Developer Layoff Imminent - Take Job as Lot/Land Developer??
TLDR: about to get laid off from urban MF developer. Only open roles in my city (based on LinkedIn/Glassdoor…haven’t reached out to my network yet) are lot/land developers/home builders. How hard would it be to transition back to urban infill once the hiring market improves, if someone were to take a lot/land development job?
More detail: currently work for urban infill market rate mixed-use Multifamily development shop as a senior person on the development team. With high interest rates, high construction costs, and fewer equity sources looking for new construction deals, deals are getting massively delayed. Without dev fees coming in and with no recent sales or major capital events, my firm recently laid off 30% of its workforce. I survived the cut, but there’s likely to be more in the next couple of months and it sounds like really no one is safe. (I’m the newest employee and pretty senior on the development team).
To make things worse, the job market for middle-senior development folks seems pretty abysmal, and even if rates come down in 2024, it’ll take time for firms to start hiring again.
Question for all you monkeys- how do people view land/lot developers? If someone worked for a large home builder / lot developer (due to simply needing income as a result of layoffs), would that prohibit you from hiring that person for an urban development role in the future?
Based on the most helpful WSO content, transitioning from urban infill multifamily development to lot/land development can be a strategic move, especially in times of economic downturn or when facing a layoff. Here's a breakdown of considerations and potential impacts on future employment in urban development:
Transitioning to Lot/Land Development: - Skill Transfer: Many skills in urban development are transferable to lot/land development, such as project management, financial analysis, and understanding of zoning laws. - Market Adaptability: Demonstrating the ability to adapt to different market conditions can be seen as a strength. - Diversified Experience: Gaining experience in a different niche of the real estate market can broaden your perspective and skill set.
Returning to Urban Infill Development: - Perception: Some may view lot/land development as less complex, but this is not a universal perception. Articulating the complexities and challenges you've managed in lot/land development can mitigate this. - Networking: Maintaining connections in the urban development sector while working in lot/land development can facilitate a smoother transition back. - Market Recovery: Once the market improves, firms may value the diverse experience and the resilience shown during tougher economic times.
Advice for the Transition: - Stay Current: Keep up with trends and developments in urban infill to remain relevant. - Highlight Transferable Skills: Emphasize the skills and experiences that are applicable to both fields. - Be Proactive: Use the time in lot/land development to enhance your qualifications, possibly through additional certifications or training.
In summary, while there may be some differences in perception, the skills and experiences gained in lot/land development can be valuable and should not prohibit future opportunities in urban development roles. It's all about how you leverage and present your experience when the market recovers and urban development roles become more available.
Sources: Pros and cons of working for a large public real estate company compared to a 5 man development shop, Would you ever consider working in Residential Development?, Lunch & Learn -Ins and Outs of Construction, Building Personal Real Estate Portfolio, Career Advice: Acquisitions vs. Development
I was in a remarkably similar situation as yours earlier this year, also in urban infill. I agree with your sentiment that no one is safe. For me, layoffs had begun this time last year and after several rounds the shop closed its doors and began selling assets earlier this year. I wouldn't view land/lot development experience as a strike against you, especially as a response to this job environment. It sounds like you would be looking to hop back into urban infill as soon as you can, and a small stint working exclusively on land may be viewed anywhere from positively to neutrally.
As an anecdotal example, the aforementioned shop viewed diverse experiences favorably since we built everything from single family communities, BTR, multi, and mixed-use (including office, hotel, and retail). That breath of product requires knowledge of land and lot development too, as well as good relationships with the permitting office, MUD districts (I'm in TX), etc. That said, I've worked on a large (think >50,000 acres) land project and without knowing more about the sort of place you're going to, you may find that your scope may be limited strictly to getting the land ready to sell to builders/developers. I would be more concerned about whether you enjoy that sort of work.
Thanks for this response. SB’d. Glad to hear you think a short stint in land would be seen as neutral to positive. Not sure I would love prepping land to sell to other developers, but could perhaps be a good way to get introduced to various mixed-use developers.
Thanks for this response. SB’d. Glad to hear you think a short stint in land would be seen as neutral to positive. Not sure I would love prepping land to sell to other developers, but could perhaps be a good way to get introduced to various mixed-use developers.
Should say “SB’d - no pun intended”.
Ifykyk
Excuse my ignorance, but why would land and lot development be looked down upon? I do urban infill as well (mostly heavy redevelopment), but land development I would assume has many of the same aspects of driving a project forward - figure out my scope, who are my consultants, drive my project forward. Etc.
What am I missing?
Yes, I agree the overall process is the same/similar- initial underwriting, land purchase agreement, due diligence, entitlements, design, permitting, financing, bidding, construction, lease up or sell/refinance, etc. (or some variation of that, in some order). But my concern is that, at least in my experience (both on job seeking side and hiring side), it seems employers tend to look for people who have experience in the same or similar asset class and project size / $ amount as what they're hiring for (that's in an ideal world...of course it doesn't always happen that way).
