The multifamily development process, step by step

A multifamily project moves through five stages: site evaluation, feasibility, entitlement, design and permits, and delivery. Each stage exists to answer one question before money is committed to the next, and most of a building's value is set in the first three.

1. Site evaluation

Should this parcel be pursued? The zone, every overlay, transit proximity, the parcel's record, existing tenants and the physical constraints are read for the parcel itself, with a test fit of what the code allows on it.

2. Feasibility

Does a building on it make money, and which one? A pro forma is built for each pathway the site allows: rents, total development cost, yield on cost and the spread over the exit cap rate, tested across a range of rents, costs and timelines. The capital structure is part of the same model.

3. Entitlement

Which approval route, and what does it cost in time and risk? The pathways range from plan check alone to an administrative review to a discretionary hearing, and the choice sets the schedule as much as the building.

4. Design and permits

The licensed team produces the drawings, priced in the model before each decision is committed. The building department and every other department review them, and the permit is ready to issue when the last clearance is signed.

5. Delivery

Procurement, construction and the lender's draws, each tracked to the model that justified the project, through the certificate of occupancy and lease-up.

Questions

What are the stages of multifamily development?

Site evaluation, feasibility, entitlement, design and permits, and delivery, each answering one question before the next stage is funded.

When is a multifamily project's value decided?

Mostly in the first three stages: the site, the pathway and the program set what the building can earn and cost before construction begins.

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