Anyone in development have any tips to share pertaining to assembling parcels? Do you have a broker working for you do all the work or do you look up all the owners and call them one by one? What is the conversation like? Should an email be the first step? Interested in how this process works since marketed deals these days are more thin than ever.
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I'd be curious to hear more about this as well. My firm typically uses a broker.
I am currently doing this. Often times, the city planner will provide all of the information and will let you know if the sellers are motivated. If the project is going to get approved, often it's best to have the city involved anyways.
So if I hear you correctly, you recommend visiting the city planner or hopping on the phone as a first step? Would gauging potential opposition to a rezone through this initial contact be one of the main reasons one would do this vs. attempting to contact to the owners of the parcels in question?
If you're doing a larger assembly of parcels -- it generally means you're going to be working on a larger development or making some large changes to the property. I often find its easier to engage the city earlier than later as they tend to like to make things difficult if they feel blindsided. Quite often, they'll even give me all of the owners' true contact information rather than the LLC useless stuff on CoStar or title services. Additionally, because you've been working with the city, the planning and approval process typically goes much, much smoother.
One closing date for all parcels
So you don't get fucked by someone swooping in on one?
So you have more certainty of close. Say you have to close on 1 of 4 parcels now, that means you will be substantially at risk on a partial assemblage. Sometimes you worry about specific performance. Small risk, but a worry.
I work for a developer and we never speculate on land. Not worth it. Only buy the land if you have someone lined up with a signed lease. Unless you're willing to risk your own equity in it.
Currently assembling in Manhattan and an off-market broker has been working the owners on my behalf. Obviously do your homework and diligence on owners but in my experience it's best to go through brokers unless you have an existing relationship. As far as conversation goes they're either sellers or they aren't. Don't reveal too much info. If they are smart owners they know what they have is a piece to a larger puzzle and your offer will most likely reveal your intentions.
Underwrite the deal and know your ceiling - this involves confirming your analysis with your architect and have him put together a rough massing. Assemblages will never fall together smoothly, the one I'm working on has been going for 18 months and we're nearing the finish line.
With off-market assemblages you're forced to play the game. Never go in with highest and best. Go in low, but not disrespectful. Be sure to be in range or you won't get the time of day from the seller.
Try to get as much DD as possible (not likely) and push closing out as far as possible. You'll be more successful with hard money down. Obviously, you're able to offer more money on the individual pieces than a single asset investor would be able to due to plans of redevelopment, and therefore the sellers are willing to play ball as long as they know you're legit. If your offer is coming from JoeShmo LLC you probably won't get very far with respect to locking deals up longer than market - which in NY is barely enough time to call your controller and initiate the wire.
Timing is key. So is keeping sellers isolated so they don't collude and hold out. There are tricks for both. In NYC one of the biggest hurdles to the game is RS tenants. You need to have a mastery understanding of the current situation and their buyout prices. Surrender agreements or vacated RS tenants as closing condition is key. Credit the seller, do not close preemptively especially if it's your first rodeo.
Purchasing power and (borrowed) balance sheet is important here. Carry costs are high with most assemblages due to the (pre)redev component. Don't suck the fat out of the deal with an improper capital structure.
I will say it's fun as all hell. You'll fail a lot. It's discouraging. Especially when you have most of a site locked up and the corner holds out for steak and blow job.
Good luck.
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