When any non-residential property is used solely for the business purpose(s), it is referred to as commercial real estate. It can be in the form of Office Markets, Industrial Markets, Retail Markets, Stores, Malls and Multifamily Markets. The property is owned by an Investor who usually leases the space to the businesses on rent.
If you are in a market like ours here in Orlando Florida, it can be even trickier. The volume of tourism, and the fact that the city’s economy seems to revolve solely around this aspect, can bring an elevated challenge to the market.
In order to develop a commercial real estate business, apart from the financial investment, a sound knowledge of the requirements of the business and the zoning laws where the property is situated, is of utmost importance. Developing commercial real estate involves a lot of project management and negotiations with different authorities at every level. Thus, there is a major requirement to have representatives with the proper skill set, resources and procedure to follow. These are the steps we recommend when developing a Commercial Real Estate project..
1. Decide upon the type of Commercial Real Estate you want to develop: There are many types of Commercial Real Estate, and every type has its own demands and requirements. In order to be successful in developing your business, you must be able to have the proper knowledge of all the factors catering to your type of Estate. For instance… the right location, resources, project management, etc.
2. Carefully draft a Plan: Before you actually land a deal in any market, carefully draft a plan. Conduct proper research about the property and pre-enquire about the same from the locals in that area so as to gain an insight of the issues, if any, pertaining to the area. It is agreed that laying a plan does not guarantee a risk free move but yes, that can surely help ascertain success.
3. Perform due diligence on the prospective sources of Investment Financing before you develop Commercial Real Estate: As it is well known, without proper financing, all plans fail. So, before you start any development project, be sure to secure the right financing by performing the proper research on the prospective sources. You want to be sure that your funding source can deliver funds as promised, and by deadline (if using an investor). This can be a VERY difficult process, and is best handled by professionals such as Retail Solutions Advisors.
4. This sounds like a no-brainer, but make sure the property is zoned for Commercial Development: Check out your city’s zoning plan to be sure that the location you have decided for the Commercial development comes under the approved zone and find out how it is zoned. Also try to find out the other development and infrastructural plans that exist for that particular area in the city’s zoning and development plan. Any major upcoming change can affect the attraction of your commercial development, adversely or positively. So, be sure you are aware of it in advance.
5. Get the Survey done: Make sure to get the land surveyed by a reputable surveyor so as to be aware of the particulars of the location that can affect your project.
6. Secure the Required Permits, if any: Be aware of the permits required to develop the Commercial Estate you are planning. These may be location specific, i.e. construction permits, parking permits, etc. Make sure you secure them in advance as the preliminary step towards development.
7. Hire an Architect: Hire an architect to design the commercial real estate you want to develop. Explain to him your requirements, your needs, expectations, budget, time frame, everything.
8. Approve or revise the Building Plan: If you are fully satisfied by the architecture plan laid out by the architect, and it meets all your requirements, approve the plan. Otherwise get it revised.
9. Hire the Contractors: Once you are done with finalizing the business plan, hire the contractors to perform the construction and landscaping. Don’t forget to keep a check on the regular updates of the progress from time to time.
10. Get the Building Inspections done: Once the Commercial building is ready, get its Inspection done by a city agency to make sure that the commercial real estate is in compliance with legal requirements, and the inspector has no objections or issues with the construction.
11. Hire a commercial realtor: Now, once you pass inspection for your Commercial Real Estate project from the City, hire the services of a Commercial Realtor to attract businesses to lease your real estate to. Also hire a professional team that can manage the day-to-day operations of your commercial real estate, i.e. maintenance & repairs, etc.