The Increasing Challenges of Land Entitlements

One of the biggest challenges in the real estate feasibility process is navigating the complex entitlement process. 

Entitlement is the process by which a property owner or developer obtains the necessary permits and approvals to build a project. It can be time-consuming, costly, and complicated. The entitlement process is full of challenges, and it can take an exceptional amount of time to complete if it's done improperly. Building realities often force government agencies to approve a project in a timely manner. It is important to be aware of the implications of delays in the approval process.

Different interpretations

A local government agency will not issue the necessary permits that are required for a project to take place because it has no deadline for doing so, or for some other reason the project has taken an extremely long time to be approved.

There can be a lengthy entitlement process, which can take anywhere from 3 to 12 months.

In a sense, the complexity and conflicts that arise during the entitlement process are why it takes so long. It is common to have to obtain different interpretations of local rules from various officials.

At the same time, most development projects go through several different aspects of the entitlement process, which includes public hearings. But some projects require additional levels of approval, which can include several different phases of hearings. 

Efforts to capitalize on diminishing land supply

Urban areas will soon find it hard to expand because they could run out of land as the existing space is snapped up by expanding developments.

The truth is that the price of a piece of land is composed of three parts: First, it’s the value of the physical fixtures, second, it’s the sales price of the land, and thirdly, there’s the value of the rights.

Land supplies are depleted as demand increases. So the values of the rights people use to get to the land, increase.

The results...

Strained feasibility 

Developers are now seeing delays as land prices and construction costs continue to rise and the entitlement process remains challenging. Developers must be meticulous in the due diligence required before starting a new project, to help reduce the length of time and potential cost overruns.

Property values have soared

The entitlement process can be challenging. Entitled properties are selling at a premium because of the challenges and risks involved in getting entitlements. 

In the end, the entitlement process is complicated, and it requires experience, patience, and a whole team with the right attitude to sailing through it successfully. 

RIISE is here to help you with the challenges of the entitlement process. Rest assured that your project is safe in our hands.