11 / 06 / 2013
San Miguel Management was approached by a developer who sought to develop a ground-up conventional multifamily asset on a parcel of land in a terrific location adjacent to other new mixed-use developments. The objective presented to San Miguel was to produce a full operating budget for the first three years of operation, a marketing strategy of how we will differentiate the product from nearby competitors, a strategic lease-up plan, and to opine on the location and overall feasibility.
We began by visiting the site and conducting some diligence. This included photographs, aerial imagery and video by drone, and extensive notes. During the site visits, it was noted that the parcel was only accessible by a single two-lane roadway crossing a railroad track and trains crossing the roadway was observed multiple times during each visit.
It was decided to temporarily install a motion-activated camera to video the trains crossing and to extract key data from the videos. During a 63-hour period, there were 68 trains that crossed the roadway. From this information, we were able to produce critical data, which led us to conduct meetings with the City of Austin to explore whether alternative entrances were possible.
Unfortunately, there were no other accessible roadways and none could be developed as the land abutting to the parcel belonged to the City of Austin Parks Department.
With this analyzed, our marketing and strategic lease up plan in hand, we conducted a focus group study to gather unbiased opinions as to the feasibility and intrinsic cost of our findings. The results of the focus group confirmed our assumption that while the land site location was prime and the financial projections were favorable, the train and associated difficulties could not be overcome.
The deal did not ultimately make, but it served as an incredible learning experience for all involved and showed how San Miguel goes above and beyond simple analysis from an office and puts boots on the ground to truly serve the client’s interests.