Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 1405

I continue to be amazed by the unmet demand for real estate (development) education here in Canada.

Following yesterday’s post on the real estate development process , I received a few emails from readers asking about the best university programs (MBA, MRED, etc.) and the best approaches for becoming a developer.

I also had a good conversation on Twitter, which covered off some details that I had left out from my post (for simplicity) and which resulted in me suggesting that a real estate development school needs to be started here in Toronto:

@donnelly_b I’m game. The Donnelly-Hassan Institute for the Dark Arts.

— SymmetryDevelopments (@symmetrydevelop)

December 30, 2014

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@symmetrydevelop @donnelly_b would be your first student. damn! could’ve stayed in Toronto if there was a program.

— Kuok-Kei Hong (@KuokKei)

December 30, 2014

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Now, part of the reason things are the way that they are, I think, is because the real estate industry has been historically dominated by private rich families. People didn’t go to school to learn how to be developers. They learned by doing and that was then passed down to the next generation. All it took was chutzpah.

But as the real estate industry continues to institutionalize and become run by pension funds and large publicly traded companies, I think the point of entry will also become increasingly institutionalized. And that’s where dedicated real estate programs will continue to come in. 

I’ve spoken to a few people at the Rotman School – where I did my MBA – and there doesn’t seem to be a huge interest in a dedicated program such as a Master of Real Estate Development (they already offer real estate courses). It’s more of a “longer term” strategy. 

But I think that’s a mistake.

I’m confident there’s strong demand from the student side, so hopefully a wealthy donor will step forward to help make this happen. The University of Toronto has both a great business school and a great architecture school. That feels like a great recipe for a first-in-kind joint degree offering.

Image: Urban Learning (via Flickr )

A few weeks ago I received the following comment from a reader :

Really enjoyed reading this post about being a real estate developer . I was just wondering if you could do a write up on the various jobs and functions in a typical real estate development company so that people like me, who intend to work for a developer can roughly know what kind of skills are required or demanded in order to work there.

It’s a great question and so I will try and answer it today. The first thing I should say though is that real estate developers are typically very lean on people. I’ve worked for big publicly traded real estate companies and small boutique ones, and the development teams are always fairly small.

It’s that way because development projects can be messy and intermittent. The industry itself is also prone to regular market cycles and so the strategy is generally to remain fairly lean and outsource a lot of the work. You ramp up consultants and suppliers on a per project basis – as you need them.

With that said, let’s talk about the typical development process and some of the key skill sets required. A simplified process might look like this:

1. Buy development site (Acquisitions)

2. Design a project (Consultant Coordination)

3. Make sure project is feasible (Finance)

4. Obtain approvals for said project (Planning & Approvals)

5. Sell/lease space (Sales, Leasing & Marketing)

6. Build project (Construction)

7. Make money (The goal)

Depending on the size of the firm, one person may be responsible for managing many if not all of these steps, or they may be split up into different departments. So you could end up with a department list like this:

1. Acquisitions

2. Development/Project Management

3. Finance

4. Sales, Leasing & Marketing

5. Construction

From my experience as a developer, you’re going to be involved in all aspects. And that’s part of what makes development so exciting. But let’s talk about some of the key areas:

Planning & Approvals

After tying up a winning development site, securing your approvals (commonly referred to as “entitlements” in the US) is usually the first major step. The reason this step exists is because oftentimes what you want or hope to build isn’t what you’re actually allowed to build as-of-right.

So you have to go through a process to make that happen. It can take years depending on where you might be doing business, but there’s typically a significant amount of value creation at this stage. Some developers only focus on this stage and don't actually build.

City planning is a good background for this function. You need to understand the local planning policies and frameworks.

Consultant Coordination

As I mentioned before, development teams are often small. And that’s because all developers rely on outside consultants to make a project happen (architects, engineers, and so on). So a big part of being a strong developer is just being a strong project manager. The expression often thrown around the industry is that development is like herding cats.

Having some sort of a technical background helps for this function. You end up dealing with a lot of technical details (which I find super interesting), and so it helps to have a bit of a background or an interest. If you’re not inclined in this way, you might find this area boring.

Financial Modeling

Building project pro formas and managing budgets is obviously a key component of the development process. From the moment you first look at a site up until project completion, you’ll be building financial models and constantly refining them as you get more information. The first version might be on the back of a napkin and the last version might be a complex Excel spreadsheet.

Banking and finance is obviously a good background for this function. But you also need to understand the real estate business. Models are only as good as the information you feed it, so your assumptions have to be sound. 

Sales, Leasing & Marketing

I cannot over emphasize the importance of this function. If you are not selling units or leasing space, then you do not have a project. So no matter how amazing you might be at all the other functions (even fundraising from investors), if your firm is not bringing in money from your customers (purchasers or tenants), then you are dead.

When I was at Penn, a lot of the real estate professors used to tell us that leasing is the best way to get started in the industry. And I don’t disagree with that – even though I didn’t start there. This is often handled by a separate department and/or outside team, but you’ll need to be intimately involved.

Construction

If you’re at this stage, that’s usually a good sign. It usually means you’ve managed to sell a bunch of units and/or lease a bunch of space. Some developers (with enough scale) will have a construction team in-house, but many others will just outsource it to a 3rd party. Regardless of the setup, it once again helps to have a technical background.

If I missed anything or you want to add more detail, please let me know in the comment section below. I’m always happy to receive questions and post ideas, so feel free to tweet or email me . Tweets will almost always get a faster response.

Image: Flickr

A few years ago, I was touring a friend from the US around Toronto’s Financial District and the first thing he said to me was: “You have no retail.” And that’s certainly what it might look like at first glance.

But there’s actually lots of retail. It’s just all underground in an over 30 kilometer long network of walkways called the  PATH .

Initially conceived of as the antidote to Canadian winters, “underground cities” are a kind of uniquely Canadian form of urbanism. Toronto and Montreal have the largest ones in the world and they continue to grow. As new towers are built, new connections are added.

But the downside to all of this is that it pulls street life down underground. And it can conceal a lot of the urban vibrancy that is actually take place. So maybe we need to come up with design solutions to better connect these subterranean cities back to street level and also not forget about the street.

I’m thinking about this today because of a CBC documentary I watched this morning called  Life Below Zero . It basically argues that – unlike other cold climate cities and countries – the vast majority of Canadians actually hate winter. And underground cities are our way of trying to ignore it.

Well, I don’t hate winter. In fact, I love it because it signals snowboarding season for me. But I may be in the minority. What’s your position on winter?

Image:  Flickr