Land Assemblage

A tactic employed in land acquisition, where a real estate professional acquires two or more adjacent parcels, combining them into one. Land assemblage can be a time-consuming, complicated process – with the complexity increasing exponentially depending on the number of parcels and land owners. However, the complex process is worth it when the value of the whole (the combined parcels) is greater than the sum of the value of the parts (the individual parcels).

For example, a residential real estate developer acquires four 50 acres parcels, from four different owners, each worth $100,000 (4 x $100,000). After assembling the 200 acres (50 acres x 4), the new single parcel is worth $500,000.

Putting ‘Land Assemblage’ in Context

Bulldog Development Partners, an Athens-based real estate development firm, identified a prime redevelopment opportunity near the University of Georgia campus. The project envisioned a mixed-use student housing development, Athens Gateway Residences, featuring 850 student beds, ground-floor retail, and a dedicated classroom facility for the university. However, the desired site consisted of 89 single-family homes spread across 25 acres of land, owned by a mix of individuals and small landlords. The development team undertook a complex land assemblage process to consolidate these parcels into a single, developable site.

The Land Assemblage Process

The firm’s approach involved several key steps:

• Market Study and Initial Feasibility: Research indicated high demand for off-campus student housing in proximity to the university. The development team estimated that the assembled site would significantly exceed the combined value of the individual parcels due to its strategic location and potential zoning for higher-density use.
• Outreach and Negotiations: Bulldog Development Partners engaged a local brokerage firm to contact property owners, presenting competitive offers for their homes. The average appraised value of the homes was $220,000, but the developers offered $300,000 per property, providing a premium to incentivize sales. The total cost of acquiring the 89 parcels was $26.7 million (89 x $300,000).
• Overcoming Challenges: A few homeowners resisted selling, leading to prolonged negotiations. To maintain goodwill and avoid eminent domain proceedings, the firm offered relocation assistance, which included covering moving expenses and providing time extensions for owners who needed to secure new housing.
• Demolition and Site Preparation: Once ownership of all parcels was secured, the homes were demolished, and the land was rezoned for mixed-use student housing. The assembled site increased in value due to its higher development potential, with an appraised value of $40 million post-assemblage.

The Development Vision

The newly assembled site allowed for the construction of a state-of-the-art, mixed-use project, Athens Gateway Residences, which would feature:

• 850 beds of purpose-built student housing
• 30,000 square feet of ground-floor retail (including restaurants, cafes, and a convenience store)
• 10,000 square feet of university-leased classroom space
• A central courtyard and rooftop amenities, enhancing the student experience

Financial Impact of the Assemblage

The land assemblage process created substantial value for the developer:

• Total acquisition cost: $26.7 million
• Demolition and preparation cost: $2 million
• Post-assemblage land value: $40 million
• Value creation through assemblage: $11.3 million ($40 million – $26.7 million – $2 million)

By leveraging the land assemblage strategy, Bulldog Development Partners transformed an underutilized neighborhood into a thriving hub for students and local businesses, benefiting the university community and generating significant returns for the developer.