Yesterday after work I met a colleague, and my blog came up. He said he enjoyed the content, but he wanted to know more about the inner workings of what it means to be a developer in the real estate industry. His perception was that there are plenty of city blogs out there but you never get a developer’s candid prospect.
For one specific reason I instantly thought this was a smart idea: When I’m at a party, and I tell someone that I’m a real estate developer, they sometimes don’t know what that means. They usually assume I am a real estate agent. Or they’re asking me to describe my typical day. Either way, I usually found it smoother (and more impressive) to just lie and say that I am an architect.
So I’ll just do what my friend has suggested. I’ll try to teach you more about what it’s like to be a real estate developer. And to kick things off, I figured I was going to start with some of the basics and then talk about how I got into the business.
Effectively, real estate developers are the people who are making a new building happen. They go out and buy the land, set up a team (architect, engineers, and so on), get the necessary approvals to build (with the team’s help of course), finance the deal, and then get a builder to actually build the project.
Developers are like the conductor of an orchestra. They just direct the results, they don’t play any instruments at all.
Yet developers assume 100 percent of the project’s risk at the same time. If the building fails (because you can’t sell the condo units or rent out the space), the developer (and his/her investors) will all be responsible. All the other members of the team get paid based on the services they provide. They’re advisors.
This distinction is what can make the production of real estate so lucrative — with reward comes the risk. And I’m going to be totally honest in saying this is part of the reason I’ve chosen to get into development. I was studying to be an architect and I started to realize as a developer that I was able to make more money.
But I also came to realize that I would probably end up having more control over the built environment as a developer. That’s my industry’s lamentable truth. Even though architects spend far more time thinking about what makes buildings and cities successful than your average developer, I would argue that they don’t have nearly the same amount of influence. And if they did we would probably not have so many crappy buildings in our cities. But it’s this way, because architects don’t take the risk.
Part of me used to feel bad about actually moving over to the dark side, which is how some architects relate to the game of development. But the best way to sum up how I feel today is through what an architect friend told me a couple of years ago – cities don’t need more architects who care about the environment. We’ve got plenty of these. Cities need more developers who care about architecture. And so I became that. A developer who loves design and deeply cares about one of our greatest assets — towns.