In this case, if we're comparing land/lot development and mid- to high-rise infill, a high-rise has a different set of complexities and challenges than lot development (high-rise requiring more stringent construction logistics due to less space, special types of permitting and road closures, more arch/structural/MEPFP complexities, etc whereas the challenges in lot development are more civil, drainage, utilities, suitable soil types, building roads and infrastructure, storm water requirements, raising/lower the topography which can be very expensive). All these differences result in different sets of risks, different design and entitlement schedule durations/milestones/processes, require different types of underwriting and financing strategies, different exit assumptions (selling lots to other developers has different risks and timing than trying to refi or sell a high-rise in an urban market), etc. I imagine a hiring manager will consider these differences when deciding if a person is a good fit, particularly whether they have enough experience to know things like where to save $ with a given type of project (finding savings on an infill project will be harder if you've never worked on one, and vica versa for finding savings on a lot development), what the biggest entitlements hurdles/threats will be for said type of project, what are the design risks to look out for with said project type, what permitting issues always arise with said type of project. Since there are so many of these little differences that can have a big impact, I would think a company would look for someone who has a really strong grip on how to navigate these project/product-specific challenges by having previously dealt with these nuances. I could be wrong (and hope I'm wrong)...but this would be my best guess as to why experience in a different development class would be challenging to overcome when trying to pivot back.
Single fam for sale is where the market is heading right now and that’s where dry powder is accumulating (at least in CA for example). If you’re on the execution side it’s probably a great place for experience today. Plus, its typically a much shorter time frame than urban infill dev, especially if you are entitling sites and going through those motions
Thanks for the data point. It definitely seems that way in my market as well based on current job postings. So many development and acquisitions roles open for SFH for sale and lot development in my market right now. Infill is very tough right now.
I don’t know why there is this inherent bias against land/single family home development. For those of you wanting to start out on your own, let me ask you this:
What seems to be an easier path: Option A: you work for an institutional developer doing Class A multifamily high rises, amassing a track record of developing and delivering a few thousand units and eventually working your way up to president level where you get a couple scraps of carry (if you’re lucky) or conversely go off on your own, raise a $100M fund and forego a years of pay until you deliver your first project.
Option B: You go work for a large SFH developer (call it DR Horton or another one) and find a few $50,000 lots to develop homes yourself (price of a lot may vary depending on geography obviously) where you’re competing against Bob the Builder. Make a small profit and do it again and now you’re on to true entrepreneurship.
I question some people’s motives on this site. You aspire to be the guy who works in a fancy office and talks about the big deals he’s doing where he owns maybe a couple % of the entire deal. I’m the guy who’s working from home for myself and I own a large % of the deal. I work out at 10 am because I can and nobody is telling me I can’t. Neither way is right or wrong though. Choose your path.
What I'm getting at is much less about one being more difficult or respected than the other, and more about there simply being inherent differences between them, which can cause hiring managers to question if a person is a good fit if they haven't been doing said product type for the last several years. That's the concern.
I think it's completely fine for someone to be very successful doing land development, and those developers can be applauded as it fills an important need in society and it comes with an array of challenges and complexities. That said, my question is more so how do urban infill developers view land developers, particularly when it comes to hiring them to do urban infill jobs (which is potentially my future...going from infill, to land, to hopefully infill again as that's what I'm passionate about). Probably could've phrased it better on my end.
Understood. All the data seems to point that the U.S. seems to be suffering from a housing shortage. While most sites don't really specify the difference, I think they mean a "single family" housing shortage. Inventory levels are super low (although demand seems to have matched that now). Those of you who live in major cities can probably speak more to this problem of finding a "good" home.
I think you should seriously consider it as an option. You may realize you enjoy it. In the past, real estate development (specifically multifamily) had huge amounts of capital thrown at it, because it was better than sitting in the bank. Now, up until about a month ago, you could get some pretty good risk free returns, making the previous statement no longer true.
I think there might be some opportunity to be had in the SFH market.
It always funny to me the people that shit on mom/pop owners or smaller firms started by people outside say NYC, meanwhile they're making mid six figures at best consistently owning nothing of the assets they're working on, hanging on a name and prestige. The end goal is to make money, it's always funny to me you see so many people in smaller markets like Florida or Texas, etc that have made millions working on their own that no one has heard of meanwhile the 50th SVP at Blackstone thinks hes doing something making $500k-$1mm a year in a very HCOL city.
Very well sums it up.
I guess the downside is nobody knows you’re a big deal based on your LinkedIn job title 😂
OP - any update on your situation? I am in a similar situation; looking to leave an office-heavy GP developer. Have an interview at a privately owned urban infill / suburban townhome developer for a land acquisitions position soon. I am curious if you ever got any bites on the land development roles, and if so, how you found the interview process etc. Thanks!
Are you in SoCal?
NorCal
I was in a similar situation to you but I'm only 3 yrs into my career now. I took a role at a top national homebuilder on the land acquisition side. I've been recruiting since I took the role haha (it's honestly not horrible but I'm interested in urban), but now am finally starting to get a tiny bit of interest since, as everyone else stated, the capital is flowing toward SFH BTR/S. I think your exits may be joining a firm that is joining the movement of starting a BTR/S arm but still does other development (Hoping they don't silo you). A ton of REPE shops have started those arms, but I'm not as familiar with the dev side.
Also, I don't think you get carry here. Maybe they offer you stock options? I've been here almost a year and have closed a deal and have ~ a few hundred million in costs tied up for a later takedown once lots are developed/ready to turn to us. They bonus us quarterly and it equals 4k total at the end of the year, so I am not getting any play or comp due to production. Maybe it's my fault I didn't establish that in the interview, but being so large I don't think they care or notice they aren't incentivizing. Lots of turnover amongst acq in homebuilders I have seen. Super chill tho compared to what you are doing probably. People call, you call random new entitlements, send a contract, and play on your phone/fill out job applications until 5 then go home. Also you can wear jeans and a tshirt everyday.
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