KMK Law Real Estate Blog

At this year’s International Council of Shopping Centers (ICSC) Retail Development & Law Symposium held in Columbus, Ohio earlier this month, I presented a roundtable discussion on the best practices of land assemblage for large commercial and residential development sites.  Our table analyzed specific examples of land assemblage, both locally (15^th + High Project in Columbus, Ohio, the FC Cincinnati Stadium in Cincinnati, Ohio, and the Rookwood Commons and Pavilion development in Cincinnati, Ohio) and nationally (Google and Amazon data centers and the assembly of Disney World). 

I have included a brief outline of my presentation below.  If you have any questions or would like to discuss land assemblage strategy in further detail, please feel free to contact me directly by e-mail at kkadish@kmklaw.com.

1. LAND ASSEMBLAGE INTRODUCTION

Land assemblage is the process of acquiring control of multiple adjacent land parcels in order to form a single, contiguous development site. This may be pursued by a private developer or often times by a community development corporation that wants to attract developers to build in the community by creating larger, more malleable development sites. 

In short, larger strategically assembled development sites provide greater opportunity for a developer to design and build a development that has a significant long-term impact, particularly when the development is intended to revitalize an urban core area. Because larger sites are not often readily available or able to be quickly assembled, private developers typically look instead to larger tracts of undeveloped land on the outskirts of denser, urban cores. Executing successful land assemblage strategy creates greater opportunity for transformative development.

For communities, establishing landbanks and strategically assembling land parcels may help attract developers to ready-to-build sites and consequently help a developer get to market faster. Assembling properties is a time intensive process, especially if there are holdout owners or issues with specific parcels, such as environmental contamination or title encumbrances.

2. LAND ASSEMBLY CHALLENGES

Establishing control of a project site and assembling the land parcels required for the development carries unique challenges and considerations – the primary challenge being time – due to the multiple land owners and stakeholders that might be involved. A developer must work against the project’s hourglass to establish site control without being locked-in financially (i.e., without being forced to close on costly individual parcels while the project’s viability is still in question).  

1. Confidentiality
2. Site Due Diligence
3. Title, Survey, Environmental, Infrastructure, Leases
   1. Time Period for Site Control, Infrastructure, Entitlements, Zoning, Etc.
4. Financing for Site Acquisition and Assembly
5. Speculative Land Buyers
6. Competing Developers
7. Holdout Owners/Tenants
8. Relocating Owners and Tenants (Commercial and Residential)
9. Rise of Community Benefits Agreements

3. LAND ASSEMBLY STRATEGY CONSIDERATIONS

This may be too obvious, but acquiring control of the parcels comprising the project site as early as possible cannot be understated. If projects are announced publicly before achieving site control, it will be difficult (if not impossible) to negotiate and obtain control of the project site, especially if a project is high profile and garners media attention.  

1. Engage With the Local Redevelopment Authority and/or Community Development Corporation
2. Execute Purchase Options to Maintain Flexibility
3. Obtain Control of High-Value Parcels First
4. Maintain Anonymity Without Damaging Reputational Value
   1. Land Assembly Agents
   2. Shell Entities[1]
      
      1. Agent, Incorporator, Organizational Structure and Authorized Signee, Tax Notice Address
   3. Non-Disclosure Agreements
   4. Confidentiality Provisions
   5. Price Anonymity
5. Streamline Local Review and Approval Procedures

4. CONCLUSION

Because of the unique challenges associated with establishing site control through the land assemblage process, whether a private developer or a community development corporation, it is important to consider the many facets of land assemblage, as briefly described in this outline.  

Assembling multiple parcels into a single real estate development is not a novel concept.  However, as millennials and younger generations (and empty nesters) continue to flock towards our urban core, larger real estate developments in denser populated areas are becoming more prevalent and desirable, despite the increased costs of developing in dense urban landscapes. Strategic land assembly has also proven to be instrumental for neighborhood revitalization efforts by communities with established landbanks.

[1] See the following articles discussing Google and Amazon utilizing shell entities to secure land and entitlements, as well as Disney utilizing shell entities to assemble the land for Disney World: https://www.techspot.com/news/78809-google-hiding-behind-shell-companies-score-tax-breaks.html; https://www.latimes.com/business/la-fi-disney-shell-companies-20160408-story.html