Table Of Content‘The new text Real Estate Development Matrix is the first truly significant advancement on
the groundwork laid by James Graaskamp many years ago. Dan Kohlhepp has taken his own
years of actual development experience combined with the perspectives gained teaching
this material to students and professionals that range from the University of San Diego to
Johns Hopkins University, CCIM and NAIOP members and integrated it all into a systematic
method of development decision making. Not only are the fundamental areas covered as in
the Graaskamp model, but, here we have the players involved, the requirements of achieving
more sustainable and responsible development, and the time sequence of development
action items. Here, one can study development from the perspective of what the participants
in the process actually do, what information they need and when they need to make decisions
from idea conception through property value harvesting. Covering this subject matter for all
property types and markets, is not an easy task and many developers have told academics
you can’t teach this stuff, but Dan Kohlhepp, who uniquely combines his experience in both
the academic and private sector worlds, has provided a new comprehensive model that
sets a new standard. Great cases are provided, making the concepts within the matrix tangible
for the advanced student of real estate. Suitable for advanced students, capstone courses
and professionals alike, I give the Real Estate Development Matrix my strongest possible
endorsement.’
– Norm Miller, PhD, Ernest Hahn Chair and Professor of
Real Estate Finance, University of San Diego
‘The matrix covers the entire development process and breaks it down into the key stages
that require critical tasks to be completed successfully to mitigate the development risk. The
book blends years of development experience with the academic background of the authors.
This is critical for a real estate development text because missing any of the key steps
can jeopardize the success of the entire development project. It takes someone who has
learned through years of development experience to know what the sources of risk are as you
navigate the development matix.’
– Jeffrey D. Fisher, Ph.D., President, Homer Hoyt Institute,
Professor Emeritus, Indiana University
‘The Real Estate Development Matrix masterfully blends the complex topics and concepts
of the real estate development process into a navigable road map for any real estate profes-
sional. Daniel and Kimberly have creatively used real world “case studies” to reaffirm
concepts, provoke critical thinking and illustrate discussed topics in a way that brings clarity
of the real estate development process to all readers. This book is a must read for the aspiring
real estate professional, a seasoned developer and any of the multidisciplinary professionals
that plays a critical role in the real estate development process.’
– Bobby Zeiller, Managing Director-Development,
Silverstone Healthcare Company
‘Real Estate Development is usually taught as the cap-stone/final class in most real estate
programs. Development brings together all the aspects of real estate including: market feasi-
bility studies, market strategy, environmental studies, transportation/accessibility, legal
issues, acquisition, financing, approvals and permits, construction of physical improvements,
leasing, operations, sales and finally disposition. As a professor teaching real estate develop-
ment over the past 30+ years, the complex development process is challenging for students
to grasp and master. Finding good textbooks that cover areas that a professor deems most
important in their course can be challenging.
Real Estate Development Matrix takes a unique “modular” approach to the process, putting
each step into a compartment that can be understood and accomplished independently.
This allows each of the individual contributors to the development process to be able to
understand their role in the process and the value that it creates. A developer is like an orches-
tra leader who knows what the music should sound like and must lead each instrumentalist
to function in a harmonious fashion to produce a good result. Just as an orchestra leader may
not be able to play every instrument, a developer does not have to be able to produce alone
each task of the land planners, architects, engineers, bankers, contractors, sub-contractors,
lawyers, brokers and users they lead; who all have special expertise. The developer must be
able visualize and communicate the end goal to all players and then oversee and coordinate
all those players to achieve the final result.
The book breaks the development process into seven stages: land banking, land packaging,
land development, building development, building operation, building renovation and prop-
erty redevelopment. It then uses the eight tasks needed in each stage: acquisition, financing,
market studies and market strategy, environmental studies, approvals and permits, physical
improvements, transportation/accessibility, and sales/disposition. Therefore, each player can
see their own task and how it fits into the big picture, and the developer can more easily
manage the entire project and coordinate the tasks.
