Plan Ahead: Using Master Planning for Financial Success!

It is easy to forget that master planning is an essential step in

designing an effective and profitable real estate development

strategy. The master plan helps strike the balance between investment

objectives and programmatic requirements, taking

the nature of site and control parameters of zoning, building,

and environmental ordinances into account. Therefore, it is

a key tool for both economically and environmentally sound

decision-making..

Forecast Needs and Vision

Healthy corporations seem to grow gradually, and so do their

spatial needs. Acquiring real estate and building facilities are

long lead-time processes. Well-run corporations feel the need

to proactively develop strategic facility plans well in advance of

the actual demand. The planning efforts ensure that the right

type and quantity of land, buildings, and services exist in the

right place at the right time to house corporations’ burgeoning

resources. This can have a significant impact on the future

financial success of the company. Corporate clients, targeting

specific market sectors, require specialized built-to-suit facilities

with specific quality and quantity of space in mind. Thus,

master planning and design become incredibly important to

resource planning as corporations start allocating finances, assemble

expertise, develop schedule, and build facilities in the

right quantity and with the desired results. Further, corporate

image, or vision, is a part of the client’s competitive advantage,

which the architect can integrate most thoughtfully and

effectively through the process of master planning.

Evaluate the Site.

Location, location, location: Some sites may offer strategic

advantages in terms of zoning, topography, access, and geometry.

When selecting the site, it is crucial to evaluate the

physical aspects of alternative sites as they can have enormous

financial impact on the development. Highly contoured

sites, of course, are expensive to build upon. A complex

program can be relatively easy to reconcile with a site’s regular

geometry, while the presence of a ground water table may

limit below-grade expansion. Soil quality has direct impact on

the type and cost of foundation, and contaminated soil will

require mitigation. Sites with similar topography and regular

geometry may also have other competing characters that only

can be discerned through a master planning exercise.

Clients seeking to find an appropriate site should work in close

coordination with architects to determine the suitability of the

site with respect to the program in mind. Some sites may offer

better development density and flexible zoning benefits than

others. Access to the existing roadways and utilities reduce

infrastructure development cost. The financial attributes of

various sites such as initial purchase cost, tax incentives, and

resale value can be determining factors as well. Environmental

restrictions, undesirable neighboring properties, covenants,

easements, deed restrictions, entitlement restrictions, and

even archeological impediments are other compelling factors

to be taken into account.

Holistically Consider Regulations

Master planning is an ideal tool to convey the intent and

benefits of the proposed development to regulating bodies.

All large-scale public projects are subject to the requirements

of Environmental Impact Assessment, for example. They are

also subject to public scrutiny and interest. The process of

master planning addresses zoning regulations and building

codes in detail, since these may have considerable impact on

the outcome of the development. Easements may limit the

development of a portion of land. Stipulated zoning tends to

exact certain conditional development by requiring developers

to perform certain activities (providing low cost housing,

development of open spaces, provision of public amenities,

etc.) in order to permit development. On the other hand,

incentive zoning provisions make projects desirable for both

public and private developers by encouraging developers to

integrate certain amenities or qualities (open spaces, plazas,

public art, public amenities, etc.) in their projects in return

for identified benefits such as an increase in development

density or rapid processing and approval of applications.

Historic districts may have specific conditions that may limit

the appearance and extent of development permitted, just

one of many considerations it’s important to understand early.

Plan Efficiently for Infrastructure

Other value-adding parameters are pursued concurrently during

master planning as well. Efficient and thoughtful vehicular

and pedestrian circulation can help reduce infrastructure

development costs by maximizing green space, increasing

porous paving, and reducing hardscape to bare minimum

requirement. Sustainable principles and urban design features

make projects more attractive for prospective tenants and

buyers. Views and vistas fetch high premiums on unit sales,

thus defining premier locations of the site. Early geographic

and geological considerations can significantly reduce construction

cost by proposing location of buildings in congruence

with the existing topography and ground water. Cut and

fill encourage re-use. Locating pathways along the contours

reduces excavation costs and does minimum damage to the

sensitive geography. The occurrence of hard strata escalates

the excavation cost and thus vertical stacking of the program

may be economically feasible. Population density derived

through a master planning exercise helps to determine the

cost associated with the provision of utility infrastructure for

water, gas, and power

Avoid Over- and Underdevelopment

Overdevelopment and underdevelopment are both detrimental

to the financial success of real estate investments, and can

be avoided with a bit of planning. A project is overdeveloped

when the pace of demand lags the pace of development.

Developers invariably run the risk of delayed return on

investment in a sluggish market, sometimes even incurring

significant financial losses. Phasing through master planning

can prevent overdevelopment as it addresses key aspects

such as available financial resources and thoughtfully planned

scheduling. Strategic phasing enables the development that

is gradual: supplying as the demand occurs.

A project is underdeveloped if the site is not put to best

and most appropriate use, and thus fails to realize its full

potential. In this case, the master planning exercise can help

determine the maximum possible development by taking into

consideration both positive and negative impacts of zoning

and building ordinances, and by analyzing a site’s strengths

and weaknesses. A prudent developer may seek a feasibility

study to understand the nature of market demand in this

case. Also, no two investors have the same appetite for risk.

Some dare to invest aggressively, others invest conservatively.

Economic conditions also suggest whether phased development

might be appropriate. Lower inflation marked by lower

material and labor costs tempts some developers to complete

projects in a single phase. Hence, a market analysis backed

by a well-conceived master plan only helps to turn critical

economic challenges into viable decisions.

Not all markets are predictable. Developers can best take

advantage of master planning to assess the financial viability

of their development by beginning with a soft launch. By releasing

a small portion of a development to market early and

testing the product, the developer will have a clear sense of

the market demand, allowing the possibility to pivot the development

strategy if necessary, thereby avoiding over- and

underdevelopment.

Create a Cohesive Sense of Place

The intangible benefits of master planning can increase the

success of a development. Common design controls developed

during master planning can help make a large-scale

project a seamless experience by arranging buildings into a

coherent pattern irrespective of the phase in which they are

built. Urban design guidelines enhance the place-making experience

by specifying aesthetic characteristics. Programmatic

requirements backed by a unifying aesthetic have proved to

work as a magnet and a selling point in many successful real

estate ventures around the world.

Keep the Plan Responsive and Flexible

Long-drawn planning projects bear the brunt of ever-evolving

market conditions. Large-scale projects span over a number

of years and evolve through constantly changing social,

economic, and political conditions. For that reason, it is wise

to consider periodic updates to the master plan in order to

study the suitability of the original program against present

circumstances.

For all these reasons, developers are well advised to select

architects and planners that can integrate the expertise of

planning, urban design, architectural design, and environmental

design to deliver a master plan that helps clients to set

up pragmatic and achievable financial goals. The master plan

is a crucial first step to ensure the success of any site and, by

extension, the vibrancy of the Pittsburgh region.

Nitin Desai is a registered architect at AE7 Pittsburgh. He has

worked on numerous building types and master plans of all

scales both in the US and internationally.

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