A commercial developer is responsible for the purchase, building, management and leasing of commercial real estate. Commercial real estate is a term used to describe any building or property purchased for the purpose of creating profit. This type of property includes malls, stores, shopping centers, industrial property and office buildings. A commercial developer can be either an individual or a business. The role of the developer is to coordinate the use of space for business purposes.
In the purchase phase, the commercial developer may decide to purchase a plot of land or an existing building. The developer is responsible for confirming that the land is zoned for commercial use before purchasing it. Although a submission can be made to change the zoning status, this process is time consuming.
The purchase is typically financed with a mortgage on the property. In a typical arrangement, the commercial developer purchases a plot of land. The developer obtains financing to build an office tower, and signs the lease agreements with tenants for space in the office tower. The profit from this type of business is generated from the sale or lease of space to other businesses or clients.
If the developer purchased an existing building, he may decide to renovate the building or simply to complete maintenance work required for basic upkeep. The level of effort and investment required depends on the condition of the building and the number of current tenants, if any. Management of a commercial building can be completed by the commercial developer, or by a property management firm. This role is focused on daily management issues, including tenant applications, structural building maintenance, standard repairs and tenant relationship management.
Commercial real estate leasing contracts are quite different from residential contracts. They may include minimum maintenance clauses, security, signage access, business type restrictions and other details. These contracts are typically multi-year, with renewal every three to five years.
Many commercial developers focus on a particular niche in the marketplace, specializing in serving a specific community or business model. For example, a commercial developer may focus on providing medical services buildings. These clients tend to follow a specific pattern of requirement, with standard hours, maintenance needs and overall support service needs. A detailed approach improves the business model, as it allows for the creation of a targeted consumer base, reputation-building within a sector and the development of a client base. All these items are helpful when attempting to secure stable, long-term tenants.
