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Question
In which order does a development transaction progress?
a) site selection, entitlement, construction, tenant fit out
b) entitlement, site selection, construction, tenant fit out
c) site selection, entitlement, tenant fit out, construction
d) site selection, tenant fit out, entitlement, construction
Answer
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Related questions
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General
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Five years ago you invested in a brand new 100,000 square foot office building. The building was fully leased to great tenants with 10 year leases. You financed your purchase with a ten year mortgage at a rate that would be considered high in todays market. You can refinance today and get a new ten year loan at a lower rate. You will however be required to pay your current lender a steep prepayment penalty. You can also wait until the loan comes to term and repay the loan without any penalty. This was your plan until you recently read about a brand new office park being discussed for the old farm just a mile down the road. Coincidentally, this development, if built, could open just as your tenant leases are coming up for renewal. What are your thoughts?