Discovering the Highest and Best Use for a Property
Determining the highest and best use involves running multiple scenarios. We envisioned a software that automatically identifies the most profitable development approach, and we are closer than ever. We started with a tool that allowed us to seamlessly analyse development.
Exploring Scenario One: Maximizing Units Allowed
We’ve observed instincts and behaviors when analyzing real estate development with our software. Initially, we tend to set up basic zoning parameters, starting with maximum number of units or buildable SF, required parking, and setbacks. All of which greatly affect floor plates.
Analyzing Return on Cost
Next, we fine-tune the assumptions to reach a good return on cost. Here we lean on market rates, average construction costs, standard operating expenses. We then adjust the size of the units, amenities, and take advantage of any parking reductions. All of which affect returns.
Evaluating the Impact of Adding Retail Space
Eliminating barriers to exploration is essential. Buildings last decades and all should be considered. In the past, exploring mixed-use was not trivial. Now, a click of a button enables you to quickly weigh the benefits of including retail, office, or even industrial uses.