Three keys to collaboration in big building development
After the ribbon was cut, cameras finished flashing, handshaking was done, and the grand-opening crowd drove away, we appreciated more the work going into this $250 million Valley Grove development. Without exception, multiple organizations and hundreds of people collaborate to make these glittering office parks get off the ground.
The oft-heard phrase “herding cats” comes to mind as we consider the issues faced, the organizations involved, and the sometimes surprising solutions that result from a well-planned and executed business office building development. The same principles apply when any commercial venture seeks to get off the ground.
Developers posture with local government stakeholders for preliminary approval, which leads to other coordinating organizations with a stake in the game. The challenge is to align competing goals in a collaborative, rather than adversarial way.
“A positive business planning outcome can be reached with a positive, proactive process,” said Scott Darrington, city administrator for Pleasant Grove. “Everyone would rather work in an environment of mutual trust and benefit. We are certainly happier when well-thought-out and mutually beneficial plans are executed.”
Such positive outcomes can be accomplished by following three key concepts: know the field of play, know your strengths, and allow all parties to win.
Know the Field of Play — Adequate homework done in advance helps promote understanding of the decisions that must be made so there are relatively few surprises. City, county and state government have regulations you must address. Having a large library of experience reduces the number of unforeseen issues that may float to the surface in the ocean of project planning. This also helps you avoid putting others on the spot with spur-of-the-moment thinking, requests or conflict.
Take road infrastructure for example. Looking out for the best interest of future tenants, the developer must plan for street access and adequate parking, among many other factors geared to maximize economic benefit. City planners may share these objectives regarding local streets, but the Department of Transportation is likely much more concerned about traffic flow’s affect on the interstate highway. City planners may share a developer’s enthusiasm for attracting growth away from another city within the state. The Governor’s Office of Economic Development would more likely be excited about attracting out-of-state business to enter the state.
“Our state depends on well-planned business development and the bigger the project, the more complex the process,” said Vale Hale, director for the Governor’s Office of Economic Development for Utah. “A lot of moving parts are in play, sometimes for years, before the public may see fruits of collaboration. Knowing what we have to offer and constant collaboration are key to the state’s stellar business growth.”
Know Your Strengths — When entering negotiations in any field, identifying areas of strength and leverage are vital. In the case of building development, once property is owned, you likely know if you have terrific access, a central location, a growing area, a community primed for job growth, etc. When it comes to dealing with organizations that grant zoning and variance, and may control eminent domain for street expansion, knowing what you have to offer in exchange for a concession is vital.
Take a street-widening proposal. If the Department of Public Works wants more right-of-way, they are motivated to avoid the hammer of claiming eminent domain. You in turn may know that you would like a new access lane to your property not previously in the plan. Previous efforts to get such a lane or another stoplight may have failed. Your position is likely stronger knowing that the commission would rather not force the street widening without your buy-in, especially knowing they declined your suggested intersection light.
Allow All Parties to Win — In today’s media, we seem to reward confrontation and adversarial relationships. This thinking can spill over into negotiations, creating an atmosphere of negative energy with win-lose outcomes. Perhaps the wiser approach is taking time to find a common solution that suits all parties, resulting in win-win.
Take the example just discussed. City and state planners come to you with the request to widen the street. Since you are a forward-thinking developer, you may have observed the rapidly rising traffic congestion and have foreseen the need. However, since you also know that you own the land, the other parties need your approval or face legal challenge that may delay needed improvements. You really don’t want to lose more land, but your wise planning required little adjustment to accommodate another traffic lane. What you really want is that added access lane for your tenant’s customers. So you agree to sell the right of way once the added access lane is granted. Everyone wins.
The developer must negotiate with not only government entities, but potentially dozens of designers, architects, engineers, brokers, attorneys, tenants, etc. Regardless of who is on the other side of the table, the same principles apply. Know the field; know your strengths; allow all to win. Perhaps these principles are part of the reason Utah is at the top economically and internationally. This type of thinking will surely help Utah business to stay on top.
Daniel Thomas is regional partner for St. John Properties Utah and is currently managing development of the Valley Grove business park in Pleasant Grove. He holds a B.A. in Real Estate Finance from Portland State University and an M.S. in Real Estate from Johns Hopkins. He is the past chairman of the University of Baltimore’s Real Estate & Economic Development Advisory Board. He may be reached at www.thevalleygrove.com.