How long did it take to plan that building?
Long and getting longer, says the first comprehensive study on this topic

Reuters

The construction site of the CityCenter project is pictured in Las Vegas, Nevada April 4, 2009.

Article Highlights

  • More stringent regulations tended to be associated with longer planning times for commercial real estate projects.

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  • Accounting for construction cost, the average planning time for a commercial real estate project is 28 months.

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  • Planning times for commercial real estate projects tend to be longest on the coasts.

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Before construction can begin on a commercial real estate project, a great deal of preliminary work has to take place. The developer must acquire the land, work with architects and engineers to draw up plans for the site and the building, hire the contractors, and navigate the many steps to obtain regulatory approval for the project. Developers know how long this process takes for their own projects and may have a general sense for other projects in their market. But, until now, there was no hard evidence on planning periods across the entire country.

Recent research, which I conducted with Jonathan Millar of the Federal Reserve Board and Daniel Sichel of Wellesley College, fills this gap by presenting the first comprehensive estimates of planning times for commercial construction projects across the United States. We analyze roughly 82,000 projects nationwide for which planning was initiated between 1999 and 2010, using data obtained from CBRE Econometric Advisors/Dodge Pipeline. The projects in the dataset include office buildings, retail stores, warehouses, and hotels. About 95 percent of these projects involve the construction of a new building; the remainder are additions or alterations to an existing building or conversions to a new use.

For our analysis, we define the planning period as the time between the hiring of an architect to draw up preliminary plans and the start of construction. Some planning surely occurs before an architect comes on board. If nothing else,the developer will have given the project enough thought to believe it’s worthwhile to incur the cost of an architect. Our dataset, however, provides little information on this initial stage of planning. Excluding the very beginning of the planning process means that the full timeline is even longer than what we find.

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About the Author

 

Stephen D.
Oliner
  • Stephen D. Oliner is a resident scholar at the American Enterprise Institute (AEI) and a senior fellow at the University of California, Los Angeles (UCLA) Ziman Center for Real Estate.

    Oliner joined AEI after spending more than 25 years at the Federal Reserve Board. An economist by training, Oliner held a number of high-level positions at the Fed and was closely involved in the Fed's analysis of the US economy and financial markets. Since leaving the Fed, Oliner has become well known for his analysis of US monetary policy and has maintained an active research agenda that focuses on real estate issues and the US economy’s growth potential.  He is coprincipal developer of the AEI Pinto-Oliner Mortgage Risk, Collateral Risk, and Capital Adequacy Indexes.

    Oliner has a Ph.D. and an M.S. in economics from the University of Wisconsin. He received a B.A. in economics from the University of Virginia.

  • Phone: 202.419.5205
    Email: stephen.oliner@aei.org
  • Assistant Info

    Name: Emily Rapp
    Phone: 202.419.5212
    Email: emily.rapp@aei.org

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