The term “commercial real estate” is a broad category describing income-generating properties. Within that classification are multiple assets (office, industrial, retail and residential rentals) and actions (buying, selling and financing).

But none of the above can take place without land. Land is essential for launching, completing and occupying buildings and real estate transactions.

Unlike buying and selling buildings, finding and acquiring the right land requires on-the-ground knowledge, provable experience, patience and the ability to build and maintain long-term relationships.

Working with the Landowners

At KDC, we rarely acquire speculative land for development. More often, we locate a land-owning entity with which we can partner. While that corporate concern or farming family contributes the acreage, we provide experience, confidence, transparency, capital and ideas that can help improve land value.

Meanwhile, the landowner has the following options:

An immediate sale. The owner sells the land at retail value to KDC and its partners, receiving a lump sum in the process.

A joint venture. The owner becomes a KDC partner by contributing their land value and receives a return on their land value and a profit percentage as the developed land generates income or appreciates.

However, we’ve learned through the years that landowners aren’t the same, as indicated by the following examples.

The Long-Term, Uncertain Land Holder

The targeted land might have been in someone’s family for generations. It’s also possible that multiple buyers have approached the owner for some time, and the owner refused to sell. That owner might not be ready to sell, or wants to sell, but doesn’t know which direction to go.

This is where relationship-building, flexibility and transparency are essential. It is important to maintain contact with friendly, non-sales-oriented gestures and talk. Be willing to answer questions and be transparent. Offer education and options. Build trust by demonstrating expertise and patience.

The Unready Land Holder

A landowner may be reluctant to relinquish property unless a significant event occurs. This was the case at Legacy Business Park in Plano, Texas, where JCPenney owned 240-acres surrounding its 1.8 million- square-foot headquarters campus. This acreage and campus were located at the southwest corner of the Dallas North Tollway and Texas Highway 121 on the west side of Legacy Business Park.

During the 1990s, KDC was active in and around Legacy Business Park, developing build-to-suit projects for prominent companies such as Countrywide, PepsiCo, Intuit, Rent-A-Center, Denbury Resources and Encana, totaling 2.8 million square feet of office projects.

JCPenney’s land had always piqued the interest of the development community because of its visibility and location. However, the company was not interested in examining a land deal- in the meantime, until the east side of the North Dallas Tollway was nearly built out with office, multifamily and retail.

JCPenney executives’ decision to entertain development proposals coincided with two monumental aspects in the market. First, the conclusion of the 2009 financial crisis, and maybe most importantly, the almost full build out of the east side of Legacy Business Park and the east side of the toll road’s office sites (built mostly by KDC). Ultimately, JCPenney selected KDC as its strategic office development partner, and the coveted 240 acres became Legacy West, one of the most successful mixed-use developments in the country.

When KDC landed the FedEx global corporate headquarters project in 2014, the team felt it would be a 10-year land development absorption model. However, the market and desirability of the masterplan exceeded expectations resulting in almost complete build out by 2018.

Today, Legacy West is home to KDC projects totaling 4.5 million square feet for Toyota’s North American headquarters and regional campuses for Liberty Mutual Insurance and JPMorgan Chase, and features more than 360,000 square feet of retail, restaurants and hotels and 1,300 multifamily units.

Working with JCPenney meant building a relationship through regular communication, proposing a joint venture wherein they could participate in the development success, as well as staying informed about local activities. Demonstrating expertise and knowledge in the area also helped.

The Landholder’s Anticipation of Growth

Right before KDC began developing at Legacy West Business Park, developer David Craig was positioning his 2,200 acres at Craig Ranch in McKinney, Texas, for what would become McKinney Corporate Center. David had already established a beautiful master planned community with urban center and a world class golf course. KDC had a hunch that the Metroplex population would continue to migrate to the north and willingly shook hands with Craig to develop build-to-suits and office space in the corporate center.

But McKinney had a reputation as a small-population bedroom community for employment centers in Plano and Dallas. Fewer locals meant businesses couldn’t justify basing operations north of the busier cities of North Dallas, Richardson and Plano.

However, in the years between the initial site development and KDC’s first build-to-suit assignment, McKinney’s two main thoroughfares (SH 121 and US 75) were widened. At the same time, people continued moving north.

As the population expanded, corporate tenants took notice and became interested in the McKinney Corporate Center at Craig Ranch. Since 2018, KDC has been responsible for the development of the Independent Bank Group and SRS Distribution at the development, and Raytheon’s corporate headquarters located nearby.

Craig Ranch presented an opportunity for the landowner to enter a joint partnership with an office developer. And KDC trusted the data and understood the local trends and fundamentals, recognizing that it was only a matter of time before businesses also took note.

Land Development’s Human Perspective

There is more to ground-up development than dirt work, girders and cladding. It all starts with the land. That land belongs to different entities, ranging from long-time ranch or farming families to knowledgeable partnerships and companies. Due to the diversity, each partnership requires an approach that includes understanding the landowners’ mindset and goals, the ability to build long-term relationships, showcasing expertise, and demonstrating trustworthiness and honesty.

In addition to the above, flexibility and patience are key to finding the right land, working with capable landowners and developing the right project.