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 it's done in Germany.
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 unnerving as it sounds. When he finally made his exit, 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 a tenacious 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, considering why they are conceived in the first place. Part Two will then walk you through the specific stages of pregnancy and delivery that each individual building faces. 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 mind: selling single-family houses. But that image overlooks a number of things. First, it overlooks buildings like offices, shopping centers, hotels, apartments, industrial warehouses, self-storage, and many others. Second, it overlooks the process. You can only sell something that already exists, and developing a new building usually takes much longer than selling it. Finally, it assumes real estate is primarily something for sale. But a considerable amount of real estate is held and used to generate rental income, month after month. So, without discounting the importance of the single-family housing industry, this book will focus on the process required to develop the kinds of buildings that exist to generate rental income.
My grandfather milled the lumber he used to build his own house and barns. His buildings were a one-man show. But they're the exception. Think of one of the spaces you frequent every day. Architects designed it. Lenders and investors financed it. City staff reviewed it. Contractors built it. And their work consumed thousands, or tens of thousands, of hours. This is a strong argument for placing these people at the center of the story.
On the other hand, for all their work, the project didn’t start with them. 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 was first conceived. Developers decide what kind of building is in demand, find a site, and determine whether the project is financially feasible. To move forward, they have to pledge their personal assets as collateral for the project, which can bankrupt them if something goes wrong. Finally, they must hire and coordinate all the parties involved throughout the process.
The relationship between these two groups—those who conceive of the project and those who bring that vision into reality—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. This will give us historical and financial context for development in general. Then, in Part Two, we will consider how a specific project takes shape, leaning heavily on the insights of people like architects, engineers, urban planners, general contractors, lawyers, bankers, investors, brokers, and asset managers.
We will touch on every discipline involved in the birth of a building. But this book isn't a proper introduction to any of those disciplines individually. I won't have an extended conversation on lease structures 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 urban planning's history and theory, the book isn't a proper introduction to that subject either. 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 process as a whole first. I hope our more limited scope will make that 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 many projects. 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.