For this Field Note, we wanted to share a theme that has been consistent throughout the life of our company — the importance of controlling well-located land.
Across multiple real estate cycles, one lesson we have seen repeatedly is that long-term value is often created at the time the land is acquired, not just when the building is completed. Projects that begin with a strong location and a reasonable land basis tend to have more flexibility over time, while projects that start with expensive land or tight sites leave very little room for error.
Our strategy has generally been to focus on fast-growing suburban corridors where population growth, traffic patterns, and new housing development support long-term demand. In these areas, land can often be acquired before the market is fully built out, allowing us to develop projects at a cost that is difficult to replicate later once the area matures.
This approach does not always produce the fastest results. In some cases, we are early to a submarket and lease-up takes longer than expected. In other cases, surrounding development may take a few years to catch up. Over time, however, we have found that owning the right piece of land in the path of growth tends to solve many problems that can arise during the life of a project.
Controlling land also creates opportunities that are not always visible at the beginning. As markets evolve, we are often able to add buildings, expand parking, create pad sites, or generate ancillary income through uses such as cell towers, billboards, or other ground leases. These types of decisions are much easier when the site was acquired with flexibility in mind.
Another advantage of a land-driven strategy is that it provides more options when markets change. If leasing slows or capital markets tighten, a project with a lower land basis typically has more time to stabilize and more ways to create value than a property that was purchased at peak pricing.
We believe this is one of the reasons our development projects have generally performed well over long hold periods, even when individual years did not go exactly as planned. Real estate cycles will always move up and down, but well-located land in growing markets tends to become more valuable over time.
For that reason, we continue to spend a significant amount of effort on site selection, even when it means passing on deals that might look attractive in the short term. In our experience, patience at the front end of a project often makes the rest of the investment much easier.
