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Owner's representative in real estate development

Steve Bentley is a wealthy individual living in Los Angeles, California. He has made a good living for years running the family business he inherited from his parents. While Steve sees himself as a savvy investor, putting his earnings aside in stocks, bonds, mutual funds, etc., he feels he needs to diversify his portfolio a bit more. When the market went south in 2008, so did Steve's returns on his investments. After researching alternative investments, he decided to get his feet wet in real estate. He knows a few people in the business and is aware of the potential returns from successful development.

He identified a piece of vacant land near his house that he said would be ideal for building a multi-family project. Without really looking at other properties or running detailed financial projections on the development, he acquires the property.
Once the property acquisition is complete, Steve hires an architect to design his vision. 

You see, Steve feels like all he needs to run this business is an architect and a general contractor. The architect is quick to warn him that there is much more to be done for a project of this magnitude. Not only will he need his architectural services to design this 42 unit stick frame condo structure on a podium parking lot, but he will also need a planning consultant to get the project right from the authorities. governmental; a structural engineer to design and build the structure; a civil engineer to design all the site's public services and earthworks since his car park must be underground; a geotechnical engineer to perform tests on the soil on which the building foundation will rest; an MEP engineer for the design and engineering of mechanical, electrical and plumbing systems; an interior designer to design the finishes of residential units and common areas so that they are salable; a landscape architect to design the exterior landscape and the landscape; an acoustics consultant to ensure that sound transmissions entering condominiums comply with the code; a waterproofing / roofing consultant to ensure that the building design does not allow any water infiltration that could potentially lead to future legal proceedings; an elevator consultant to design the elevator system; a building inspection consultant because the insurer needs him for the condominium work; and since this project is in a neighborhood that is trying to lobby for lower density, it even needs a political / community outreach consultant to deal with opposition from the local contingent Not In My Backyard ("NIMBY" ).

Steve knows he is not authorized to do this work alone and does not want to be sued for construction defect in 10 years. As such, he decides to hire all of these entities but doesn't know how he can possibly manage them all.

Steve has no experience in construction, let alone design and engineering. In addition, he blew his budget for incidental costs, which were essentially reduced initially. As such, he decides to try to deal with them all on his own. Several months after hiring all the consultants, as well as a general contractor, things start to fall apart. Consultants fail to produce their deliverables on time, the drawings reflect conflicting information, and Steve can't even get an appointment to submit the drawings for plan verification with the city.

The contractor forgot to submit his insurance certificate before mobilizing on site and one of his workers was injured during the structural excavation, city inspectors have already drafted several correction notices due to From unsafe conditions, the contractor's high costs are racing, not to mention that they are submitting many change orders because there were so many holes in Steve's contract with them. Everything is a mess and Steve needs help quickly. 

It is now evident that he needs an external consultant to remedy these issues and manage the project on his behalf. Looking back, he should have brought someone on board, maybe even before he submitted his offer on the property.

Introducing the Owner's Rep

Herein lies the need for the Owner's Representative in the real estate / construction industry. The Owner's Representative, also referred to as the Owner's Rep, OR, or simply Project Manager, is sometimes an overlooked asset that can be included in any project undertaking. The Owner's Rep bridges the gap between ownership and all other entities involved with the project. They control the design and construction process, making sure that every decision is made in the Owner's best interest. A true Owner's Rep is well versed in development as well, managing the entire development process and not just design and construction. 

More often than not, an Owner's Rep has a background in development themselves, so they know what it takes to pull off a successful development project and maximize their client's Internal Rate of Return ("IRR"). In turn, the Owner's Rep can use their ownership experiences to solve problems and offer creative solutions that directly affect the bottom line.

As one can see from the litany of tasks mentioned earlier in Steve's case, there are a myriad of moving parts to a development project, many of which may be a daunting undertaking for most small property owners to handle on their own. If the Owner chooses, the Owner's Rep can manage every aspect of the project, ranging from approvals to lease-up, something that individual Contractors or Consultants don't have experience handling either. Hiring an Owner's Rep is crucial and will allow the Owner to focus their time and resources on more important issues.


A very experienced Owner's Rep can even be brought on before the acquisition of the property, to help the Owner with things like property selection, acquisition analysis, economic studies and due diligence. They may also provide financial support, assisting in the identification of various forms of traditional and non-traditional financing sources and then help evaluate and analyze each of the options. 

The compilation of feasibility reports may also be necessary for decision making and reporting to various partners such as equity, banks, and appraisers, which include market research, detailed financial analysis, entitlement summaries, and justification for "go/no go" decisions. The Owner's Rep may also put together and update the project pro forma and even lead the project through the typically complex entitlement process, providing coordination with the city officials, land-use attorneys, and Architects involved.


When it comes time to start the design process, the Owner's Rep will assist in selecting the design team, typically at a minimum consisting of all of the players mentioned in Steve's project above. They may create and issue a formal Request for Proposal ("RFP") to go out to several different firms, or they may rely on past relationships to select a firm that best suits the particular project. 

Once the project team is formed, the Owner's Rep can lead the effective collaboration towards a common goal. Again, the Owner's Rep is typically involved in every aspect of the process and spearheads the flow of information among Architects, Designers, Engineers, Planners, Consultants, Contractors, Vendors, Property Managers, Sales Staff, Lenders, Governmental Authorities and of course, the client. Due to the number of players involved in the process, the Owner's Rep should have a commanding influence to lead this synchronized effort to crystallize the design concept so that it can be built in the field. This point in the project is the ideal time to start exploring/visiting the value engineering possibilities. 

Value engineering is a technique in which the value of a system's outputs is optimized by crafting a mix of performance and costs. In most cases this practice identifies and removes unnecessary expenditures, thereby reducing the cost. The Owner's Rep should work with the consultants to remove these unnecessary costs and put the money in places where it should be spent.

This may also be an opportune time to perform a LEED analysis if the client wishes to go in that direction. The Leadership in Energy and Environmental Design ("LEED") Green Building Rating System, developed by the U.S. Green Building Council ("USGBC"), provides a suite of standards for the environmentally sustainable design, construction and operation of buildings and neighborhoods. 

Several Owner's Representation firms have LEED Accredited Professionals ("LEED AP") on staff, which have the capability of analyzing a design and driving it to LEED certification.

The Owner's Rep may prepare and maintain a Master Cost Report if the client so chooses, which includes the hard and other related development costs, such as acquisition, design & engineering, permits & fees, legal, FF&E & OS&E, administrative, sales, and marketing costs. This budget should include allowances for any anticipated cost exposures....