Commercial real estate developers need to understand an area’s political and approval climate – especially in a growing region.
If the area is unfamiliar to the developer, it is especially important to have a guide to smooth the way for relationship-building, financial assessments, providing development context in the area, and to help gain support for a project. A city or region’s Department of Economic Development can be a key resource, helping streamline the deal process for commercial real estate development.
Five Tips to Help Ensure a Successful Commercial Real Estate Development Deal
1. Do Your Due Diligence
It is relatively easy to find information about a property’s ownership and debt structure online, and determine whether any covenants or restrictions exist before beginning the deal process. Online portals maintained by city building departments and building data websites like PropertyShark.com also provide zoning information and other important due diligence information.
All of this information helps developers to get the most out of a potential deal by assessing all of a property’s past – and potential future – uses quickly and easily, and prevents wasted time on sites that aren’t a good fit.
2. Relationships are Critical
Get in touch with the local Economic Development department. They are often the gatekeepers to the local commercial real estate development process. They will be able to give you the insider perspective on the approvals process and the personalities involved in deal making in their area – some of which may include:
- Local government officials (zoning boards, planning boards, boards of commissioners, etc.) - Departments of Commerce - Local Fire Marshall - Departments of Transportation - Local Chambers of Commerce - Transportation / Utilities / Infrastructure - Neighbors / community members and leaders
3. Get Good Financing In Place – In Advance
Before making offers, find out which are the best lenders in the area for commercial real estate development, as it may make the difference between qualifying for a loan or not. Build relationships with local and independent lenders to finance your investment activities. As they come to trust you, these lenders can give you swift, personalized service at competitive rates.
4. Streamline Zoning and Planning Approvals
Comprehensive due diligence and taking the time to build key relationships will enable developers to streamline the zoning and planning approvals process in any cases. There may be one or two key gatekeepers that can mean the difference between quick approvals and months of delays – or a failed project. By paying attention to these early processes and setting the project up right from the earliest stages, it can shave months (or years) from a commercial real estate development timeline and make all the difference for a project’s profitability.
Experienced commercial investors can answer questions that come up while you are evaluating properties. There's no sense in losing a deal or buying a bad property because you didn't understand certain environmental regulations or estimating what trash collection really costs. Know who you can ask to get fast answers when you need them, and make them your new best friends.