Each topic is handled in an industry standard fashion that is already being used by the
NAIOP (commercial developers) and CCIM (commercial brokers) organizations in their
professional courses, providing good consistency, terminology and approach. The Kohlhepps
have been developers, operators, and instructors – thus the applied nature of their approach.
I recommend that anyone teaching real estate and/or development courses consider this
book, as all or parts of it may be useful in many different courses.’
– Glenn R. Mueller, PhD, Professor – University of Denver,
FL Burns School of Real Estate & Construction Management,
Real Estate Investment Strategist – Black Creek Group, Denver, CO
‘Forever academics have attempted to describe and explain property development in the
context of specific property types. Dr. Kohlhepp breaks this paradigm rut by focusing on
the 7 different stages of property development and the 8 specific tasks associated with
each stage. The brilliance of this framework is that it transcends any property-type specifics
and squarely outlines the whole of property development, regardless of property type.
Dr. Kohlhepp artfully explains property development as a series of complex and interrelated
activities, and demonstrates how the Development Matrix can help bring order to the thought
process. The Matrix encourages the reader to think logically and systematically, but not
linearly about property development.’
– Jeff Engelstad, Ph.D., FRICS, CCIM, Professor, Burns School of
Real Estate & Construction Management, University of Denver
‘The Real Estate Development Matrix is simple, clear, and insightful. The authors breakdown
a confusing process into seven understandable stages. This readable and non-technical book
is a must read for every participant in real estate development. The companion website
nicely compliments the text with in-depth discussions and analysis.
The real-world examples clearly demonstrate the authors’ points. Having worked with the
senior author for over 30 years, I have participated in most of the projects discussed in
the text. They were always learning experiences and illustrate the stages and tasks in the
Matrix.
I particularly enjoyed the discussion of “project feasibility” and the Three Commandments
of real estate development.’
– Art Fields, Retired President and CEO of Crescent Resources, LLC
‘I have had the pleasure of working alongside Dan Kohlhepp in the presentation of his
Development Matrix throughout various US markets. This material has been well received,
as it outlines a very logical series of development stages, each containing well defined tasks.
The total matrix clears what is typically the ‘fog’ of the development process, and no matter
what level of development one is involved in, they can clearly see both their entry into the
process, as well as various exits.
I highly recommend Dr. Kohlhepp’s material no matter the level of experience, or in what
sort of development one is involved.’
– Mark Van Ark, CCIM, SIOR, Sr. Instructor – CCIM Institute, Director – KW
Commercial, Denver/Boulder, CO
‘This is the book that real estate/urban development educators in professional organizations
and academic institutions have needed for a long time . . . Real Estate Development Matrix
shows that one does not have to be a master developer taking a project from start (undeveloped
land) to finish (operating building) to be successful. One can be successful by mastering
some tasks at some stage of the overall process. . . . real estate developers will empathize
with the presentation and discussion of the real world experiences encountered; task
experts in a part of the development process – lawyers, bankers, urban planners – will better
understand what the developer needs from them; and students new to development will have
an overview of what they can expect in their future careers. It is an essential book for anyone
dealing with the built environment.’
– Michael A. Anikeeff, PhD, Professor (retired), Johns Hopkins University,
Carey Business School, Edward St. John Real Estate Program
Real Estate Development Matrix
This book presents a new way of thinking about, teaching, learning, and practicing real
estate development.
Real Estate Development Matrix describes the process in a two-dimensional model
and presents seven Development Stages which form the horizontal axis, and eight sets of
Development Tasks which form the vertical axis to define a 56-cell matrix. In each cell,
money is spent and risks are taken to achieve certain tasks and thereby create (or destroy)
value. This holistic process considers the entire life cycle of real estate from its “green field”
inception to its “brown field” state.
The book is written by a real estate developer and academic, and the presented material is
conceptual, practical, and non-technical. Jargon has been minimized as much as possible
as the authors introduce an entirely new model for real estate development that is both
academically authoritative and developed in practice.
