Redeveloping Your Opinions Please
I am working with a couple of guys over here in the Netherlands on a kind of redevelopment project. Here's the deal.
One of my partners owns a property which he uses to run his very profitable private eye clinic. So well in fact that he is planning to move to a bigger property. Now the current property is in a shopping street in a suburbian town and we have been offered two properties directly next to the one my partner already owns.
These two properties have been neglected for a couple of years and need a lot of work. We have offered the current owner (a foundation that manages homes for the elderly) to take the two properties for no money down. We want to join the three properties and redevelop the ground floors into one supermarket with an underground parking garage (parking space is very difficult to find in this area). On top of the supermarket we want to develop the three remaining floors into around 30 apartments. We will take a problem away from the foundation and give them in return 6 or 7 apartments back (again no cash) to let them be turned into elderly homes. The rest of the apartments we either want to sell (most likely) or rent out.
I would really appreciate any comments as we are still in a conceptual stage.
Thanks,
Norbert
Some questions and thoughts...
Have you had any discussions with the local government as to what they would like to see on the 3 properties from a land planning viewpoint? You may need to rezone the properties and to a classification that does not already exist. What uses does the current zoning of the 3 properties permit? So the foundation's properties have structures on them and you would gut these to construct supermarket with apartments above?
It seems to me there are two key issues (in addition to being able to strike an acceptable deal with the foundation): ability to get zoning/rezoning for the intended use and high construction costs (below grade as well as above grade).
Thanks for you feedback, we appreciate it.
The street we are talking about is already a shopping area, which happens to lack a supermarket in the neighbourhood. Our third partner has good contacts in local government and expects that they will be quite enthousiastic as now the properties of the foundation are not being used for anything. Also there is quite a shortage in living space in the area.
As to the construction site, we still need to do the numbers, but at least for the labor costs it should not be a problem. This third partner happens to be setting up a construction company consisting of 35 constructors from Poland, who work like crazy for 9 months out of 12 and support their families in Poland in that way. As you might have guessed they are a lot cheaper than Dutch construction companies. All strictly legal btw.
Norbert