Highest and best use analysis

Analysis of the best and most efficient use of the site helps to understand which development scenario will provide the maximum value of the land, taking into account the market, constraints and potential of the territory. The ERA CAPITAL team will develop a concept that will ensure maximum ROI and commercial success of the future project.

Investment in development is an equation with many variables. Any mistake at the start, whether it is an incorrect concept or an overestimation of demand, multiplies the risks. For capital to work, decisions need to be based on numbers, legal norms, and an understanding of location.

Investment in development is an equation with many variables. Any mistake at the start, whether it is an incorrect concept or an overestimation of demand, multiplies the risks. For capital to work, decisions need to be based on numbers, legal norms, and an understanding of location.

Why is it necessary to analyze the best and most effective use of the site?

A land bank or an existing building is an asset that requires competent analysis and management. Owning them imposes costs, but does not always bring profit. Owners often face a situation where a location seems promising, but legal restrictions or market conditions block obvious solutions.

The modern market is saturated with standard projects. The winner is the one who finds hidden opportunities, exactly falls into the needs of the audience, reduces risks at the planning stage.

If you don’t, you risk creating a “dead” business. These are frozen funds, long payback, difficulties with leaving the investment. An in-depth study of best use addresses these questions before funding begins.

What is Best Use Analysis and how does it help you choose the best project format?

Best Use is a comprehensive assessment that allows you to identify a scenario for the development of an asset with maximum return.

ERA CAPITAL’s methodology is based on four fundamental filters. The project should be:

• Legally permissible
• We check town-planning regulations, monument protection zones, sanitary protection zones, easements.

We consider various functions: residential development, retail, offices, warehouses, mixed-use formats. We compare their indicators, find the most effective way of business development.

What does the client get after Best Use Analysis?

Instead of a set of hypotheses, the customer has a step-by-step road map.

The final report includes:

Location audit:

audit of location, transport accessibility, environment.

Overview of the competitive environment:

overview of the competitive environment, rental rates, sales prices in a given location.

Legal Screening:

Legal Screening of Building Restrictions (GPZU, PZZ).

Concept variants:

development of several variants of the concept (master plan, technical and economic indicators).

Financial modeling:

financial modeling for each scenario (NPV, IRR, payback period).

Stage of implementation:

recommendations on the phased implementation.

For what areas and facilities is the service suitable?

The service is universal for all areas. It applies to both free land (Greenfield) and built-up areas requiring redevelopment (Brownfield).

The method is suitable for the following objects:

• Empty lot. It is necessary to understand what is most profitable to build here and how to apply.
• Industrial zones. Renovation of the territory, withdrawal of production, creation of creative clusters or residential quarters.
• Incomplete or outdated object. The building is outdated, has ceased to bring income, requires reconstruction or demolition.

Change of VRI. The current designation of the land does not allow to implement a profitable business project. A rationale is needed to make changes to the PPZ.

Farmland. Transfer to another category, changing the boundaries of settlements.

Complex multifunctional complexes. It is necessary to correctly combine functions so that they strengthen each other, and not compete.

We work with all segments. This can be a logistics park, a shopping center, a premium residential complex, a business center or a hotel. Even specific formats (data centers, light industrial) fall within the perimeter of our expertise.

How does ERA CAPITAL analyze the best use of the site?

We do not use formulaic solutions. Each asset is unique, so the work is built systematically, consistently, transparently. The process begins with the collection of raw data. The team requests documents, goes to the site, assesses visual accessibility, environment, physical parameters. Then a marketing study of the territory is carried out. We study the demand, supply, future projects of competitors. It is important to see not only the current situation, but also the forecast for 3-5 years ahead.

Next is the analysis of the best use of the site (Best Use). Experts generate hypotheses, test them through the prism of constraints, economics. The concept is being developed: product formation, cutting of premises, functional zoning. Then the financial calculation is performed. A detailed cash flow model (Cash Flow) is being built, which takes into account taxes, operating expenses, construction costs, loan maintenance. The end is defense of strategy. We discuss details, adjust the model if necessary.

Our team unites analysts, consultants, appraisers, brokers. This multidisciplinary composition allows for a comprehensive examination.

Developing the concept of Best Use is a mandatory step for a professional developer. ERA CAPITAL helps reveal the true value of real estate. We develop a concept, create a foundation for sustainable business, offering solutions proven by practice, deep knowledge of the market.

This includes the development of a site best use analysis (BEST USE)

Location and site characteristics analysis

Preliminary selection of use cases of the site, taking into account the characteristics of the location, the current type of permitted use of the site and the configuration

Main and local characteristics of the market by selected use cases of the site

Formation of the concept of development of the site for each of the options, including a description of the positioning of real estate, volumes and areas of the main development and additional infrastructure

Enlarged article-by-article calculation of the investment volume of the project of each of the options

Building an enlarged financial model for each of the options and calculating key economic performance indicators

Conclusions and recommendations for the best and most efficient use of the site