My son got a late start to life. Eleven days after my wife’s due date had come and gone, we decided we had had enough. The days felt like years and we worried that something might be wrong. So we hobbled over to the hospital to discuss our options.
We were living in Berlin at the time. When we got to the hospital, the staff was divided. The nurses who handle delivery told us that eleven days wasn’t too late and suggested we wait it out. The doctors, on the other hand, told us our chances of complication went up every day we waited. We sided with the doctors. They began to induce labor, which takes a while as the Germans do it.
Around midnight the following day, he got stuck in the birth canal and had to be pulled out with a suction device. This was just as scary as it sounds. Upon finally making his exit safely, the doctors realized he had an infection and whisked him to the neonatal ward. Thankfully he stabilized there, spending his first days in the care of an elderly Bavarian midwife.
Those days were the culmination of a long process, and it took weeks for the three of us to recover from it. But if you met my son today, I’m confident you would agree with my assessment of the ordeal: it was all worth it. And there’s a reason I’ve decided to begin a book on buildings with a story about birth.
It would be profane to compare the importance of a human's birth to the “birth” of a building. But I’m struck by the similarities in the experience of these two processes nonetheless:
That’s the metaphor I’d like to use for this book. As such, I have divided it into two parts. Part One of the book will outline the “birds and the bees” of buildings. Why are they conceived in the first place? Once we have a clear concept of why buildings are conceived, Part Two will walk you through the stages of the pregnancy and delivery process. There are a few things to note.
The first point regards definitions. When you mention the words “real estate” in public, one mental image comes to peoples’ mind: selling single family houses. That’s not what this book is about. First, that image overlooks most of what counts as real estate. Real estate includes office buildings, shopping centers, hotels, apartments, senior living, industrial warehouses, self-storage, and so many others. Second, it overlooks the process: you can only sell something that exists. And bringing a building into existence takes much longer than selling it. Finally, it assumes real estate is primarily something for sale, though most real estate is held and used to generate rental income, month after month. In this book we’ll be discussing the entire process required to develop the kinds of buildings which are made to generate rental income.
My grandfather milled the lumber he used to build his own house and barns. Those buildings were truly a one-man show. But they’re the exception to the rule. Think of one of the spaces you frequent every day. Architects designed it. Lenders and investors financed it. The city approved it. Contractors built it. And their work consumed thousands, or tens of thousands, of man hours. This is a strong argument for placing them at the center of the story.
On the other hand, for all their work, the project didn’t start with these people. They were called in once the process had already been set in motion by someone called a real estate developer. A real estate developer is the individual or firm in whose mind the idea for the building is first conceived. Developers pick a site and the kind of building, and they vet the idea economically. They have to pledge their personal assets as collateral for the project, which can bankrupt them if something goes wrong. And it’s their responsibility to know and coordinate all the parties involved.
The relationship between these two groups – those who conceive of the project and those who do most of the execution – complicates our story. Whose view on the story counts most? Because the idea for a building begins in a developer’s head, we will spend much of in Part One in a developer’s head. But once we’ve understood that starting point, Part Two will shift to the perspectives of the other members of the team. These will be people like lawyers, architects, bankers, investors, urban planners, and contractors. This will introduce us to the thought processes of those involved in the order in which they get involved.
Our discussion will touch on every discipline involved in the birth of a building. But the book is not a proper introduction to any of those disciplines individually. I won’t have an extended conversation on lease structures or appraisal methods like you would find in a book on commercial real estate. I won’t talk about the psychology that informs classical or modern design when I discuss architecture. And though we will dabble in both urban planning theory and history, the book won’t be a proper introduction to that subject either. So why have I limited our focus?
Because of the enormity of the task, the people involved in the birth of buildings specialize. They become developers, architects, urban planners, engineers, contractors, or real estate lawyers, each with expertise in one slice of the process. There are certainly merits to specialization. But you will be more useful in your specialization, and work better with people from other specializations, if you understand the whole process first. By limiting our scope, I hope the book will make such an understanding possible.
I have spent years asking veteran developers, and their collaborators from disciplines like architecture, about this topic. Those conversations are my primary credentials. I happen to work in development and have been involved in millions of dollars of transactions across several different kinds of project. But the number of disciplines required to execute a development make it a daunting subject. I’m not sure anyone could ever be exhaustively qualified to explain it. In many ways, I’m using this book as an exercise to improve my own understanding.
Having said all that, if you decide to quit reading based on the shortcomings of my credentials, or the book’s limited scope, I won’t hold it against you. But for those of you who, having invested this much time, decide to press on, I’m hopeful the investment of time will yield a good return. Speaking of returns, let’s start there.