When embarking on a new development project, whether it be as a equity investor, lender, or developer, conducting a project feasibility review is an important step for all parties. This process typically takes place during the initial stages of land acquisition and project configuration, serving as a comprehensive evaluation to help determine whether the proposed site and project is viable and worth pursuing. The goal of a feasibility review is to identify potential risks, costs, and challenges that could impact the success of the development, helping stakeholders make informed decisions from the outset.

Site Feasibility: Evaluating the Land

The land’s characteristics and existing conditions play an important role in determining whether a development project is feasible. This is where the site analysis comes in. It evaluates everything from land use regulations to environmental conditions, helping to assess the land’s potential for development. This includes, but is not limited to:

Land Use and Zoning

Planning and Zoning Review: A review of the local zoning laws and land use policies to determine if the proposed development is compliant with city or county regulations.

Off-Street Parking Analysis: Verifying that the development complies with parking requirements set by local zoning codes, which often include a certain number of parking spaces per square footage of building space or per dwelling unit.

Utilities and Easements

Utility Availability: Assessing whether necessary utilities such as sanitary sewer, stormwater infrastructure, domestic and fire water, electricity, and gas are accessible at or near the site or whether additional infrastructure is required.

ALTA Survey – Easements & Liens: Reviewing an ALTA (American Land Title Association) survey to confirm the presence of any easements or existing conditions on the property that could affect development plans.

Site Characteristics

Site Visit: A physical inspection of the site to evaluate existing structures, topography, and overall site conditions.

Geotechnical Findings: Understanding important information about the soil composition, groundwater levels, and potential challenges related to foundation and utility construction.

Flood Zone, Wetlands, Seismic Risk, Weather Conditions: Identifying whether the site is in a flood zone, contains jurisdictional wetlands, or is in a seismic risk area. Local weather conditions can also play a significant role in construction planning and performance of the asset.

Environmental and Community Concerns

Phase I Environmental Site Assessment (ESA): A Phase I ESA helps to determine whether any hazardous materials are present on the site, which may require remediation before construction can proceed.

Traffic Impact Analysis: Analyzing how the development will impact local traffic patterns and determining whether traffic studies are needed.

Archaeological Resources: Investigating whether the land contains archaeological or historical significance, which could result in restrictions or delays.

Endangered or Threatened Species: Ensuring that the site does not contain habitats for endangered species that would trigger legal constraints.

Summary of Proposed Improvements

This section of the feasibility report provides a snapshot of the proposed development, including detailed descriptions of the building and site improvements.

Building Improvements

A physical description of the planned building, including its size, layout, and any notable design features that could impact construction.

Site Improvements

Site Plan Review: A detailed review of the proposed site plan, ensuring it meets zoning, access, and other standards.

Site Access and Circulation: Analyzing the project’s access points and how traffic will circulate on and around the property.

Pavement Systems and Drainage: Ensuring the development includes appropriate pavement and drainage systems to manage stormwater and prevent flooding.

Off-Site Improvements: Identifying any off-site infrastructure improvements required, such as street widening or utility upgrades.

Development Schedule and Budget Considerations

Development and Construction Schedules

A preliminary development timeline is important for understanding how long the project will take. This will typically outline key milestones, including design approval, construction phases, and completion.

Budget Considerations

Development Budget: This includes an overview of the estimated costs for land acquisition, construction, permits, and other related expenses.

Construction Cost Comparison: A comparison of the projected construction costs with similar developments, contractor estimates, or cost data to ensure that the budget is realistic and achievable.

Contingencies: Estimating a contingency amount to cover unexpected costs that could arise during the development process.

Conclusion

Performing a project feasibility review at the land acquisition and/or early design stage is a critical step in the success of any development project. By carefully analyzing the land’s zoning, utilities, environmental concerns, and proposed improvements, stakeholders can make informed decisions about whether to move forward with the development or reconsider the project scope.

A well-executed feasibility review not only identifies potential risks and challenges but also provides a roadmap for overcoming them. By gathering all necessary information in the early stages, developers, investors, and lenders can set the project on a path to success—minimizing risks and maximizing the likelihood of a successful outcome.