Sometimes, having a successful development is all a matter of timing.

That means, among other things, knowing where the market is headed or at least knowing enough to make an educated guess. It requires developers to scrutinize both current market conditions and the larger economic picture.

“You can be the best developer there is, but if the market is bad, your project is going to be a failure,” said Charles Lyons III, managing partner of L.A. development firm Fu-Lyons Associates. “On the other hand, you can be a mediocre developer, but if the market is hot, people will say that you’re a genius.”

Lyons knows all about how market conditions can determine success or failure. During the severe real estate slump a few years ago when hardly anything was being built, he embarked on an 11-acre industrial project in Torrance.

“Everybody thought we were crazy at the time,” said Lyons. “My partners were strong financially, otherwise we would not have been able to finance it. But we lucked out and hit a home run. The market went up just as we were building, and all the buildings were sold as soon as they were finished.”

But even the best analysis can fall short.

“We looked at the vacancy rates in Glendale, the rental rates, and what our competitors were planning to do in the area,” said Nyal Leslie, chief executive of PacTen Partners LLC, the first developer in the current cycle to break ground on a large L.A.-area office project. “All the indicators looked good. Vacancy rates were in the single digits, and no new buildings had been built in the area for a long time. But we overestimated the entertainment market.”

In undertaking Glendale Plaza, PacTen had anticipated that the growth in movies and television would continue. But it didn’t. Just as Glendale Plaza was finished last year, the industry began to stagnate. As a result, the project has not been anywhere near the resounding success that many expected it to be.

Timing a project just right (at or shortly after the cycle bottom) can be challenging on the financing end as well.

“In 1996-97, the market was just starting to show signs of improvements, but financiers were reluctant to invest because there was no strong data to support that there was an actual recovery on the way,” said Kim Snyder, managing partner with Insignia/ESG. “The risk takers who came in and started building speculative developments at that time made a killing because their product hit the market just as the tide (of new demand) came in. Then everybody jumped on the bandwagon as institutional capital for new construction became available.”

The current cycle is reaching the point where large investors are now concerned that the market for major projects has peaked. Instead, institutional financing is more readily available for short-term developments, such as industrial buildings that can be put up in 12 to 18 months.

“Developers are walking a fine line,” said Bob Ruth, area president with Trammell Crow Co. “We are taking no long-term, five-year bets. Instead we’re looking at a 12- to 24-month cycle, from entitlement to leasing, for our projects.”

Ruth, who acknowledges that there is little indication of softness in the market, reflects the view of many developers who have grown more cautious since the boom-bust cycle of the ’80s.

Long-term timing considerations are often less critical in business-friendly environments, such as those found in certain smaller cities around Los Angeles. Tom Irish, president of Transpacific Development Co., says undertaking projects in smaller cities like Cerritos and El Segundo typically carries less risk because construction can be facilitated in a more timely manner.

By contrast, hot office markets like Santa Monica are making it hard on developers.

“It is becoming a much more difficult environment,” said Gary Toeller, partner and senior vice president for L.A. County with Koll Development Co. “Homeowners are putting more pressure on city officials to make tougher deals with developers. In the ’90s, entitlement has become the big challenge. Developers have to work hard to sell the benefits of their project to the community.”

Also sensitive to timing is the competition. As knowledge spreads that a particular area is ripe for development (that demand for a certain type of building is outpacing supply), then the developers who are quickest to act generally have the best chances for success.

“In hot markets, such as Santa Monica, the Westside, and Tri-Cities, it is very difficult to find land,” Toeller said. “As demand increases, the competition among developers for the few available sites gets very fierce.”

Coming too late to the party means paying astronomical land prices, and the developer who tries to pass along those higher costs to tenants (in the form of higher rents) risks pricing his project out of the market.