Acquiring a land is the first step in building a new apartment development.
As the urban cores is growing in cities throughout Canada, land is now considered a gold mine for owners occupying it. The GTA by itself is expected to add as much as 100,000 new residents per year and increase residential densities along major transportation hubs such as subway and commuter train stations.
Land for new development can come in many forms other than the farmer’s field at the edge of town, or the abandoned industrial building at the edge of downtown. For subdivision builders, that left-over plot unsuited to new housing could become the site of a high-rise apartment and a new revenue stream. In cities, where bylaws permit, owners of shopping malls and high-rise apartments could subdivide their underused parking lots or surrounding land to build additional units. We think it’s fair to say that condos should go on the “A” piece of land, and apartments should be built on the slightly quirkier, good “B” or “C” sites.
The Bureaucratic Process.
Despite cities encouraging the crease of denities along major corridors, there are important steps for developers and landowners to undertake to reap a plot’s potential. The first process is the difference between the landowner and the developers not always one in the same. While property owners may realise they have excess density they can profit from, they may be experienced only in managing their shopping centre or apartment building and they may not have the necessary experience to navigate the complicated rezoning procedures or the task of building on the freed up land. but The developer still has to find the land upon which to build and must get in touch with the owner in order to buy it. A third party is often required to attain the right property which knowns how to negotiate the complicated process of changing by-laws, conducting feasibility studies, and gathering the right builders. It is a rare landowner who has all the expertise he or she needs to develop his or her excess density from the ground up. A successful development often has multiple partners.
There are multiple of ways to recognize the intrinsic value of excess landing by who the owner is and the level of development expertise.
A landowner could request the expertise of a planner, an architect or municipal lawyer to contact the city and ask for a rezoning. After that, the person must decide whether to sell off the excess density to a developer, try to develop the property themselves or do a joint venture with a developer in order to realize the full value of the new asset.
The second approach would be for a landowner to partner up with a developer to deal subject to rezoning, and then letting the developer handle the rezoning negotiations at his cost. This approach can generate better results, as a developer is usually experienced in dealing with city planners and understanding what is feasible for a particular plot of land.
Experience Key to Successful Negotiations
In undertaking a development, it will require a lot of negotiation between the city and various stakeholders (including the property owner, and owners of nearby properties). Developers with rich experience will have an advantage in these negotiations. A single property owner with no development experience asking for a severance is less likely to have a clear vision of what to build or how to build it and is more likely to sell the severed land to a developer who may or may not like what was negotiated between the property owner and the city, thus requiring further negotiations when the developer comes back to the city to change what was agreed to.
To get the best value for a land, the developer will need to have a strong idea of what will be built before purchasing the land. By carefully analyzing the local market, the developer can understand the type of development that will generate the best investment. Less expensive lot of land can be bought elsewhere that will provide similar returns. This is crucial because new apartment developers are already competing with new condominium developers. Land costs have already increased in the past few years, but a developer or a property owner who has a clear idea of what to build and where, who has pulled together the best data or who has been introduced to the best development partner, has the potential to reap considerable rewards for land.