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3 Questions When Planning Your Commercial Real Estate Development


When you’re looking to plan your next development project, it’s usually a sign that business is good. Whether it’s your second location or your 152nd location, it means you're expanding and excited about what the future has in store.

And while stepping out into a new commercial development project is a significant commitment of time and resources - for tenants, developers, and everyone in between, - if approached properly, it can mean great success.

Before even starting the process, you want to make sure the conditions are right to help achieve a successful project, expansion, and ultimately your long and prosperous occupancy.

Here are just a few of the important, overarching questions to ask before diving into a new commercial development.


What are the market conditions?

While you may have a plan for a great property, if it’s in a poor market, you’ll end up with disappointing outcomes.

You’ll want to look at the overall supply and demand of the market. Do the demographic trends meet your requirements or expectations? Is there demand for particular users or a void that you may be able to fill?

Demand generators might include:

  • Number of households

  • Income and income changes

  • Consumer spending

  • Additional business and employment growth

Supply generators might include:

  • Identifying competing tenants in the area

  • Assessing competitive differences – location, size, quality, etc

  • Considering additional potential developments within the market

6 Questions to Ask Your CRE Developer CTA

What are the regulatory requirements?

Almost every jurisdiction in the country has some type of land use regulations and restrictions. Those determine what the property is zoned for, what its use might be, as well as the characteristics of the site improvements.

Whether the requirements are too strict, the costs are too high, or the process takes too long, specific regulatory requirements can make or break plans for a new commercial development.

So, as you look to move forward with your expansion plans, it’s important to note what the regulations, rules, policies, and procedures are in relation to your planned development.

You’ll often want to know:

  • Is the proposed area pro-development?

  • Does the zoning of the property make it an allowed use?

  • If the property needs to be rezoned, what’s that process?

  • How long does the entitlement and approval process take?

There is a wide array of regulatory issues that you’ll want to pinpoint. Ultimately, your goal will be to determine if the process to meet municipal requirements is worth the time and financial investment?

Is the financial climate favorable?

A significant factor in determining what makes expansion through new development viable is the financial conditions surrounding it.

One of biggest questions is: What are the numbers?

Factoring in things such as market conditions, lending conditions, costs for the new development, and expenses will narrow down whether a project is feasible and financially sound.

As a business, will you be owning the property? Leasing it? Will you be responsible for the maintenance costs? Property taxes? What are all the expenses associated with operating out of a potential new location?

The state of the financial market will determine where a lot of those numbers will come in at and whether you should move forward with the project or explore additional options.

When it comes to planning your next commercial real estate development there are definitely a lot of options to weigh, and questions to ask. This is just the tip of the iceberg when it comes to exploring whether a new project is right for you.

Curious as to what else might help prepare you for your next project, or simply have questions for us? Let us know in the comments section below.

Commercial Real Estate Development Tenant