Real Estate Development


Commercial real estate development is the construction of commercial buildings that are later leased out to 3rd parties. This includes; office buildings, industrial facilities, retail centers, and any other commercially oriented property. For instance, condo and multifamily apartment building projects are also considered commercial real estate development. 

One challenge of property development though is that it’s often a lengthy, hard, and costly endeavor. This is because it involves various processes and activities. Besides, the project requires the involvement of various professionals including engineers, architects, contractors, site planners, etc. 

However, despite being a difficult task, commercial real estate development projects can be quite lucrative, especially if they’re successful. But for that to happen, you need to familiarize yourself with the marketing, financing, town planning, and processes involved in these projects. 

In this article, I’ll take you through various steps involved in the development process of commercial real estate development design. Hopefully, understanding the development process will take your commercial real estate development business one step closer to success!  

The life cycle of commercial property development 

The best thing about commercial real estate development is that each project follows the same life cycle. As a result, the commercial property development process includes the following stages; 

  • Site selection & acquisition 

The initial stage of any commercial real estate development is to acquire a site that you can build on. However, before that happens, you need to undertake a considerable amount of research and evaluation. This will help you determine if the proposed commercial development is truly feasible. 

With that in mind, as a commercial property developer, you need to determine if the site has the potential to meet market demand in that area. At the same time, the site must meet regulatory requirements, tenant requirements and accommodate the consumers. 

After identifying a suitable site for your project, you need to acquire that property. You can accomplish that through various ways that will allow you to proceed with the proposed project. For instance, you can acquire the site through a joint venture of an outright purchase of the land. 

  • Preparation

Once you acquire the property, you need to ensure that the site is ready for the construction of the desired commercial building. More importantly, you need to perform architectural design and engineering for the building before the project begins. 

If the site is currently raw, land preparation may involve clearance of natural features and installation of infrastructures like roads, electricity, etc. The preparation process will entail any work that ensures the property is ready for construction. 

On the other hand, if the property has been previously developed or in an urban area, the preparation process will be a little different. For instance, land preparation may involve demolishing the existing structure to pave way for the new building in this case. In addition, this situation may require unique financial and legal strategies to achieve this task successfully. However, the final result is still to make sure that the site is ready for construction of the proposed building. 

Note, the preparation process will also entail obtaining the relevant approvals before the actual construction commences. Unfortunately, areas like California tend to have long and intricate approval processes. Luckily, involving a reputable construction firm in the area like Innodez Design & Engineering will help you pull development approvals quicker. 

  • Construction

After preparing the land fully and obtaining all the relevant approvals, you can start building the commercial development. At this stage, builders and contractors will bring the building to life. This will be accomplished through various activities starting with laying the foundation to finishing the project. 

One thing you need to note though is that the construction phase is a highly variable process. That’s because it’s influenced by various factors such as the type of commercial real estate development design, jurisdiction as well as scale and complexity of the project. 

  • Inspections 

Once the construction of the commercial property is completed, the project is inspected to ensure that it meets all municipal ordinances and codes. More importantly, final inspections ensure that the property is safe for occupancy. Some of the elements that are inspected at this phase include; HVAC, roof structure, structural & building envelope, fire/ safety, MEP components, and HVAC systems. 

  • Issuance of Occupancy certificate 

After ensuring that the projects meet all the codes and ordinances, the relevant municipal agency issues a certificate of occupancy. The certificate indicates that the property is ideal for occupancy by proposed users or types of users. Also, the issuance of the certificate shows that the building is compliant with the specifications and plans that were originally submitted and approved. 

  • Tenants move-in 

Lastly, after obtaining a certificate of occupancy, the final step is to procure tenants that will occupy the property. This can happen in various ways. For instance, some commercial properties are designed for specific tenants, which is known as ‘build-to-suit’ development. Here, the developer has already identified a tenant at the start of the project. Consequently, the property is developed to meet the needs of that client. 

Alternatively, the commercial development project may be constructed ‘speculatively’. Simply put, this means that no tenant has agreed to move into the property once it’s completed. Instead, the real estate developer has speculated that market demand will attract tenants upon project completion. 

Whichever the case, the goal of every commercial real estate project is to offer leasing space to tenants. In return, the tenants will provide revenue to the developer, thus resulting in a stabilized financial situation. 

Final Word 

From the steps I’ve highlighted above, the commercial real estate development process may seem like a simple task. In reality, however, the process can be so challenging and complex. That doesn’t mean your project will not be successful if you’re doing it for the first time. Instead, you need to familiarize yourself with these steps, identify unmet market demand, get expertise in various areas and you’re good to go. 

Alternatively, you can hire a reputable commercial property contractor like InnoDez Design & Engineering. Our experienced professionals will combine all these tasks into one cohesive plan to ensure your commercial property development project is successful! 

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