goals.
The Learning Curve in Development
Real estate development is a multifaceted discipline involving niches such as market analysis, financing, construction, and regulatory compliance. There can be challenges that arise in each of these areas, and it may be difficult to anticipate issues without direct experience. For instance, understanding zoning laws may be one step; however, if you’re new to development, you’ll likely want to bring in an experienced partner. They can help you navigate the next steps, which could include the rezoning process and working with a community amid the changes that construction brings.
Similarly, while spreadsheets can model financial returns, real-world experience might reveal nuances related to unexpected costs, market shifts, and negotiating with lenders. For instance, MaryAnne Gilmartin, a real estate developer and founder of MAG Partners, worked with legendary Bruce Ratner on projects such as the Barclays Center in Brooklyn early on in her career. She gained experience in development and eventually went on to start her own firm.
Rosie Tilley, the head of development at Charney Companies, oversees the execution of complex development projects. One of the ways she learned about development and construction involved asking questions on the field. By listening to others and observing, she gained knowledge and went on to take on larger projects.
Experience as a Risk Mitigator
Every development project carries inherent risks—ranging from economic downturns and fluctuating interest rates to construction delays and community pushback. While no developer can eliminate risk entirely, experience could significantly improve risk management. Seasoned developers tend to be well equipped to identify potential pitfalls early and craft contingency plans.
For example, an experienced developer may anticipate potential construction delays by building buffer time into the project schedule. They might negotiate flexible financing terms to account for possible interest rate hikes or diversify their portfolio to spread risk across different asset classes and markets. Experience also helps in choosing reliable partners—be it contractors, architects, or financiers—who can deliver under pressure.
Moreover, seasoned developers may be able to better understand the cyclical nature of real estate markets. They might have lived through active and quiet times, and learned how to capitalize on opportunities during downturns. They could also be knowledgeable about avoiding overleveraging during market peaks. This long-term perspective can aid them in making decisions that are resilient to short-term volatility.
Managing Stakeholders Well
Development projects typically involve a wide range of stakeholders, including investors, government agencies, contractors, and community members. Each group has its own priorities, and balancing all these interests can take some creativity and strong communication skills. Experienced developers often excel in stakeholder management because they’ve had years of practice negotiating, communicating, and building relationships.
Leveraging Experience for Innovation
While it might seem counterintuitive, experience doesn’t just make developers cautious; it can also fuel innovation. Seasoned professionals can use their deep understanding of the industry to identify and implement creative solutions. For example, they might explore mixed-use developments to maximize land value or adopt sustainable building practices to meet changing regulatory requirements and consumer preferences.
If you’re new to development, you can look for an experienced partner who may be willing to mentor you. You’ll be able to improve on skills such as risk management, stakeholder communication, and innovation. While theoretical knowledge can provide a starting point, you’ll want to consider every project to be a learning opportunity. As you look for ways to continually grow, you’ll increase your chances of gaining the Insider’s Edge and achieving long-term success.
