Commercial Real Estate Development Process
When a piece of property is purchased and developed for commercial or business purposes only, it is classified as commercial real estate. Most commercial property is owned by one entity and leased to one or more tenants. But in some cases, the owner of the property is also the one who uses it.
Commercial real estate development includes every type of property that doesn’t deal primarily with living spaces, such as retail stores, malls and shopping centers, industrial parks, gas stations, office spaces, restaurants, convenience stores, and hotels or motels.

Basics of Commercial Real Estate Development
Commercial Real Estate Development Process
Market saturation: Learn the local saturation level for the type of project you have in mind. For instance, if you want to build a hotel, ask yourself, “Is the area already overloaded with hotels?” If it is, you might want to look elsewhere. Alternatively, think carefully about how you will make your hotel stand out from the rest.
Local zoning laws: Before you buy property, be sure the local zoning laws permit completing the project according to your vision. Developers often realize they have problems with local zoning laws too late in the process.
Crime: What’s the crime rate where you plan to build? If you got a great price on a property because crime is high but the area is improving, that might be advantageous. But if the area is not up and coming, you might wind up with a poor investment.
Natural disaster risk: A lot of people dream of owning a beachside bar in Florida, but what happens when a Category 4 hurricane blows through? Developing in an area with natural disaster risks means you have more to consider, such as building materials, special zoning laws, insurance and more.
Potential liabilities: When you find a property you like, don’t take it at face value. Instead, dig deeper. Some properties have hidden liability issues that cause a variety of problems. For instance, a building might need asbestos or lead paint removed before it can be used. Additionally, research a building’s history. If it housed a previous tenant who worked with chemicals or toxins, you could be adopting an environmental nightmare.
Building a Development Process Checklist
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