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The biggest risk in real estate development, besides the uncontrollable which is the market, is clearly construction and cost overruns. When you figure that hard construction costs on average account for two thirds of a development budget, one has to figure how to control costs. This is best accomplished by tested contracts, complete and fully detailed plans, good coverage in your subcontractor bids, regular review of critical path method schedules and dealing with issues timely as they arise.

I think clients benefit by receiving professional services from both a construction management perspective and a legal perspective which helps mitigate risks. I was fortunate to start my career in development and construction by working for a “top 10” real estate developer and general contractor and then becoming a general contractor in the 1990’s. I grew up in the construction trades. I went to law school after working in real estate development and general contracting after being frustrated with paying large sums of money to attorneys, which ate up my company’s profits. Litigation should always be the last option. Most disputes that arise in construction can be resolved through negotiation and timely handling of any issue(s).

Mixed use development simply refers to two or more independent uses in the same development. This could be residential and commercial, office and retail within the commercial context or a host of a variety of different uses. The complications arise not so much in the physical construction, but rather the entitlements and legal issues. This is particularly true if a homeowner association is involved. With less open land available and a migration to urban infill projects, mixed-use development will continue to increase. I have been involved with mixed-use development since 1989. Mixed-use development can be challenging, but at the same time on of the most gratifying forms of real estate development. We utilize our extensive experience a mixed use development to help others learn from our mistakes.

The greatest lesson(s) I have learned relate to due diligence, planning and the cyclical nature of the industry. First, there is no substitute for thorough due diligence and good planning in any real estate development. If there are any unknowns or uncertainties when deciding to move forward with an acquisition for real estate development, it is better to walk away. It is better to lose a small sum of money in due diligence as opposed to getting into a bad deal that could cost much more later. Second, I would shy away from development projects that tend to span longer durations of time. This is not to say that a development that takes several years to entitle is a bad deal, but rather there is more risk because you become exposed to more market fluctuations like what we say in 2008. The market is beyond one’s control, however, it seems you can mitigate some of the risk exposure by pursuing developments with a shorter durations.

California is considered the hotbed for construction defect litigation and has been since I got into the business in 1989. It has changed with legislation over the last 25 years, but any builder should understand that a residential project in California will end up in construction defect litigation. In essence, it becomes a cost of doing business. It really becomes a question about mitigation of damages through building quality construction projects. The unfortunate reality is that legislation in California has precipitated plaintiff attorneys to find homeowner associations in California within the 10 year statute of repose within which to bring construction defect actions. With significant experience in defending construction defect actions, we understands the quality control and procedures that are necessary to deter or mitigate construction defect actions in the future.

The Professional Certificate program at the University of San Diego (USD) is so valuable from both a learning experience and networking with others in the local development community. First, I think it is always important to stay connected to education. No matter how long we have worked in an industry, there is always more to learn. Having gone to USD for my undergraduate degree, it was fun to go back over 20 years later and continue my education. Second, the instructors in the courses are all involved in some form of real estate and provide great practical hands-on experience that I have been able to utilize as a benefit to clients. Lastly, it has been a great opportunity to establish relationships with other professionals in the local real estate community.