Ask a Real Estate Expert #2: What is predevelopment? September 4, 2019

IFF’s Real Estate Solutions team works with a wide array of nonprofits that each have unique needs. For the next few months, we’ll be sitting down with Dominic LoGalbo, IFF’s Director of Consulting for Design and Construction, to answer a series of real estate-related questions we’ve gotten throughout the years from our nonprofit clients.

Q: What is predevelopment?

Dominic: Predevelopment can be a lot of things. To put it simply – it’s anything you need to do to define the project before you can start putting hammers on nails.

This might mean doing a needs assessment from a either a programming or facilities standpoint. An organization needs to figure out what exactly it is that they need, how they want to enhance what they’re doing, and how to make it all happen.

During the predevelopment phase of a project, we have also done things like a strategic facilities masterplan where an organization has multiple facilities. We look at what condition the facilities are in and how well they’re able to support the organization’s mission. Sometimes we help them map things out to ensure they have a more efficient distribution of resources. We look at what their rent costs are, the specific terms of a lease, which facilities have good terms, and then what’s the physical condition of them in terms of deferred maintenance.

Another predevelopment activity could be a feasibility study. Say an organization has an idea of what they want to do and where they want to do it, but is it feasible? There’s a financial component and a physical component to a feasibility study. We’ll look at operating budgets, staffing costs, and building occupancy costs and develop those with the client. On the physical side we ask the questions – will it fit, will it give them enough space for what they want to do, how much, if at all, will it interrupt their current operations, or should they look at a different site?

The predevelopment phase could be 3 months, or it could last several years. It depends on how challenging of a situation an organization is in and how much money is available. Frequently, the predevelopment phase feeds into a fundraising effort for an organization. This is where some projects can get stuck. Some organizations are equipped to do major capital campaigns, and some organizations may need more time to develop a donor base.

Sometimes predevelopment is about answering the question “if” or “when” instead of “how.”  The answer may be, “not yet.”  If you do not take the time to answer the basic questions, and you start before you are ready, you could really damage your organization. In this process, don’t pressure yourself that something has to happen right now.

Once the basics of the project are defined – the where, what, and when – IFF will help clients complete the predevelopment process to get shovel ready. Our predevelopment supports typically include selecting the project team, such as the architect and general contractor, developing the design and construction drawings, going for permit, and getting formal bids for the construction. Many clients are surprised at how much work is involved up front. But it is essential to get the predevelopment phase right for the construction phase to go well.

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