Professional Real Estate Development: The ULI Guide to the Business
Carter, Charles C., Journal of Real Estate Literature
Professional Real Estate Development: The ULI Guide to the Business. Second Edition. Richard B. Peiser and Anne B. Frej, 2003, 397 pages, Urban Land Institute.
The second edition of this ULI-sponsored book appeared in print last year. The first (1992) edition's authors were Richard B. Peiser and Dean Schwanke and the acknowledgments and foreword to this second edition are both by Richard B. Peiser. The book is essentially a practical guide on developing the five major types of real estate: land, residential, office, industrial and retail.
The authors' progress through the chapters is logical and the later chapters do a very good job of building on the basics presented in the earlier chapters. After two relatively short chapters, entitled "Introduction" and "Organizing for Development," the third and fourth chapters, "Land Development" and "Multifamily Residential Development," respectively, set out the foundations of real estate development. The third chapter covers the subdivision process by which raw land is transformed into parcels ready for building. The fourth covers multifamily residential development but includes a step-by-step analysis of topics common to all forms of development. The remainder of the book covers office, industrial and retail development and ends with a chapter entitled "Trends and Issues" that examines the industry.
Organization and Readability
As is common with ULI publications, the book contains occasional text boxes or short topics alongside the main text meant to elucidate or provide historical insight. All the text boxes are relevant and promote a fuller understanding of the topics discussed. Someone relatively unfamiliar with real estate development would undoubtedly be lost without the diagrams, photos, charts and extra text. Occasionally the text boxes are used to introduce developers or development companies or specific development projects, giving the reader a sense of real-life applications.
One potential problem with any development book is that there are many topics and details must be left out. This results in many lists scattered throughout the text that the novice might view as uninteresting or unnecessary. For example, paging through Chapter four the reader finds a list of residential product types, a list of stages of income property analysis, a list of factors to be considered in delineating the target market area for a proposed development, and so on. The authors' many reference notes at the end of each chapter make it plain that the lists are meant to summarize broad topic areas that could take up entire courses, such as real estate finance and real estate market analysis.
The discounted cash flow and investor returns analyses in Chapters three and four are excellent. Less extensive financial statements and charts are set out in Chapters five and six. The financial analyses are not relegated to appendices but set out up front in the text, which I think is a good idea. (Appendices include legal forms, e.g., "Sample Letter of Intent for an Industrial Property Purchase" and "Sample Commitment for an Office Building Construction Loan.") The authors also point out that the financial analyses in Chapters three and four can be accessed through ULI's website and additional materials providing more detail are available through the Harvard Design School website. Calculations and measures of return are very adequate, with coverage of un-leveraged IRR, both before and after tax IRR, return to investors and simpler return measures. (Number crunchers should be satisfied.)
The book succeeds in doing what a book on development should do, that is, give the reader a feel for how real estate development is conducted and all the problems that must be considered. And it does this smoothly and gracefully. Of course, a good understanding of how development is done requires some knowledge of real estate law, finance, market analysis and how real estate professionals conduct their business. …