What You Should Know About the Real Estate Development Process

A commercial real estate developer is a company that builds buildings, subdivides land, or rehabilitates existing properties. These businesses work on retail facilities, multifamily units or apartment buildings, office buildings, warehousing, manufacturing facilities, or other commercial properties. They may purchase the land and fund the building project themselves or work for others who fund the project. This is what you should know about the process

Setting Development Goals

The first task of any development project involves setting development goals. They should determine whether they will rehab an existing facility or start from scratch and purchase land. These professionals also determine what type of project they plan to complete.

This planning step guides all the remaining decisions the company makes. For example, they may work with architects, engineers, or other professionals to draw up blueprints for a new facility, or they may secure contractors and engineers to review possible rehabilitation options.

They should also discuss their holding strategy. The company may plan to sell the development immediately, lease it out, or it may belong to someone before the process even begins. If the business plans to lease the facility, it should evaluate the benefits of short- and long-term leases and whether the company will work with a property management company or handle the leasing itself.

Finding the Land or Facility

The first step in any project is locating the raw land or site they will work on. For example, developers who plan to build a custom facility will search for raw land that meets their needs. They may also look for land that has some old buildings they can tear down.

Other developers will search for facilities that need rehabilitation. For example, Angelo Ingrassia of Rochester NY purchased a mall that needed rehabilitation. In this case, the developers will search for buildings that meet their square footage and other needs. These facilities may need extensive work, but they

In both cases, the developer will analyze the site and assess it for zoning, local economic opportunities, cost, surrounding land uses, location, and other factors. Often, these companies will compare more than one commercial property and location to narrow down their choice as they go.

Researching Land or Facilities

Next, the company will conduct extensive research on the property. These professionals search for outstanding tax or other liens, or judgments against the property. They will have the property appraised and investigate utility access. They may also investigate mineral rights. Environmental and engineering studies follow.

Developers search through covenants, zoning, restrictions, easements, or other conditions on the land. These individuals scrutinize any current leases as well as the leasing history. They will review the property‚Äôs insurance as well as pending claims and certificates. These professionals may also research current commercial real estate development trends.

Planning and Construction

Developers do most of their planning in step one, but some will depend on the facility or land they choose. They will review land features, utility plans, materials, and other decisions. The company will photograph the land, facility, and any progress.

Successful commercial property developers create in-demand properties that have tenants or owners before they start building. This requires significant planning and research but encourages greater financial returns.


Home Base Project Team
Home Base Project Team
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