Commercial real estate development is often loaded with great risk and great reward. It can be a big commitment. Like a REALLY big commitment. And when making real estate decisions, it’s not something that should be taken lightly.
There are a lot of factors that go into finding the right opportunities and finding the right commercial real estate developer. So, let’s take a look at these six questions you should be asking when looking for the right commercial real estate developer to partner with.
Knowing as much as you can about a business partner’s background is a must, no matter what industry you’re in. Researching a commercial real estate developer’s company history, services, scale, and project portfolio will help you determine the experience and capabilities of the firm to meet your needs. Knowing if the company has a history as a preferred developer and speaking with previous and current clients will also provide great insight into just how well a developer has met the needs of those clients.
Does the developer have financial stability?
The financial stability and security of a commercial real estate developer is just as paramount as knowing a company’s background. You don’t want to set yourself up with a developer that has little financial security or lacking a credible borrowing history. By getting a better understanding of a developer’s financial stability and history, you can ensure that your projects can be completed on time and up to standards.
What are the developer’s project time frames?
Tied in with the financial stability, time frames of a developer’s completed projects are crucial to your development decisions and to your bottom line. You want to find a developer who can deliver projects on time ensuring your expectations are met. Again, spend some time speaking with previous, and current clients to get some information on project timelines and delivery expectations for the developer.
What kind of professional network does the developer have?
The development and construction sectors revolve greatly around a variety of different professionals. Engineers, architects, general contractors, subcontractors, bankers, attorneys, as well as other professionals all play a part in the real estate development process. It’s important for clients to know that their commercial real estate developer has a broad network of reliable business partners in order to develop a smooth and successful project.
Does the developer maintain the proper documents?
Make sure your developer has the proper documentation throughout the development process. From the land title to authority approvals to construction commencement, you want to ensure that your developer has a history of managing and maintaining all of the legal documentation that is pertinent to a successful development.
What is the developer’s track record, and portfolio?
Just as with a company’s overall background, it’s important to understand a company’s detailed track record and portfolio. The specifics on types of projects, delivery time frames, quality, and project management can provide you with a base for establishing specific expectations, and if the developer can meet those expectations.
As with almost any service provider that one could hire, you want to do your homework. You want to make sure the developer you hire has a history of successful projects and financial stability while exceeding the client's’ expectations. Putting in the time prior to hiring a developer can be the difference between success and failure in the long run.