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Old 12-26-2016, 06:24 AM
 
Location: Los Angeles
783 posts, read 686,689 times
Reputation: 961

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I'm a newbie trying to get some info. I have a question about the process of taking land from nothing to built. Do the developers who have the initial plot of land own the property?

I hear about people who

Buy & sell land (real estate developers)
Build actual structures on them (Architects, engineers, contractors)

I am wondering if the two meet in the middle very often.

Say you want to own a mall, and you are the real estate developer. How common is it for them (the real estate company) to actually have the ability to construct their mall in-house (own a construction company)? Sometimes, rare, never? Does it happen in certain markets? i.e. home-building, commercial etc.
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Old 12-27-2016, 11:32 AM
 
28,455 posts, read 84,921,999 times
Reputation: 18723
There are MANY different "business models" for development.

The larger firms do have a staff of architects, engineers, and contractors, but even such firms often rely on relationships with third party firms to provide specialized consultations for some circumstances. The various ups and downs of the market mean that sometimes there is too much work to get everything done in-house and other times, when work dries up, it does not make sense to carry a large staff that is idle...

When it comes to "owning the land" there are similarly all kinds of situations that are common -- if a vacant piece of land that once may have been used for farming becomes available there are some firms that buy it outright, while other firms will try to enter into a long term land-lease with the owner and they might get a specific amount annually for an extended period of time after which the developer who built the structures that are now stores can renegotiate. The "lease termination" might also have the "improvements" revert back to the land owner after 50 years, though odds are former farmers (or their heirs) are not going to want to have the responsibility of working out leases with the various anchor tenants and smaller shops...


There are often consortium type ownership of major retail properties and REITs that specialize in getting the kind of tenants that make for successful malls. In the US two of the most well known are General Growth Properties | GGP and https://www.westfieldcorp.com/about/

There are some REITs that specifically attempt to be "cross categories" owning retail, office, and residential properties while other specialize in one or two areas. The advantages of specialization vs broader reach as well as the positives of having a narrow or wide geographic reach are often less important than how thoroughly any firm manages the various risks of occupancy / operating costs against their costs of financing and the value they can deliver to various tenants.

There are also large residential developers that build tracts of homes and sell them to homeowners, a whole separate kind of development.

Technically firms that just focus on building large projects often consider themselves simply "builders" or "project engineering" firms.
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Old 12-27-2016, 11:37 AM
 
Location: Salem, OR
15,490 posts, read 40,182,593 times
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Yes, there are builder-developers in both the commercial and residential real estate sectors.
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