Wednesday, June 16, 2010

The risk analysis of the station redevelopment


In the real estate development project, both developer and investor face risk when they make decision. In the risk consideration of the development, market, location, political and financial issues should be considered in the proposed project. These factors affect developer to make sure in the development process for reducing potential risk after project is finished.
Market analysis - Will the supply and demand relationship be successful in that location? Many people pass through station. They are busy to meet the train schedule and their main purpose is transferring. Therefore, snack or fast-food that are easy to take from passengers and supporting them at the same time can bring profits.
Location and site analysis - Will the proposed energy efficient design improvement attract the site demand for the market income available? If city allows the private developments like mixed-used projects for residential and commercial buildings near the stations, station would be more attractive icon in that community, and it will work more efficiently as its main role for transportation and historical conservation.
Political and social environmental analysis - Business decision is integrated into the political and social effect. Station opens from early hours to late night. It has potential to be homeless shelter or potential crime site. Therefore, overly available rest area in the station would not work well with its function.
Financial analysis - Does the projected financial picture make sufficient profit? And with due diligence in current market value, does developer evaluates how much tenants to spend on the rent and how long they should make contract?
During pre-development, developer, investors and city officials reevaluate the design layout again under feasibility analysis. They may ask questions themselves such as what are pros and cons in the project for the best decision- each retail’s usage, location and size in the station, restaurant’s space and usage and office location. In the redevelopment project, existing limited space in the station would be obstacle for adding other program. Therefore for additional new program, if there are available space near the station, side development approach can be another strategy for success.