Does Bigger Always Mean Riskier? Understanding Infill Development Risks

Sometimes Bigger Can Actually Make More Sense

One of the lessons development has taught us is that bigger does not automatically mean riskier.

When we were deciding which of our projects to build first, conventional wisdom suggested starting with the smaller one.

We had a 9-unit project and a 24-unit project.

Which one became our first construction project? The 24-unit development.

It may seem counterintuitive, but when we examined the numbers, financing, and development process, the larger project made more sense for us.

Many of the professional and development steps were required whether we were building nine homes or twenty-four. The larger project attracted stronger lender interest and gave the financial model more flexibility.

Its scale also made it easier to incorporate some of the affordability objectives that mattered to us. Moving the larger project forward first ultimately helped strengthen our position for the project that followed.

This experience taught us something we now carry into other decisions: do not choose a strategy simply because it is the conventional path. Understand the project in front of you and follow the numbers.

That does not mean larger developments are always more suitable. Every project has different requirements, risks, costs, and financing considerations. The appropriate choice depends on the circumstances.

The Risks of Infill Development

We believe strongly in infill development, but we do not believe in pretending it is easy.

There are real risks, and understanding them is part of responsible development.

1. Zoning and Approvals

A property's zoning is only the beginning.

Depending on the project, municipal approvals, building permits, site plan requirements, and other reviews may still be required. Each can affect the schedule and the overall development plan.

Understanding what is permitted, what approvals remain outstanding, and how those requirements may affect the project is important before committing significant resources.

2. Site Constraints

Infill development means building within an existing community, where neighbouring properties, existing buildings, utilities, trees, easements, and property boundaries may affect the design.

Construction access can be tight, and existing structures may need to be demolished.

Even determining how to excavate safely can become an important engineering and financial decision.

These conditions make early site investigation and coordination with qualified professionals essential.

3. Construction Costs

Labour, materials, equipment, and professional services all contribute to development costs. Prices and project requirements can change over time, and unexpected conditions may emerge during construction.

A realistic budget needs to account for the work required and include an appropriate contingency for uncertainty.

Cost assumptions should also be reviewed as the design develops and more information becomes available.

4. Financing

Development financing differs from obtaining a mortgage on an existing home.

Lenders may evaluate the project plan, budget, developer experience, construction team, timeline, projected value, and other factors. Changes to the project or schedule may also affect financing arrangements.

Developers need to understand the terms of their financing and how delays or cost increases could affect the overall plan.

5. Schedule

Development involves many interconnected tasks and stakeholders. A delay in one area can affect several others.

Planning approvals, technical reviews, financing, consultant coordination, and construction all need to come together.

Developers cannot eliminate every delay, but they can plan for uncertainty, communicate early, and make informed decisions when circumstances change.

6. Community Impact

Infill development happens in neighbourhoods where people already live. That deserves respect.

New housing can create benefits, but it can also raise concerns about construction activity, parking, neighbourhood character, affordability, and change.

Responsible development means taking these concerns seriously and considering how a project can respond to the site's surroundings and community context.

How We Think About Development Risk

At NCTL Group, we believe risk should be considered throughout the development process, starting before a property is purchased.

That includes reviewing zoning and approvals, understanding physical site conditions, examining construction methods, testing financial assumptions, and considering the potential effects of delays.

It also means working with experienced professionals, asking difficult questions, and being willing to adjust a plan when new information emerges.

Sometimes, the most appropriate decision may be to proceed. In other situations, changing the design, waiting for more information, or reconsidering the opportunity may make more sense.

Responsible Development Requires More Than Ambition

Infill development creates opportunities to add housing within established communities, but those opportunities need to be evaluated carefully.

A larger project may offer financial flexibility in some circumstances, while a smaller project may be more appropriate in others. Neither size guarantees success.

What matters is understanding the project, examining its risks, and making decisions based on its actual conditions rather than assumptions.

At NCTL Group, our experiences continue to shape how we evaluate opportunities, approach uncertainty, and plan for the unexpected.

Follow NCTL Group as we share more about the decisions, challenges, and lessons behind developing housing within existing Canadian communities.