DFW development is a popular topic in commercial real estate. In this edition of the Champions DFW Commercial Realty Radio Show and Podcast, Jim Kelley welcomed Julia Barth to share her insight on DFW development. Julia is the managing partner of the JP Barth law Firm, and she has extensive experience in residential/commercial real estate law, construction and business acquisitions.
Here’s a sample of Julia and Jim’s conversation about DFW development. Then, listen to a free download of the podcast.
Jim Kelley: What are some of the strongest major hurdles or challenges you see in DFW development?
Julia Barth: I think that the biggest challenge for any developer, whether they’re developing for their own use or they’re developers for profit, and that’s what they do for a living, is the timing of the transaction. It is securing the land but not taking it down and how much does that cost them and what can the accomplish in the mean time. And that’s critical because almost, I’d say almost every project that I’ve seen come through is not zoned for the use that is proposed. It will absolutely need variances and there’s no guarantee that the zoning will change, the variances will be given, and if you take down a piece of land, you close on it and you buy it, and then it becomes less marketable if you can’t get those approvals. And you have to disclose that, so you don’t want to buy three acres to build a three-story building that has a two-story max right now, thinking, “Oh, no problem, surely they’ll approve it, they approved it down the street in the same town,” and then you go and you ask for the variance and the neighbors in that location freak out, don’t want a third story and you will not make any money if you develop two stories there. Only way to make money is three stories.
What are you going to do? You’ve got to sell the land. Well, how are you now going to sell it when the use is even more limited than it was when you bought it? So the timing is the biggest hurdle and then the orchestration of meetings with the appropriate people in the cities, in the planning and the zoning, and economic development. And there’s so many different people down there you can talk to. Finding the right people, because you are not developing the same city over and over again, so you’ve got to find the right people in the right amount of time. Government timing is not always the same as a private developer’s timing. The governments tend to be short staffed, or shorter staffed than you’d like them to be. And they work hard and they try hard, but at the end of the day the government turns off the phone at 4:30. So, you know, you might be trying to work on your development and doing your pro form at midnight, but you’re not going to be able to talk to someone in P and Z at midnight.