Nesbit News Article |
How long does it take to build a professional office building? |
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| Posted: 5/8/2006 |
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| Over the past several weeks, Dave Nesbit has had a few opportunities to teach real estate development and the fundamentals of the Pennsylvania land development approval process to attorneys, engineers, real estate agents, bankers, municipal officials, contractors, and others who need “continuing education” credits. Dave would like to share the consensus of how his “students” collectively answered the question -- “How long does it take to build a professional office building?” Not surprisingly, the answer suggests that office condominiums are a great solution if you are an office professional who understands that it is foolish to lease office space when you can afford to own, but maybe you don’t have the time to work through the lengthy real estate development process.
I consider it to be both an honor and a privilege to have been asked again this year to share my experience with the Central Pennsylvania real estate development community as a continuing education instructor. When I stand in front of a class that includes attorneys, engineers, real estate agents, bankers, municipal officials, contractors and others, I am humbled by the expertise of the many specialized professional disciplines. Yet, because increasing and ever-changing governmental regulations have resulted in a complex and often illogical real estate development approval system, few of these professionals have a clear understanding of the entire process. It is an interesting exercise to use the individual expertise of such a class to create a consensus of a realistic schedule for an applicant to obtain all of the approvals needed for a typical professional office development process. The answer is that it takes a minimum of 18 months and as long as 2 years from the date that a professional determines that an office is needed until the date of occupancy is reached. This time applies whether an office is 2,000 or 15,000 square feet in size. The schedule can vary slightly among municipalities, and it is increased by certain circumstances which necessitate state involvement. Here’s an overview of a typical office development schedule as defined by a consensus of specialists, who are each experts in a part of the process: Month 1 - Define the office square footage requirements with preliminary space planning. Select suitable land for an office location and put it under contract. Month 2-3 - Complete 60 days of Due Diligence of environmental, title, municipal land development regulations, state-related development approvals, and other preliminary issues. Determine whether to proceed and invest funds ($25,000 to $75,000) to obtain land development plan approvals. Month 4-5 - Retain a civil engineer to complete a boundary and topographical survey and prepare a land development plan for municipal submission. Month 6-9 - Review of plan by the municipal engineer before the Planning Commission meeting, review of plan by the Planning Commission, revision of the plan in response to Planning Commission comments, conditional approval of the plan by elected officials. Consultations with an architect and contractor to design a building to meet the functional and budget requirements. Obtain a conditional financial commitment from a lender Month 10-16 - Satisfy the pre-recording conditions of municipal plan approval, which nearly always include NPDES permitting, negotiation of a developer’s security agreement, preparation of a bonding estimate and posting of letter of credit, and confirmation of utility service. These approvals may also include a Highway Occupancy Permit from PennDOT if the site is accessed from a state road, or permits from the Department of Environmental Protection if wetlands, streams, sewer issues, or other environmental issues are encountered. Add a minimum of 3 to 6 months if involvement of a state agency such as PennDOT or DEP is required. Month 11-17 - Record the land development plan. Hold settlement on the land acquisition. File for a building permit per the requirements of the International Building Code, which typically requires a 2-4 week plan review by the municipal code officials. (Many municipalities will not accept a building permit application until a land development plan has been recorded). Month 12-18 - Begin construction (weather permitting). Allow 6 months to complete construction from the date of ground breaking until initial occupancy is permitted by the issuance of a Certificate of Occupancy by the municipality. Month 18-24 - Move in! Not only does this development process take approximately two years, but it involves economic risk because of several factors including but not limited to: Unexpected (re)design fees due to complex and changing municipal regulations; Unforeseen municipal requirements for off-site “voluntary” financial contributions requested in exchange for obtaining necessary and routine waivers of municipal land development requirements; Rising interest rates; Rising construction costs related to the cost of oil, steel, concrete, labor and hurricane relate lumber increases. Nesbit Development, LLC has teed-up the Mountain View Office Park, a condominium which provides a visible and accessible professional office setting and a Mechanicsburg address along Route 15 in a growing and affluent area of Cumberland County. You can now inspect the exterior and completely control all of the details of the interior completion of your own first floor office of 1,500 to 8,000 SF, which will have its own 5’ x 8’ exterior sign, front door, private restrooms, plus a secure bonus storage area. Occupancy can be delivered within 3 to 6 months of your commitment. Why lease when you can afford to own? Why wait 2 years when you can plan your move now? Why risk the rising costs and hard-to-control variables of real estate development when you can fix your costs today? Contact us now for more information!
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