As an investor you should treat this precieved opportunity no differently than you would if you were making an investment in something that is your usual focus. My guess is that you obtain as much knowledge as you can about the particular opportunity before commiting any funds.
As a developer, I never commit to anything without first knowing my marketplace. Thus, the first thing needed is a market study. You can do this yourself, however, I feel that it is money well spent to hire a third party to perform such. It also makes for a better submission package to the lender, if such is sought. The market study will tell you if there is a “pent-up” demand in the marketplace for the proposed use, as well as, many other things. However, the most important thing is if there is a pent-up demand or not.
My gut feel is that there probabaly is, as you have indicated that there is ongoing growth, which would validate the new construction taking place. Specifically, what kind of new construction? is office space being built? retail space? industrial? residential? etc… How much of each type is being built? (I.E. number of units, square footages, etc…) The marketing study will also show you how each of these relate to one another.
It would also be a good idea, if you don’t already have control of the land, to get it under contact with a feasibility period where you can walk from the deal for any reason and retain any earnest money you may have deposited. Likewise, earnest money is meant to be a showing of “good faith” in that you are serious about doing the deal. Therefore, I would suggest that you do not deposit any earnest money because the expenses you will be incurring during the feasibility period are a reflection of you being serious about closing the deal. If the Seller bucks at this, simply insert a special stip that states, in the event you determine the property is not feasible for your intended use that all studies, reports, test, etc… that have been done will be assigned to them. After all, there not going to do you any good and the seller would then have something to aid in marketing their property to future prospects.
As a 3rd generation developer, I’ve seem alot of deals. Never has two been alike. With each deal being different, your primary focus should be on how to mitigate risk! Which you have already started by simply posting your request here.