Master Developers are real estate developers who build Master Planned Communities. This post expands on the ingredients needed to become a great Master Developer, outlined by Urban & Civic, a Master Developer, in their infographic.
Projects
Target big, complex sites in key growth locations
Study urban growth patterns and predict where new developments will happen. Acquire the most land you can afford to benefit from land appreciation created in the first phases.
Invest in the land for long-dated returns
Master-planned communities are like icebergs — they are massive and move slowly. MPCs require a lot of investments to transform undeveloped land into developed, functional, and aspirational for the first residents to move in. Recruit partners who have long-term investment horizons.
Work with like-minded partners
Attract high-quality shareholders, talent, and clients who share your values and add value to the project. Work hard to maintain and raise the quality bar in every aspect.
Recognize every site demands a customized approach
Every site has unique topography and engineering challenges. The market is always different. Learn to adapt to the context and attempt to understand the market. Highlight and incorporate natural environments into the master plan.
Planning
Ensure senior team engagement with stakeholders and communities
Master-planned communities significantly impact the city. It is human nature to resist change. That is why the NIMBYism movement against development exists. Therefore, excellent relationships with public entities and surrounding stakeholders are paramount to minimize unforeseen setbacks.
Trust is earned by making and delivering on promises
Build what you say you will build and work to exceed stakeholders’ expectations. The job of a Master Developer is selling a vision, securing funding, and making it happen. Rinse and repeat.
Cut through jargon and complexity – explain, illustrate and guide
It is hard to transmit the idea of an unbuilt vision. Make sure to develop clear communication skills and invest in graphic materials, like renders, of what you will achieve. Make sure to align the design and construction with the marketing material.
With a 20-year consent – build in flexibility from the outset as things will change
The needs of the market change with time, and master plans must evolve to capitalize on those changes. That is to say you don’t need to have the last phase designed in detail from the beginning. Create space to incorporate lessons learned into future phases.
Delivery
De-risk issues at the earliest opportunity
Recognize all possible risks and have a strategy to mitigate them. For example:
- Lower market risk by attracting anchor tenants like universities, schools, and town centers.
- Lower finance risk by conducting feasibility studies, buying land at the right price, having wealthy shareholders, excellent relationships with banks, and having long-term financing.
- Lower construction risk by hiring outstanding engineering designers, general contractors, and third-party inspectors.
- Lower product risk by conducting market studies and understanding your customer.
Assume responsibility for the delivery of infrastructure to maintain momentum
The project should always be moving forward. Master-planned communities behave like a snowball rolling downhill; they start slow and small, but as you move forward, it moves faster and bigger. To clarify, more infrastructure and residents increase the market size for potential new businesses, thus increasing the value of the project and creating a virtuous cycle.
Work at scale to create efficiency
The headache and management costs of building a 1-kilometer road are almost the same as building 5 kilometers. As a result, you should build the most you can while maintaining a healthy percentage of sales (>40%) and keeping your debt in check.
Establish multiple points of sale to enhance absorption
Experiment with various markets to understand what works and double down on those who do. Make sure to understand which price points can have high absorption and differentiate your product. Experiment with age groups, price points, and interests.
Homes
Keep control by not selling off large parcels
Selling large parcels might make you lose control and put the vision at risk. All pieces of land must follow the code and add value to the project. The job of the Master Developer is to build out the vision from start to finish.
Package land consistently across phases and sites
Master-planned communities must be thought of as an assembly line. When building one phase, you must plan and sell the next one. Designing, financing, and building is a continuous endeavor. Build a constant supply of residences to keep the ball moving forward.
Create a level playing field for all sizes of housebuilders to compete
Help everyone involved in the project make money. This creates a virtuous cycle of repeat customers because they reinvest in the project. Especially help homebuilders. Their success is your success, and their failure is your failure. The Master Developer must orchestrate homebuilders, so they must enact equal rules and allow fair competition.
Be prepared to self-deliver the more difficult plots to maintain quality and values
There are always hard lots or residences to sell in every project. Not all properties can have the best views and locations. Acquire the skills to develop those lots.
Quality
Establish a quality benchmark from the start
The first project in the master-planned community sets the standard for the rest of the project. Make sure to control it and do the best job possible. This is a high leverage move.
Use planning, contracts, and the example of self-delivery to maintain standards
Develop a code to maintain the vision and build the first project according to it. Make sure to include the code in the purchase agreement contract.
Ensure your team cares about the details
The heart of the customer is in the details. Become customer-centric and ensure everything you build is functional, feasible, and beautiful. Architecture must get inspiration from local, vernacular architecture and respond to the climate. Public spaces and street trees must be exceptionally well thought out.
You don’t need to spend more; you need to spend it smarter
Some solutions might cost the same, but one is much more beautiful and aspiring. One example is brick roads vs. concrete roads. A misconception is that brick road are more expensive, but they might be cheaper depending on the market, materials chosen, and labor costs. Another example is to provide spaces early on for basic needs like convenience stores, access to urgent care, and education. These services offer outsized values to residents with marginal investment.
Funding
Patient, experienced capital, is required
Master-planned communities are often intergenerational endeavors. Investment returns might take more time to materialize than usual real estate development projects. Raise funds from investors with know-how who can provide advice and resources.
Investment needs to be aligned with a commitment to quality
Invest in great architects to generate great designs, especially the master plan. Invest in materials that stand the test of time, and that can be easily maintained. One example is investing in street trees; time makes those streets look better.
Actively use public funds to accelerate delivery
Use the financial markets to increase your leverage and build faster the master-planned community. Raising public funds creates more ambassadors and alignment with the community.
Maintain delivery throughout economic cycles
Master-planned communities are multi-decade ventures; therefore, they are bound to experience bearish economic cycles. Plan for them and make sure to keep the momentum strong.
Download the infographic of the DNA of a Master Developer:
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