These are the Processes Involved in a Commercial Real Estate Development Project: by Hoorman Nissani
Completing a successful commercial real estate development project may seem like a complicated process to many, but the only reason for that is – because it is! Like all complicated tasks though, anything that is complicated can be simplified by breaking it down into a series of logical steps, which is what this article aims to do.
There are four phases involved in a commercial real estate development project, as follows:
Each phase will be described in greater detail below:
Step 1 – Project Initiation
The first step of the project will be the project’s initiation phase, during which the creation of the initial conditions of the commercial real estate development project will take place. There are three basic requirements that will create the way in which the project itself is created, namely location, capital and idea. How these three aspects are configured will determine how the project should be approached.
For example, a company (location) may be looking for a project (idea) and investment (capital) for a property that they already own. This is largely a development project. Alternatively, a company’s needs (idea) may require a relocation (location) and the necessary investment (capital). This is a more challenging project, as a new location needs to be found, and possibly funding as well.
The final configuration is when an investor (capital) wishes to make money (idea) by investing in a suitable property (location). This can be as challenging as finding a suitable new location for a company premises.
Once you have your configuration aligned you will understand the order in which you need to tackle the aspects involved, although in some cases (finding a location and funding) can be handled in tandem.
Step 2 – Project Conception
Once the issues of capital, idea and location have been solved, the project can move on to the conception phase. This will likely involve the creation of a feasibility study where proof will need to be supplied to convince all parties that the project is feasible, and will achieve the desired aims. Both positive and potential negative factors will need to be identified in terms of planning plus any economical, legal, sociological and technical considerations.
Step 3 – Project Management
Once the approval for the project from all interested and affected parties has been received, it is time to move to the management phase. The main purpose of this will be the overall planning and the coordination of all the teams involved. This can be one of the most stressful periods of the entire commercial real estate development project.
The main purpose of the developer in this phase will be to keep everything on schedule, to support all aspects of the project and to supply solutions should problems arise.
Step 4 – Project Marketing
The final stage of the project is project marketing. This phase can be started before the project management phase has completed, if the developer has confidence that the management phase is likely to be completed without any (further) issues.
In some projects (company relocation) the marketing phase will not be needed. Also, with some projects the above four phases may overlap. This could be the best way of dealing with a commercial real estate development project if timescales are tight, or if a large number of experienced teams will be involved, allowing for the option of delegation.
If you wish to learn more about the processes involved in a commercial real estate development project, or anything about the commercial real estate development industry as a whole, then please feel free to contact Nissani Brothers Enterprises. You can contact us at any time using our online contact form.
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