By Tony Seruga, Yolanda Seruga And Yolanda Bishop
Not every city has the proper political and social environment to sustain growth. In fact, there are some cities who are completely opposed to growth and work very hard to maintain the status quo, regardless of how the world is changing around them.
Land developers and investors specifically look for cities that are fully open to growth and progress. Cities that have municipalities open to growth and development are prime locations to build large commercial and multi-family properties. These cities often have future land use maps where they outline land and color code them based on the zonings, or type of properties they will allow within the border. This is a city that is looking to grow and they actually have a plan for it. These cities will be ready to help you with anything you need to get that land developed, especially with a growing population or major change in infrastructure.
The cities that are not open to growth have three major characteristics that are clear signs that growth or development are NOT in their future.
The first is purely political. Even if city officials are pro-business and development, well-organized opposition can sway votes and cause projects to die. Maybe not with the city, but with the people in the city as well. The city officials may have an election coming up or there are strong opposing forces and any major moves may hurt their campaign and position. It could even carry to the lenders in that if they realize there is opposition, even though they could say "Yes," they will say "No," to avoid public ridicule. Politics can be a huge constraint to growth in a city.
The second is that the people voted into local office are elected to keep the city the way things are. The politicians are put into office because of their commitment to keep things the same so growth and development are out of the question. They focus in maintaining not growing which is suicide for a developer. You can bet 30 acres of raw land zoned commercial will not be approved as a new mall or office park. The red tape and barriers would be so thick, that it would take years and years before a project would ever be approved- or ever approved for that matter. City officials would simply lay every obstacle in your route before they would allow such huge changes. These are the cities a land developer MUST avoid unless they want to spend 3-5 years spending money and trying to get a project approved.
The third is state law restricts local governments from planning growth. So the local government may have ideas, but the state restricts them from actually moving forward. There may be extremely strict guidelines or jurisdictions or even conflicting views between the local and state governments. And you know where this leaves the land developer or investor? In the middle running around with no real future for a project. This is where you do NOT want to find yourself.
As you can see, there are multiple reasons as to why a land developer or investor would not want to work in a specific city. You can easily find out by asking to the local brokers. You can ask them if the municipality is open to development. They will either say, oh yes definitely. In fact, they may mention that the local government will provide tax incentives for the jobs that are created and will be willing to help any way they possibly can. Or, you may get, our city government is very strict and it takes a while for projects to be approved.
A simple discussion with the local brokers and even Chamber of Commerce will give you a good idea if they will be open to working with you and your proposal. Otherwise, no matter how good the deal looks theoretically, leave it alone if the city won't cooperate. Don't expect that red tape to disappear- it rarely does without a good, long, expensive fight.
As a commercial real estate land developer or investor, the golden rule is to only work in cities that are willing to work with you. It makes the process so much easier and enjoyable working in a city that welcomes your presence and efforts.
About the Author: Tony Seruga, Yolanda Seruga and Yolanda Bishop of http://www.maverickrei.com specialize in commercial and investment real estate. As of May, 2006, they and their partners are managing over $600 million dollars worth of new projects.
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