By Andy

Real estate as a concept is complicated. After all, for thousands of years people have been buying, selling, using, transforming and enjoying what is essentially unmovable and unchangeable: land.  And as long as people have walked the Earth, we’ve found that we need structures on top of this land to shelter us. We humans have to find a way to “improve” land to suite our needs, be it for dwelling, schools, places of worship, grocery stores or office building.  For all it’s inherent qualities raw land is typically not that useful to us.  But if we put just the right building in just the right place, suddenly that land has a purpose and a mission.This list is about the real estate pillars that hold it all up.  And before you ask, there are quite a few subsets to each categories.  Many people forge wonderful careers out of building appraisals, but those appraisals are meaningless without a willing buyer which is really just an investment.  For example, one can make a very strong argument that Land Preservation could be added to this list, however I view that effort as a critical Managment function.  

Ok ….on to my list

DEVELOPMENT/INVESTMENT

Usually the first step in bringing a building into reality is based on the decision of what building type to put where.  Development of real estate is really just that: the establishment of a building on a specific piece of land. In the private sector this task is taken up by enterprising capitalists looking to increase the value of land to ultimately sell it to a buyer.  The tasks involved in a successful real estate development are inextricably linked to complicated investment and financial analyses because there are big dollars in play and because the life of a building can be quite long.  Ultimately the value of a building is based on the cash flow generated by rent payments so these analyses are quite important up front.  The art of the developer is to understand the best use of a particular property, have a vision for it and get the numbers to work.  The public sector is a bit different but governmental or quasi-governmental agencies typically will have real estate departments that help to source land and help to manage the process of a new building.  The analysis amongst these groups are typically not as financially burdensome but do require layers of bureaucracy that help to keep checks on how the taxpayers dollars are being spent.

DESIGN & CONSTRUCTION

This is where the Architects and General Contractors come into play.  In the hands of a talented Architect, the Developer’s vision can be realized in fantastic ways.  The Developer creates the guiding principles behind a building, but it’s the Architect’s job to ensure the vision is realized within (mostly) the budget constraints.  Additionally, most Developers are looking for new and innovative ideas to help separate their properties from the competition or to extract the best value from the land itself.  The Architect is the sculptor of the vision and must communicate that vision effectively to the General Contractor.
Most of us know what the General Contractor’s role is but this is usually a deceptively simplified idea.  The General Contractor must of course build the building.  But to do so effectively requires a tremendous level of collaboration with the wide variety of sub-contractors that have a particular specialty.  I often think of a GC as a jack of all trades, master of none.  They must be informed enough to know what things should cost and how long it should take to provide.  

PROPERTY & LAND MANAGEMENT

Once a building is there it must be managed.  Property managers (sometimes call Asset Managers) collect rent payments, makes sure the elevators inspections are up to date, call the pest control company, respond to critical building maintenance issues.  These folks keep the light on for you.

LEASING/BROKERAGE

The connection between a building and a person or company is made through the real estate agent.  If you own or rent a home you’ve come into contact with a leasing or brokerage agent.  They are the link that brings people to the buildings they want.  They create an efficient line of communication between Owners and Occupants to create consistent and efficient transactions so we can get to using our new real estate.  

To be sure there are disruptions happening in all these pillars that could increase or decrease the importance of each.  There are lots of online real estate websites that allow individuals the option to look at houses from their couch.  But that’s really just transferring a duty, albeit a large one, that used to be the agents into the hands of the user.  There still needs to be an agent to complete a sale and it’s likely to stay that way indefinitely.  So for as far as I can see these pillars will remain strong and integral to the real estate market as a whole.