In 2004, I had the opportunity to help a land owner plan a 30 acre parcel of land in Las Vegas just off the Strip and behind the MGM Grand Hotel.  The parcel was zoned for casino uses and also had potential for hotel, residential towers and other retail uses.  The land owner paid about $9 Million for the underutilized property land and received minor residual income for lower intensity uses that were currently operating on the site.  Initially, the land owner tried to flip the land using a prestigious national real estate brokerage that marketed the property with a glossy aerial photograph with a large red line outlining the parcel for sale, a few ground level photographs, zoning information, potential uses, allowable square footage and the new price - $35 Million.  After several months and no interest from investors, the real estate brokerage contacted us to develop a few simple plans and sketches of what the property might look like to support the marketing effort. Our budget was not to exceed $7,000.  In about two weeks, we were completed.  Our effort consisted of visiting the site, meeting with the City Planning Department, creating hand-drawn site layouts for the land owner to review and select a direction, some relevant precedent images showing what the site might look like when completed and an illustrative computer model showing the overall project from above.  Everything was put into an 11x 17 booklet inelandplanning.com/delivers.php with a front and back cover totaling 8 pages. Now, here’s where the story gets interesting.

Upon review of the work, the real estate brokers in charge of marketing the property decided to option it themselves from the original land owner and using the booklet that we created, quickly sold the land for just under $90 Million to an investment group.  The land owner was compensated with a profit and the brokers left their brokerage firm and retired.  Our cut of the deal was .00007% of the total land transaction.  A few weeks later, we protested to the brokers and were able to negotiate $350,000 by imploring them about respect for our profession, their sheer greed and just common decency to do the right thing by compensating the people that helped them.

I never forgot this project because after nearly twenty-five years of master planning throughout the world, here was a prime example of how a strong vision, coupled with storytelling and simple clear graphics can create substantial value.  It also taught me that a ‘professional fee for service’ approach is not always the best method for master planning firms to be compensated.

A Chance to Change the Rules.

Stimulus money or not, it appears that architectural projects will be set aside for the foreseeable future as the economy recovers and work force transformation takes place. If building design and architectural fees do commence again, a more efficient fee structure will be created that leaves only the concept design through the initial stages of the design development phases to be reserved for specialized architects. Typically, architects negotiate fees in a range of between 4-7% of the total construction cost of the future building, depending on its use. Therefore at most, this will now only be calculated at no more than 40%. The remainder of the design work and potentially 60% of the fee that architects usually count on to keep people employed and offices profitable will be shipped overseas for the construction drawing phase, saving the developer even more money. A small fee percentage may be reserved towards the end of the project for the architect to participate during the bidding and construction phases of the project to ensure design intent and quality.