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How to Navigate Preconstruction in a New Market

It’s easy to rush into construction when your business is ready to grow to new locations, especially when you’ve been through the building process before. But if you’re building in a new state (or even a new city), it’s important to tap the brakes so you can gather the information necessary for a smooth construction process.

Here’s how to gather a few details to assess a new location thoroughly.

1. Find out who the Authority Having Jurisdiction (AHJ) is for zoning procedures

The Authority Having Jurisdiction refers to the organization, office and/or individual(s) who has final say over approving drawings, equipment or procedures. For zoning, the AJH is always the government—but you will need to determine whether it’s at the city, county or state level.

Once you’ve determined the AHJ, clarify requirements and review/approval procedures so that you have a clear understanding of documents needed for approval and realistic expectations for lead times. 

2. Do your due diligence on permitting requirements

Unfortunately, permitting requirements aren’t always as cut and dry as they’re spelled out to be. Apart from gathering information directly from your local jurisdiction, reach out to local contractors and consultants who’ve been through the process before. It’s important to have your local bidders walk you through their own unique experience with local processes to anticipate possible curveballs.

In some cases, it may also be important to keep your project under wraps, so you might consider hiring a third party consultant to anonymously represent you in these conversations. Keep in mind, going this route will multiply the bills if you intend on performing due diligence in more than one location.

Tight budget, but plenty of prospective markets? If that’s your scenario, you may want to explore a design-build approach where a national service provider like ARCO/Murray performs due diligence exercises at a low cost under the agreement to work together when an effective site is found. 

3. Familiarize yourself with wetland and floodplain regulations

The last thing you want is to find yourself deep into the design process, only to discover you haven’t accounted for wetland, stream, or floodplains and/or easements on your site. In either scenario, you’ll be shelling out more money for potentially significant redesigns, and then more for the actual build, along with added time to work through the regulatory processes. Before you head into a new territory with design plans, determine what constitutes a wetland and where they currently exist. Don’t skimp on research to uncover any other potential land encroachments such as easements. The more you know about your site, the less time you’ll spend revising previous layouts and paying unexpected fees.

4. Anticipate hidden fees

Environmental factors, weather, and utility accessibility are only some of the potential issues you could find on a site with large price tags to resolve. Even before site selection, some immediate budget risks may come to the surface such as Permit, Tap and Impact Fees—these can be fees charged to property developers that fund a public projects, utility capacity, police/fire funds, etc. These costs do not translate from market to market. What may be $500 in one location could be $50,000 in another, so be sure to ask about these potential fees earlier rather than later. 

5. Meet with the city to confirm your findings

Once you’ve collected your research, it’s time to verify your findings with the city. Apart from ensuring the quality of your information, meeting with the city and developing a rapport with the decision-makers is key to having your project greenlit at each stage. It goes without saying that certain jurisdictions are friendlier towards certain types of businesses, too, so make sure you and/or your developer have done your part to scope out the local business landscape in order to have a strong pitch.

Conclusion 

Discovering a new market for your real estate project is an exciting step for your growing business, but be careful not to get carried away before you understand all the cost-impacting factors at play. No two places are alike, and as much as anyone would like to have a cookie cutter solution from state-to-state or city-to-city, the reality is one project in one part of the nation will end up looking and costing a lot different than another elsewhere.

Need to assess a high volume of locations over a short period of time? Working with a national design-builder like ARCO/Murray can help you perform these intensive steps at breakneck speed for more than one location, and we do it with the same goal that you have: get to construction faster by uncovering expensive risks with minimal upfront investment.

Looking for the right design-build partner? Experience a better way to build: partnerwitharco@arcomurray.com