A commercial property development is one that is planned, constructed, or intended to be used for commercial, retail, industrial, or office purposes. Commercial Development, in its simplest form, refers to a project involving the development of land for non-residential use.
In this article, commercial property development, we take a look at the process involved.
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Things to consider when developing commercial property
Finding a suitable site
To develop a property, you must first acquire a suitable site. Successful commercial property developments are built upon sites that have the potential to serve an unmet need in the neighbourhood, such as new housing in a quickly growing region.
Certain developments, such as those in urban or suburban areas, may be built on previously undeveloped land. Others may be constructed on land that is now occupied by another building.
After identifying a suitable site, the developer must acquire the land by outright acquisition, joint venture, or any other way that enables the developer to proceed with the planned project.
It is crucial to examine the location of a potential development site when determining whether or not it is suitable for a certain type of development. A completed development project’s value is determined by its location. Different types of development require different characteristics. It is critical to ascertain the worth of an area in order to meet specific requirements. If developments are more user-friendly, they will have a larger chance of profitability.
Preparations for development
Following site acquisition, actions must be performed to prepare the land for construction. If the land on which the project will be built is currently undeveloped, the developer must clear the area of natural features, supervise the installation of utilities such as water, sewer, power, and roads, and undertake any other work necessary to prepare the land for construction.
The process will be slightly different if the site is in an urban location or has been already developed. While the end result is still to prepare the site for future building, any existing structure may have to be entirely removed to allow the new project to proceed. Each of these scenarios will necessitate a unique strategy to land preparation and may necessitate distinct legal and financial methods to be successful.
Additionally, the complexity of obtaining planning clearance varies greatly depending on the area in which the property is being developed. Certain localities have quite difficult planning authorities who appear to say “no” to everything. Other areas are significantly more receptive to development approvals, allowing for a more expedited and risk-free undertaking.
The build process
After the ground has been completely prepped and planning permission is in place, the next stage in the process is to begin building the property. This is the stage at which the structure begins to take shape, from the foundation to the last details.
As with the preceding step, this one is very variable, based on a variety of elements including the project’s complexity and scale, the type of property, and the area in which the development is located.
Find a suitable tenant
After construction is complete, the next stage is to find tenants to occupy the property. Almost every commercial property development seeks to produce space that will be leased to tenants, generating revenue that will result in a property valuation larger than the cost of development.
This stage can take a variety of forms. Certain properties are constructed specifically for a certain tenant. In this case, the tenant has been identified from the start of the project, and the property has been designed with that tenant in mind, frequently with his or her input and direction. Other properties are constructed “speculatively,” which means that no tenant has consented to take possession of the property upon completion. In this instance, the developer has speculated on the demand for the property they are building.
In either case, there must be a transition from building construction to tenant occupancy, resulting in cash flow that stabilises the financial situation.
Sale of the asset
At some juncture, the developer will probably look to reap the rewards of the property’s development by selling it. In reality, this can occur in a variety of ways. One possibility is that the property (with or without a tenant) is sold outright to another owner. Another possibility is for the developer to refinance the property in order to pay off any outstanding construction debts and then maintain it in their portfolio for as long as they like.
Certain property development firms focus exclusively on property development and always sell the property upon completion, while others have various divisions that can manage the transition from development to operational stages internally. Sometimes, the developer’s decision to hold or sell is influenced by market conditions, financing possibilities, or other opportunities accessible to him.
How we can help
We have a proven track-record of helping clients with commercial property development. We are a multidisciplinary firm and have all the expertise inhouse to satisfy the most exacting requirements of our clients. We will guide you through all the necessary legal due diligence in a comprehensive and timely manner. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
How to Contact Our Commercial Property Solicitors
It is important for you to be well informed about the issues and possible implications of commercial property development. However, expert legal support is crucial in terms of ensuring a positive outcome to your purchase.
To speak to a member of our New Enquiries Team today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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