Written by: Doug Hunt, Partner & SVP-Development (South Bend, IN)
Land Sellers! Like snowflakes, no two are alike. Any structure that gets built is built on land… except of course the space station, which is on – or in - the most expensive real estate of all…outer space. So without the land you need, you can’t build anything.
Developers looking for land are like tight-fisted farmers at a horse auction. They notice things about a site that the average passerby, well, passes by. To a passerby, it’s just a farm field on the edge of town, a corner store that’s been closed for years, a crumbling parking lot orphaned on a city block...
A developer, on the other hand, sees what might be. That’s the fun, the work, the risk; the unknown voyage that starts when you try to acquire a “position” in a piece of land. I say “position” because you almost never want to pay up front in cash for land. This isn’t just greed; it’s reality. Putting something of value on that land, something that will generate profit one way or the other, is seldom an overnight experience.
It’s kind of like finding a big chunk of gold. Sure it’s great...But can you carry it back to town to sell it or will it break your back along the way?
Of course, it can be exciting. We’ve all seen those photos of developers and builders with the plans spread out on the hood of a pickup truck. The developer is the one who looks a little out of place in his hardhat and suit, probably pointing to a distant horizon. And how distant it can be!
What can make that picture ugly though, sometimes, is that capturing that land can be like having a tiger by the tail if you can’t turn it into the profit-making project that was in your plans. Maybe your customers, the ones you planned to sell to or build for, evaporate. Maybe the approvals you need from the local government are not forthcoming or maybe all of that drags on and on…and the taxes and the interest costs click on like a New York taxi meter. And maybe your bank that started out as a friendly “Dr. Jekyll” turns into a nasty “Mr. Hyde” and pulls the plug on your loan.
So the occupational hazard of the developer is to – somehow – keep his vision clear. Somehow – to see what might be. See the dream but don’t lose sight of the disaster.
But let me go back to getting control of the land. As I said, no two landowners are alike. We all have our stories. Once in awhile… once in a great while… a meeting of the minds of seller and buyer can occur quickly and with smiles all around. More likely is a series of meetings, messages, stops and starts, and it’s not until well into the wooing that the outcome seems in reach.
The most interesting stories arise when the seller is not in the real estate business. Could be a farm family whose land is in the path of growth...Could be a retired couple whose home and land are too much to take care of. Or a business owner who wants you to take his old place off his hands if you want to build him a new place. Might be a bank that just wants to unload property that it took back from a failed business enterprise… or even a failed developer!!
Once, we were negotiating with an elderly gentleman whose job in retirement was driving a shuttle bus at the local airport. We went literally round and round the parking lot, picking up and dropping off passengers as we tried to convince the fellow that he should sell his property to us. Finally, he heard the right price or terms and he pulled his bus to a halt in the middle of the parking lot. He swung the doors shut, yelled “out of service” to passengers wanting to board – baggage and all – and promptly started talking terms. You never know. But it’s better to be on the bus then off the bus when that happens.
Developers aren’t the only ones with plans that can go unfulfilled. Sometimes big companies not in the development business will hold land positions for decades and no one who works there now knows why the land was bought. But that doesn’t mean the company will even consider selling a tract of land that is otherwise of no value to them. Railroads are notoriously reluctant to even consider selling land, as if somehow, someday, that acreage just might fit into a grand plan. There is still a lot of that in the Midwest, where the painful changes in the economy have left factories abandoned or land lost in inventory.
Whatever the motivation to sell or the reason for reluctance to sell, whatever the notion of value the seller clings to, you can be sure the situation is unique. And the job of the developer is to listen clearly to what the seller is saying...or not saying.
So the first chapter in the story of a development project – controlling the land – can have a long and twisting plot. There are many unfinished first chapters in every developer’s file cabinet. There are many wasted months trying and failing to get to chapter two.
But nothing starts if you can’t get past the peril and promise of Chapter One. “It was a dark and stormy night… but.”
* * *
Land We Sought …
In living rooms, board rooms, bar rooms.
Land we bought….
Flat, rolling, or rock hard land,
Patches, corners, quarter sections of farmland.
Sand, or clay, or blasted stone,
Tread-grabbing muck in Spring.
See the sweet deal
but beware the long shadow perhaps it casts …
the thorn on the rose
Dreamers, geniuses, journeymen developers…
All know the direction and the destination we seek.
But there’s a seat on the bus for fools too.