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Land Development Terms You Need to Know

Land developers throw around a lot of terms that you may not be familiar with. To help familiarize yourself with the industry, here are some land development terms, such as land grading and building pad, that you need to know. Not every land developer will offer all of these services, so be sure to ask ahead to ensure you find the right company for your project.

Land Development Terms


A parcel is, essentially, an extended area of land owned by one person.


An individual tract of land designated as part of a nonresidential group development, such as a retail mall or shopping center. An outparcel is not physically connected and is secondary in nature to the primary development.

Building Pad

A building pad is essentially the area that will be occupied by future construction, including future buildings, structures, graded areas and accessory uses are to be constructed on a proposed parcel.

Pad Site

A pad site is different from a building pad. It’s the empty area of land (or outparcel) directly adjacent to a larger shopping center or strip mall. If you’ve ever seen an empty piece of land behind or next to them, that is a pad site!

Pad sites are typically purchased or ground leased by users for construction of freestanding buildings for use by casual or quick-serve restaurants, banks or other freestanding single and/or multi-tenant uses.

Land Grading

While land grading may sound like a teacher giving a piece of land an A+, it’s something entirely different. Land grading is leveling the surface to create a flat foundation for your project.

While grading the land, you may need to take dirt and move it to lower elevations using machinery and evacuation techniques, as well as consider drainage, surface smoothing, and topsoil installation.

Land Levelling

We include this because “land levelling” sounds like it would be “land grading.” However, land leveling is strictly an agricultural term that is used for surface irrigation.

Levelling ensures irrigating is done efficiently and effectively to make the most use of fertilizers and pesticides. In an unlevelled field, high spots might not be covered by irrigation water, and the dissolved nutrients and/or pesticides might percolate unused into the soil.

Land Analysis Terms


An appraisal is an estimate of the value of a property by a certified appraisal expert. The appraisal can value multiple aspects of the property, including the land value, the improvement value, the “as-is” value, or the fully completed value of the development.

Highest and Best Use (HBU)

The Highest and Best Use analysis determines the optimal use for a piece of land or an existing property. It considers the existing condition of the property, the market, and legal constraints such as zoning, to help the developer decide what is the “best use” of the land.

Land Costs Terms

Land Cost

The land cost is straightforward. It’s the price that the developer paid for the piece of land where the development will occur.

Acquisitions Costs

In addition to the land cost, the developer will incur acquisitions costs. These fees are not a part of the land cost, including any legal fees, consultants, analysis, and other costs associated with the acquisition.

Construction Cost

Construction costs are considered the actual construction of a physical structure on the project and includes both labor and material. They are not the development cost (see below).

Development Cost

Development costs are costs and fees associated with the planning and execution of the development. This includes permitting fees, architectural and engineering services, legal representation, survey fees, etc. It also includes costs associated with preparing the land for development, such as site preparation and infrastructure (sewer, water, and utilities).

Development Appraisal

A development appraisal is an assessment of a project’s viability. It includes an investigation into all project aspects and anticipated outcomes. A good property development appraisal will help you identify your cash flow needs, a critical success factor for any developer.

If you are looking for a land development company to make the process easier, give BC a call at 480-900-1991 or visit us online.

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