What do you do if you're faced with a complex project in Commercial Real Estate?

When tackling a complex commercial real estate project, start with a comprehensive risk assessment. Evaluate market conditions, zoning laws, and environmental factors. Factor in financial considerations like capital costs and ROI potential. This detailed analysis informs decision-making and prepares you for challenges.

From the outset, it is essential to initiate a comprehensive due diligence process. When it comes to land acquisitions, the focus primarily lies on conducting a thorough legal due diligence. However, the purchase of a fully operational asset, such as an office building or shopping mall, necessitates a more intricate approach, encompassing commercial, technical, financial, tax, and legal due diligence. Consequently, it is imperative to enlist experienced advisors to identify and mitigate potential risks associated with the acquisition, as well as to validate the asset's price.

Some ways to get started: - Conceptualize the need (lease, purchase, development, sale...) - determine financial budget - figure out location need and timing - hire an expert to assist you in the market/submarket opportunity analysis

Assess risks associated with the project by identifying potential threats, uncertainties, and vulnerabilities. Analyze factors such as market conditions, regulatory requirements, financial risks, and project-specific challenges. Prioritize risks based on their likelihood and impact, and develop strategies to mitigate or manage them effectively. Regularly review and update risk assessments throughout the project lifecycle to ensure proactive risk management.

When selecting legal representation for a project, the initial inclination may be to opt for firms with international recognition and reputable brands. However, it is essential to remember that ultimately, your collaboration is not with the brand itself, but with the individuals representing it. Hence, a more prudent approach involves a thorough investigation into the market. This includes reviewing the LinkedIn profiles of specific lawyers and consulting international rankings, such as Legal 500. Often, choosing a local law firm over a global brand can be a smart decision. This strategy ensures that the selected attorneys align more closely with your project's specific needs, potentially offering more personalized and attentive service.

Assemble a skilled and diverse team with expertise relevant to the project's requirements. Select team members based on their knowledge, experience, and ability to collaborate effectively. Consider including professionals such as architects, engineers, financial analysts, legal advisors, and project managers. Ensure clear roles, responsibilities, and communication channels are established to facilitate smooth coordination and execution of the project.

For complex commercial real estate projects, assemble a team of experts with diverse skills and proven track records. Foster collaboration and clear communication while ensuring adaptability and strong project management leadership.

Engage Stakeholders - Keep stakeholders informed and engaged throughout the project lifecycle. This includes clients, investors, tenants, regulatory authorities, and any other parties with a vested interest in the project. Communicate regularly to provide updates, address concerns, and solicit feedback.

Strategic Planning and Timelines are out the window since Covid, WHF and Quiet Quitting types who no longer put a full days work in, in their mind maybe they do. Everything takes two to three times longer and Flexibility is key now to getting a deal done. Plan for the worst case scenario as far as timing now because that is the likely scenario. Need a new retail store or DC in 2025-2026. You are likely already late to the show! Have a contingency plan and don't be afraid to include performance and drop dead deal dates in negotiations. Walk if you have to and do not let people waste your time. Tell them that as well when you walk out the door.

Develop a strategic plan outlining the project's objectives, timelines, resources, and milestones. Identify key stakeholders, define success criteria, and establish clear metrics for measuring progress. Consider factors such as market dynamics, financial feasibility, regulatory compliance, and client requirements in your planning process. Ensure alignment between the project's strategic goals and the overall objectives of your organization or client. Regularly review and update the strategic plan as needed to adapt to changing circumstances and priorities.

For complex commercial real estate projects, strategic planning is crucial. Set clear objectives, establish timelines, allocate resources, and develop contingency plans to ensure alignment with goals and readiness to adapt.

Identify the challenges, and break them into smaller categories. With said categories, identify the goal and or information needed to execute need in the category, then identify industry leaders or partners, and enlist their knowledge. A quick call, a meeting over coffee. Collaboration. Creating a schedule or atleast a defined end goal is always crucial. If you have defined all the parameters of what is creating resistance in your project, and you have each category separated, it is then you can best present to either leadership, or a group of industry partners and develop a set plan to achieve your end goal.

Conduct a comprehensive financial analysis to assess the feasibility and viability of the project. Evaluate factors such as acquisition costs, construction expenses, operating expenses, financing options, and potential returns on investment. Utilize financial modeling techniques to forecast cash flows, calculate return metrics (e.g., ROI, IRR), and perform sensitivity analyses to assess the project's financial performance under different scenarios. Ensure that the project's financial projections align with the organization's investment criteria and risk tolerance levels.

When doing the financial analysis, ensure you keep in mind the decision-makers intent on the ROI. There are times that a project may not be as lucrative as the planners would like it to be, but possibly this is all the decision-makers are looking for. A project's viability is not always dependent on a high financial analysis result.

Ensure compliance with relevant laws, regulations, and permitting requirements throughout the project lifecycle. Conduct a thorough review of zoning regulations, building codes, environmental regulations, and other applicable laws to identify any potential compliance issues. Obtain necessary permits and approvals from regulatory authorities before commencing any construction or development activities. Establish protocols for ongoing compliance monitoring and reporting to ensure adherence to regulatory requirements. Engage legal counsel or regulatory experts as needed to navigate complex regulatory landscapes and mitigate compliance risks effectively.

Monitor project progress regularly to track milestones, timelines, and budgetary targets. Utilize project management tools and reporting mechanisms to collect and analyze data on key performance indicators. Conduct regular meetings with the project team to review progress, address any challenges or deviations from the plan, and make necessary adjustments. Maintain open communication channels with stakeholders to keep them informed of project status and any changes that may impact timelines or deliverables. By monitoring progress proactively, you can identify and address issues early, mitigate risks, and ensure the project stays on track towards successful completion.

One important conversation which is part of the monitoring progress is when (not if), the project has items that may change the result or the final costs or the timeline... Hopefully, The discussion was had at the beginning, but the questions of "How much is too much?" AKA: When do you pull the plug and walk away? NOTE: It is much easier to have this conversation at the beginning, then when the project is already too far along.

Price volatility- How to deal with significant changes in prices of materials considering financial implications and timelines. This happened of recent to us. We building a 106 units of varied apartments in a city center when suddenly prices of cement jumped from N5200 per bag to N9500 while that of iron rod jumped from N670k per ton to over N1.3m per ton.

Do not go it alone! Expert planners, agents, architects... and whilst you think I would say this... an expert lawyer is invaluable. You see my partners in commercial property pull everything together. They see the whole project, how it has gotten to be. They are SO used to chatting through things before new projects get off the ground, even when NOT YET instructed... and because they have seen it all before they can objectively help and suggest the right experts, all while keeping an eye on the commercial outcomes that must be monitored to see success. Whether that is purely financial, ESG, education, employment, training... green... political... or more likely all of the above, the right lawyer, the right planner... the right TEAM is key.

I would also network with a world-class specialty resource such as a nationally recognized university CR program or even a friendly competitor whose had a similar complex situation( and succeeded). I had an extremely complex situation and chose to visit a world-renown Harvard professor who was currently writing a book on the topic most important to my complex issue. His views were invaluable; and he, in turn, enjoyed having a front row seat on my real world transaction. Win/win. We continued our relationship until the Professor retired.