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Have you ever played SimCity? I loved it when I was a kid because I got to literally build a city from scratch. Homes, roads, hospitals, power plants, police stations…heck I still love it. But—surprise surprise—in the real world, there’s a lot more to building those buildings than simply building them.
With construction cranes looming over most of the growth states in the Southeast, it’s hard to miss the steady flow of developments being built in our communities. They seem to pop up overnight, at near-SimCity-like speeds. Before you know it a multi-story building is being delivered and having its grand opening. But don’t let the speed and scale of these projects trick you into thinking it’s easy. As complicated as the construction process can be, there’s more to the story and it’s in the dirt; before any land-clearing or ground-breaking.
Our Development & Investment (D&I) and Project Management (PJM) professionals manage a truly complex process, part of which involves zoning and entitlements, which establish exactly what it is you’re allowed to do on a given site. Like a permission slip. You typically need a bunch of them in order to bring a development to life. A good starting place is thinking about entitlements as layers of approval. Let’s take a look at four basic layers of approvals a project must receive before proceeding with vertical development.
Future Land Use
The first layer, the foundation, is called Future Land Use, or FLU. This layer is part of a comprehensive plan that outlines development density for a particular area and defines how specific areas of land are intended to be used. The best way to understand FLU is to look at a FLU map, which is typically provided for each municipality. This visual guide is color-coded and highlights the major components of the comprehensive plan such as economic development, housing, infrastructure, and natural resources (not unlike a SimCity map in my opinion).
The general land uses shown on a FLU map include commercial, residential, recreation, conservation, etc. In the development process, you’d first want to identify whether your intended use is consistent with the FLU. For example, if Foundry wanted to build an office building on land that’s been designated residential, it could be difficult to get the necessary approvals to proceed with the project. Not impossible, but difficult.
The next layer to peel back is zoning, which kicks the FLU up a notch by adding more rules and regulations regarding what can and can’t be done on the land to be developed. Zoning dictates what uses are permitted and also provides restrictions on density, size, placement and scale of buildings. If the proposed development is 100% compliant with all given zoning restrictions, we have what’s called permitted use. If our plan doesn’t comply with the zoning restrictions, we’ll have to work with the local municipality to obtain a conditional use. This can be a very long and arduous process.
If our development is consistent with the FLU and we receive zoning approval, then we advance to the predevelopment stage. At this point we’re focusing on making sure the land has the integrity and ability to properly support the development. Even if a project jives with the FLU and is properly zoned, we can’t hit “go” on construction yet. We still need to thoroughly investigate and inspect the land to make sure it’s suitable and safe for the project. Categories for due diligence include:
The purpose of this layer is ultimately to ensure the proposed development can be safely constructed and that the goings on at the site can be properly serviced by the local municipality. If the results of our investigation come back positive, we’re another step closer to getting a green light for the development.
Once we’ve made it this far we can stop and pat ourselves on the back for a second, but we still have a long road ahead of us. As you might imagine, the size and scope of our commercial developments can seriously impact a given area throughout the process, from start to finish. There has to be accountability and a process to make sure developers continually meet necessary criteria as their projects move forward. This process is managed by permitting, governed by the local municipality. Basically, a developer must submit an application to do just about anything on the property, including the following:
If our application is accepted and meets the criteria, we’re awarded a permit. To get an idea of how much time and effort goes into this process, a single industrial development of ours in Florida requires more than 25 different permits to be obtained.
AND DON’T FORGET: Once we’ve peeled back these layers—our development jives with the FLU, we have a permitted use, due diligence has been done, and we’ve gotten permits and permits and permits—we STILL HAVE TO BUILD THE BUILDING. Development is certainly not for the faint of heart. Hopefully this gives you some insight into and an appreciation for what our D&I and PJM folks are up to each and every day here at Foundry. It’s just one part of how we’re all working together to deliver successful and sound investments for our clients. Real life development projects might not be as drag-and-drop simple as SimCity, but we use our experience and expertise to make it seem that way for the people we work with.