New York Commercial Real Estate Development Lawyer
Real estate development is one of the most challenging, exciting, and profitable endeavors in New York. The entrepreneurs and visionaries that have shaped the city have also shaped history, creating a rich and fascinating legacy over the centuries.
Today, commercial real estate development remains a dynamic and rewarding industry, but developers operate within an ever-changing regulatory environment that adds complexity and potential liability. Developers need to partner with a commercial real estate development law firm to minimize these potential risks and chart a course toward success.
What Is Real Estate Development?
Real estate development is the complex, multi-step process of acquiring land or property for development, managing the project, and then selling or leasing the finished real estate for a profit. Developers have the greatest financial risks, creative oversight, and profit potential of all the parties involved in the process.
Among the different types of real estate development, commercial real estate development has the potential for higher returns, with better-qualified tenants, more favorable lease terms, and higher property values overall. However, the costs are higher, regulations stricter and more complex, and returns may be more volatile. Commercial real estate ventures need the advice of an expert New York commercial real estate development lawyer in order to avoid the many risks and pitfalls of these types of ventures.
Phases of Commercial Real Estate Development
Each commercial real estate development deal is unique. Not every project will have every possible development phase; some may have special stages or milestones not described below. However, there are always three basic phases of commercial real estate development, which may apply to both new construction and renovations:
- Predevelopment. The predevelopment phase is arguably the most important stage of commercial real estate development. During this phase, the necessary research and planning are done to ensure the proposed development is viable. Some of the stages of predevelopment include:
- Site selection and evaluation. Developers evaluate available properties to determine whether they meet the project’s requirements. Sites must be evaluated for size, infrastructure, access points, traffic flow, zoning restrictions, and other factors. It is also important to consider neighborhood demographics, environmental impact, and the marketing proposition for clients and stakeholders.
- Analysis and feasibility studies. When considering a construction site, evaluate the demand for your type of development. Who will the tenants be, and what will they find desirable in a site? How much are they willing to pay, and what features do they require? An engineering analysis should be done to determine whether your site is suitable for your development, and an environmental analysis should also be conducted. Review any legal, regulatory, or zoning restrictions that may apply to your project.
- Acquiring financing and approvals. After a specific plan is made for a specific site, the developer begins the process of seeking financing and applying for necessary permits and approvals.
- Development. The development phase takes the project from an idea to a reality. During this phase, the real estate developer manages a complex project with many interdependent parts. The basic stages of property development include:
- Site preparation. Depending on your site and engineering reports, you may need to prepare the site for construction, including grading, road construction, or utility installation.
- Hiring and coordinating the development team. A typical commercial real estate development project requires architects and landscape architects, structural and civil engineers, HVAC engineers, and various consultants.
- Zoning and municipal approval and inspections. Throughout the construction process, the developer undergoes many different stages of approval with local governments and agencies, and the project needs to pass various inspections.
- Marketing and outreach. It is never too early to begin to focus on marketing and positioning the project within the city and community. Many development projects are facilitated with the goodwill and support of neighbors and community members, who are also stakeholders in the project.
- Construction. The construction process involves framing, roofing, utilities, and HVAC before interior work can begin. Major interior construction consists of ductwork and insulation, plumbing and electrical work, drywall, floors and ceilings, doors and hardware, and painting and fixtures. Construction may also include parking, landscaping, and other site features.
- Operation. Once the building is complete, the developer either needs to secure a buyer or operate the building for tenants. The operation phase may include marketing and advertising, hiring agents or property managers, or developing leases and moving in tenants. Many developers need another round of bridge financing to close the gap between their investment and the return.
Naturally, renovations and building rehabs have different considerations and development phases than new construction, and specific considerations and guidelines apply for different types of end uses, but all commercial real estate development projects tend to follow this framework.
It is critical to conduct thorough analysis, due diligence, and detailed planning during the predevelopment phase for construction to go smoothly and the project to achieve its financial goals in operation.
Why You Need a Real Estate Development Attorney
In some circumstances, New York law requires an attorney to be present at the closing of real estate transactions. However, successful real estate development projects in New York require close collaboration with an expert real estate development attorney throughout the development cycle, not just at closing. These projects have high financial risk, complex legal and zoning regulations, and depend on the successful collaboration of hundreds of different stakeholders.
Here are just a few reasons why you need a real estate development attorney for your project:
- Evolving regulatory environment. Many commercial real estate development projects take years to complete, but New York real estate laws and regulations are constantly evolving. A specialized law firm understands the law, anticipates changes, and keeps your project on track.
- Interdependent entities and stakeholders. Over the development cycle of a real estate development project, you may have hundreds of contracts with different contributors and entities. If one vendor, project, or stage of development is delayed, the knock-on effects can be costly. An expert attorney can minimize these risks and coordinate agreements.
- Safeguard your investment. By reducing risk, managing negotiations, and offering proactive solutions, an experienced New York commercial real estate development lawyer safeguards your investment and ensures cost savings over the life of your development project.
The Fridman Law Firm supports entrepreneurs and visionaries with innovative solutions, strategic planning, and long-term partnerships that build toward success. Our New York commercial real estate development lawyer puts our clients first, regardless of the size of the deal, and helps you protect your investment, avoid pitfalls, and make informed decisions. Contact us today or call 212-262-9823 to schedule a consultation.