62 - From Architect to Developer: Managing $350M Projects with Antonia Botero
Sep 25, 2024
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Antonia Botero, founder of MADD Project, shares her journey from architect to developer, managing $350 million projects in commercial real estate. She discusses the intricate dynamics of development fees and their impact on project incentives. Understanding market data and financial structuring emerges as crucial for success. Antonia reflects on the transition from architecture to entrepreneurship, emphasizing resilience, transparency, and the challenges faced during COVID-19. Her insights offer a blend of professional expertise and personal anecdotes that make for an engaging discussion.
Antonia Botero emphasizes the necessity of understanding market data and financial structuring prior to engaging design teams for effective development management.
The podcast details how misalignment of incentives in development fees can create conflicts between project managers and investors, warranting careful negotiation.
Deep dives
Transitioning from Architecture to Development
The discussion highlights the transition from architecture to real estate development, emphasizing the significance of understanding market data and financial structuring before engaging design teams. Antonia Biterro, the founder of MAD Project, illustrates how her background as an architect informed her development management approach. Her experience in large commercial projects equipped her with insights into how the development process differs from architectural design, as it requires more comprehensive market analysis and pre-design considerations. This foundational knowledge allows her to align the project outcomes more closely with investors' needs and market demands.
Understanding Development Fees and Investor Relationships
The conversation delves into the intricacies of development fees and the potential misalignment of incentives between project managers and investors. Antonia explains that development fees typically range between 3% to 5% for large commercial projects, which can create conflicts when project managers prioritize their fees over the project's overall success. This financial dynamic often requires careful negotiation and transparency to ensure that all parties are aligned on the project's objectives. Antonia's approach aims to create a more equitable structure that benefits both her company and the investors, fostering trust and collaboration.
Market Differences and Cost Variability
Antonia compares the costs of commercial developments in high-expense markets like New York City with more affordable markets such as Salt Lake City. For instance, constructing new residential units in New York may cost between $700 and $850 per square foot, while similar projects in Salt Lake City could range from $450 to $500 per square foot. This significant variance underscores the importance of tailoring development strategies to specific market conditions and understanding the fiscal implications for investors and developers alike. Knowing how different locales affect pricing can guide developers in making informed decisions regarding project feasibility and pricing structures.
Building a Business Amidst Uncertainty
Antonia recounts her journey of launching MAD Project, especially how the COVID-19 pandemic unexpectedly propelled her into entrepreneurship. After facing layoffs and maintaining numerous contracts, she leveraged her network and social media to drum up business during uncertain times. Despite initial doubts, she successfully replaced her previous salary within a few months by focusing on creating value for her clients through her unique model. This experience illustrates the resilience and adaptability required in entrepreneurial ventures, particularly in high-stakes industries like real estate development.
Join me, Nik (https://x.com/CoFoundersNik), as I sit down with Antonia Patero (https://x.com/antonia_mdprjct), founder of MADD Project, a commercial real estate developmentmanagement company. Antonia shares her journey from architecture to development and explains how her firm handles everything from concept to completion for large-scale commercial projects. In this episode, we discuss how development fees can misalign incentives and why understanding market data and financial structuring is crucial before engaging a design team.
Questions this Episode Answers:
What is the transition from architecture to development like?
How do development fees work in large-scale projects?
Why can misalignment of incentives be an issue in real estate?
What role does market data play in successful development projects?
How can developers better structure projects for investors?
___________________________ Love it or hate it, I'd love your feedback. Please fill out this brief survey with your opinion or send me an email at Nik@cofounders.com with your thoughts. ___________________________ Spotify: https://tinyurl.com/5avyu98y Apple: https://tinyurl.com/bdxbr284 YouTube: https://tinyurl.com/nikonomicsYT ___________________________
This week we covered:
00:00 Highlights 00:44 Meet Antonia Botero: From Architecture to Development 01:27 Understanding Development Fees and Market Data 02:00 Comparing Commercial and Residential Projects 03:08 The Role of an Architect in Development 04:55 Market Analysis and Financial Structuring 07:10 Antonia's Career Journey and Starting Mad Project 10:44 Economic Incentives and Development Fees 20:35 The Million Dollar Team Dilemma 20:43 The Value of Project-Based Hiring 20:56 Challenges of In-House Teams 21:24 The Better Model for Managing Fees 22:59 Starting a Company in 2017 25:05 Navigating COVID-19 Challenges 26:58 Customer Acquisition Strategies 27:45 The Importance of Word of Mouth 30:25 Managing Projects Across the Country 32:23 Rapid Fire Questions 36:21 Final Thoughts and Contact Information
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