It is aimed at a general professional audience participating in the development process,
but equally the book is ideal for use as a textbook in undergraduate and graduate courses in
real estate development, and an excellent supplemental text for business courses discussing
real estate finance and investment. It may also be used as a textbook for professional courses,
workshops, or seminars in real estate development. The book is supported by an interactive
website at http://realestatedevelopmentmatrix.com/
Daniel B. Kohlhepp is the president of Granite Road LLC. He is a former senior lecturer
and academic program director of the Master of Science in Real Estate and Infrastructure
Program at the Johns Hopkins Carey Business School. He began his career in real estate as
a college professor at the University of Oklahoma and Penn State University and then spent
30 years as a real estate investor and developer before returning to academia. In 2007 the
Homer Hoyt Institute recognized Kohlhepp as a Hoyt Fellow, and in 2012, he was elected to
the board of directors of the Homer Hoyt Institute. He is an equity principal of the Real
Estate Counselors Group of America, and he is also a member of the Appraisal institute and
currently serves on the editorial board of the Journal of Sustainable Real Estate. Kohlhepp
holds a PhD in Real Estate and Urban Planning Analysis from The Ohio State University,
and an MBA and BS degree from The Pennsylvania State University.
Kimberly J. Kohlhepp, MSREI, LEED AP BD+C is currently the Associate Director of
Development for Kimco Realty’s Mid-Atlantic Region in Baltimore, MD. Before joining
Kimco, she was a principal at Nestwood, LLC, a consulting firm focused on producing
financial proformas, market research, and educational courses for real estate development
teams and organizations. Kimberly has also worked with Brookfield Office Properties and
Federal Realty Investment Trust in both property management and asset management roles.
Kimberly holds a Master of Science in Real Estate and Infrastructure from Johns Hopkins
University and a Bachelor of Arts in Anthropology from Ohio University.
Real Estate
Development Matrix
Daniel B. Kohlhepp
Kimberly J. Kohlhepp
First published 2018
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
711 Third Avenue, New York, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2018 Daniel B. Kohlhepp and Kimberly J. Kohlhepp
The right of Daniel B. Kohlhepp and Kimberly J. Kohlhepp to be identified
as authors of this work has been asserted by them in accordance with
sections 77 and 78 of the Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or
utilised in any form or by any electronic, mechanical, or other means, now
known or hereafter invented, including photocopying and recording, or in
any information storage or retrieval system, without permission in writing
from the publishers.
Trademark notice: Product or corporate names may be trademarks or
registered trademarks, and are used only for identification and explanation
without intent to infringe.
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Names: Kohlhepp, Daniel B., author. | Kohlhepp, Kimberly J., author.
Title: Real estate development matrix : a handbook / Daniel B. Kohlhepp,
Kimberly J. Kohlhepp.
Description: New York : Routledge, 2018. | Includes bibliographical
references and index.
Identifiers: LCCN 2017031435| ISBN 9781138745049 (hardback : alk.
paper) | ISBN 9781315180779 (ebook)
Subjects: LCSH: Real estate development.
Classification: LCC HD1390 .K64 2018 | DDC 333.73/15—dc23
LC record available at https://lccn.loc.gov/2017031435
ISBN: 978-1-138-74504-9 (hbk)
ISBN: 978-1-315-18077-9 (ebk)
Typeset in Times New Roman
by Keystroke, Neville Lodge, Tettenhall, Wolverhampton
Visit the companion website: http://realestatedevelopmentmatrix.com/
Contents
Preface xi
About the authors xv
Acknowledgements xvii
Table of exhibits xxi
PART I 1
1 Introduction 3
2 Real estate development defined 8
3 The Real Estate Development Matrix 12
4 The third dimension 17
PART II 21
5 Introduction to the Stages of real estate development 23
6 Land Banking 30
7 Land Packaging 47
8 Land Development 76
9 Building Development 103
10 Building Operations 127
11 Building Renovation 147
12 Property Redevelopment 167
PART III 189
13 Real Estate Development Tasks: an overview 191
14 I. Acquisition Tasks 195
