Which of the following can be considered development costs?

Labor and materials used for construction are fundamental components of development costs because they directly contribute to the physical creation of a project. Development costs typically encompass all expenses that are necessary to bring a real estate project from concept to completion. This includes not only the direct costs associated with constructing the building, such as the labor required for various trades (like carpentry, electrical work, plumbing, etc.) and the materials needed (such as concrete, steel, glass, and other building supplies), but also other costs like permits and fees associated with getting the necessary approvals for construction.

In contrast, marketing and advertising expenses, while necessary for promoting a project, are not considered development costs in the same sense. These expenses follow the physical construction of the project and are typically categorized as operating or selling expenses, rather than direct development costs. Utility expenses after project completion fall outside the scope of development costs as they pertain to the operational phase of the project. Lastly, lease costs for office space may be seen as ongoing operational expenses and not direct costs tied to the project’s development phase. Hence, labor and materials stand out as the correct choice reflecting the core costs associated with the development process.