Factors to Consider When Investing in Development

99% of commercial real estate investments fail before they even begin. Why? Because investors buy into hype instead of hard data. You’re making million-dollar decisions based on gut feelings instead of real market analysis. And that’s costing you opportunities, money, and long-term returns. Here’s how to evaluate a CRE location the right way: 1. Infrastructure Access If your site lacks essential utilities, road access, or high-speed internet, your investment is already in trouble. Infrastructure isn’t just about convenience—it determines functionality, costs, and tenant demand. 2. Demographic Trends Who lives, works, and spends money in this area? Are young professionals moving in, or is the population aging out? Growth patterns dictate demand for office space, retail, and multifamily developments. 3. Urban Development Plans Is the city investing in new roads, transit, or commercial hubs? If you’re not aligned with future zoning and infrastructure expansion, you’re betting on the wrong horse. 4. Taxes and Incentives The tax burden can make or break an investment. Smart investors look for opportunity zones, tax abatements, and local economic incentives that maximize profitability. 5. Transportation and Connectivity Logistics hubs, highway access, and commuter routes define commercial success. If it’s hard to reach, tenants and customers won’t come. 6. Growing Industry Sectors Don’t invest in yesterday’s economy. Tech, logistics, life sciences, and remote work hubs are shaping the future of CRE. Know where demand is rising before you buy. 7. Competition and Comparable Sales Who’s already there, and what are they paying? If your site is surrounded by struggling retail or underperforming offices, reconsider. Competitive positioning is everything. 8. Land and Development Costs The sticker price isn’t the full price. Permits, labor costs, and construction overruns kill deals. Always model your true cost per square foot—before you commit. 9. Redevelopment or Repurposing Potential Adaptive reuse is the future. If demand shifts, can your asset pivot? A strong investment survives economic cycles by evolving with the market. 10. Long-Term Investment Viability Five years from now, will this location still be in demand? If you can’t answer that confidently, you’re gambling—not investing. Smart investors don’t just buy property—they buy future demand. Before you make your next move, make sure the location works for you, not against you. 📩 DM me if you want a deep-dive analysis on your next CRE opportunity. #commercial #realestate #investors

Last week, I tackled one of the most critical tasks of the year—setting the financial roadmap for every property in 2025. Accounting wrapped up 2024 financials, and then the real work began. I sat down with the President of my property management company to pre-plan every property’s 2025 budget. Each line item was reviewed and approved by the director responsible for that specific number. Sometimes adjustments were made if the director presented a strong business case for change. These budgets were one of the most important things we did. They didn’t just set NOI projections—they aligned incentives across all teams. When a property won, the people driving that success won too. We were thoughtful about every number, but here are five key factors we considered: 1. Stabilization Levels A property undergoing a major CapEx business plan naturally had operating expenses different from that of a property that was fully stabilized. Understanding where each property was in its lifecycle was critical. 2. Last Year’s Performance We analyzed operating expenses to find areas to reduce costs without lowering quality—better systems, consistent employees, or completed CapEx projects often unlocked savings. We also focused on increasing operating income, believing strongly that each year we owned a property, we should deliver more value to residents and owners if leaders were effective in their roles. 3. CapEx Plans to Boost Income or Cut Expenses Sometimes, investing in CapEx reduces operating expenses long-term. Directors often provided business cases for these investments, like how updating common areas could reduce weekly cleaning costs. 4. New Systems and Upgrades Each year, we enhanced our systems with better technology, AI, and efforts to retain top talent. These upgrades impacted profitability and efficiency. 5. Projections and Trends We compared our current performance to lender projections and future proformas to see where we were trending and adjusted accordingly. Even if you owned just a few properties and worked with a third-party PM company, you should have had all your 2025 numbers locked in by now. It wasn’t enough to have a budget—you needed to understand it. No budget went perfectly, so communication on course corrections was key throughout the year. Finally, aligning incentives was crucial. Rewarding your PM company when they delivered on budgets created a winning partnership. Whether you were a GP, LP, owner/operator, owned 5% equity, or 100%—if you did one thing in 2025, it had to be this: understand your budgets. Everything flowed from there.

At Centra Companies, our mission is to bring visions to life in the form of vibrant communities. 🏘    It all begins with our meticulous evaluation process, where we systematically source and assess potential sites prior to acquisition. ️    Our comprehensive approach encompasses five key elements:    🔹 Strong Networks:  Our network of brokers and city contacts provide us with off-market opportunities and guide our decisions with strategic insights.    🔹 Thorough Site Evaluation:  We look at a variety of site factors such as location, market trends, and demographics to align every decision with our vision for community development.     🔹 Infrastructure Availability:  We consider how surrounding elements, such as proximity to utilities, roads, schools, and shopping centers, influence the livability of a prospective development.    🔹 In-depth Land Assessment:  We thoroughly evaluate the physical aspects of the land through topographical surveys and geotechnical analyses. This helps us foresee construction challenges.    🔹 Stakeholder Engagement:  Early on, we engage with local stakeholders, including government entities, potential buyers, and community members, to ensure our projects are vibrant parts of the community fabric.    Our early due diligence lays a robust foundation for the entire development process.    We believe in proactive decision-making and identifying opportunities and risks early on to craft developments that are financially viable and enriching for the community.    Share your thoughts, what is the most important consideration when evaluating potential real estate development sites?    #realestate #realestateinvesting #community #duediligence #development