Built-to-Suit or Build-to-Suit - A type of development where the developer builds a building to the specific needs of a tenant that was identified and secured prior to construction. Having a signed lease in hand before building gives lenders comfort that the space will generate revenue upon completion and is much easier to obtain financing than with a spec development.
Development Fee - A fee paid (usually a percentage of hard/soft costs but sometimes excluding land) as ongoing compensation to the developer of a property. The developer also earns a performance fee, but the performance fee is “back ended” (i.e. paid after a sale and profits are generated) and sometimes the developer needs to earn income to pay staff and operating costs during the actual development process.
Fee Developer - A developer that usually contributes little to no equity and earns a fee for developing a project with someone else’s equity.
Hard Costs - The costs in a development that are associated with the physical construction of the building, such as concrete, steel, framing, wood, etc.
General Contractor (GC) - The company that oversees other sub-contractors ensuring that projects get built according to construction documents (CDs). They will act as the lead and coordinate all the other “subs” that complete the project. They often will provide a bid and must adhere to the costs and timeline associated with that bid.
Impact Fees - Fees that are paid to a municipality for the disruption/strain on infrastructure that is as a result of the new project/development, such as increased stress on traffic, plumbing and other infrastructure-related items.
Phases (reference to development) - The act of building a project in multiple intervals. This often happens with large scale developments as to not “flood” the market with new supply, such as apartment units or commercial space. It is often staggered to allow the market to absorb the new space.
Spec or Speculative Construction - A type of development where a developer commences construction without signed leases and hopes to secure tenants during or after construction is complete.
Soft Costs - The costs in a development that are not associated with the physical building. These are typically professional services, fees and other costs that occur in pre-development such as architect fees, engineering fees, permits, financing costs, etc.