by Rebecca Fien

Real estate development is part vision, part execution—and 100% about the numbers. Whether you're building retail, office, or mixed-use properties, tracking the right metrics is essential to staying on time, on budget, and on target.

Alex Deitch, managing partner of Falcon Realty Partners, has overseen the development of hundreds of properties across the U.S. He credits disciplined performance tracking as one of the key drivers behind consistent, profitable outcomes.

“You can’t manage what you don’t measure,” says Deitch. “Every great development starts with a clear view of the numbers.”

Below are the five metrics Alex Deitch recommends every real estate developer track from day one.

1. Internal Rate of Return (IRR)

What it is: IRR measures the rate at which a project generates return on investment over time. It accounts for timing, not just total profit.

Why it matters: IRR is a primary benchmark for investors and joint-venture partners. It helps compare multiple development opportunities on an apples-to-apples basis.

How to use it: Establish your IRR targets based on risk, asset type, and market. Track against updated projections throughout the development cycle.

2. Cost Per Square Foot (Development Costs)

What it is: This metric captures the total cost of development—including land, design, construction, and soft costs—divided by the total usable square footage.

Why it matters: It’s your basis for determining profitability, setting rent rates, and benchmarking against similar projects.

How to use it: Break down costs by category to isolate where overruns occur. Use this metric to negotiate with contractors and track cost efficiency.

3. Lease-Up Timeline

What it is: The period between completion and stabilized occupancy (typically 90–95% leased).

Why it matters: A long lease-up period can delay cash flow and erode returns. It also impacts valuation for refinancing or sale.

How to use it: Set realistic lease-up goals in your underwriting. Monitor actual leasing velocity against projections, and adjust strategy if absorption slows.

4. Debt Service Coverage Ratio (DSCR)

What it is: DSCR = Net Operating Income ÷ Debt Service. It shows whether your income can cover loan payments.

Why it matters: Lenders use DSCR to evaluate loan risk. A healthy DSCR (typically 1.25 or higher) keeps you in good standing.

How to use it: Track this quarterly post-stabilization. If NOI dips or interest rates rise, DSCR may shrink—leading to tighter loan terms or capital calls.

5. Exit Cap Rate

What it is: This is the projected cap rate at the time of sale. It determines the likely sale price based on expected NOI.

Why it matters: Your exit cap rate assumption can swing your returns drastically. An unrealistic assumption inflates IRR on paper but sets you up for disappointment.

How to use it: Research comparable sales in the target market. Be conservative—future market conditions could be softer than today.

Tracking in Practice: Real-World Example

Let’s say you’re building a 40,000 sq. ft. shopping center:

• You forecast an IRR of 16%, targeting investors who expect 15% or higher.

• Your total development budget is $10 million, or $250/sq. ft.

• You plan for a lease-up period of 12 months, with staggered tenant move-ins.

• Your projected NOI is $900,000 annually, and your loan requires $650,000 in annual payments—giving you a DSCR of 1.38.

• You expect to sell the property in 7 years at a 6.5% exit cap, yielding a $13.8 million valuation.

Track these KPIs over the life of the project to stay aligned with your investors, lenders, and long-term goals.

Alex Deitch Recaps: From Numbers to Results – Why Tracking These Metrics Drives Development Success

Metrics aren’t just a developer’s scoreboard—they’re the steering wheel. By focusing on IRR, cost per square foot, lease-up timelines, DSCR, and exit cap rate, developers can keep projects on track and avoid costly surprises.

Alex Deitch puts it best:

“If you’re not tracking the right numbers, you’re making decisions in the dark. Great outcomes come from great visibility.”

At Falcon Realty Partners, these metrics aren’t just benchmarks—they’re embedded into every decision from land acquisition to final sale. If you’re a developer looking to elevate your process, start with the numbers—and never stop tracking.

Alex Deitch serves as the Managing Partner of Falcon Realty Partners, based in Atlanta, GA. With more than two decades of experience in commercial real estate, he has spearheaded the development of hundreds of properties across the country. At Falcon, he leads the firm’s operations, expansion efforts, and acquisition strategy.