When it comes to building a commercial property for business use, the more you know going into the project, the better. Ultimately, you are looking to turn a profit on the building. Eliminating as many variables as possible is the best way to ensure that your time and money has not been invested in vain.
Undertaking a ground-up construction project from scratch comes with a unique set of challenges. These can erupt at any time, from the planning process to the renting stage of development. Understanding the common pitfalls and giving them some serious forethought is instrumental to success.
Start with both building type and location
The point of departure for any commercial development should be the location and building type. The location must be on land already zoned for commercial projects. If you have a specific commercial building in mind, such as retail, industrial, hospitality, or a structure like a movie theatre, gym, or hotel, you will need to keep transportation and parking options in mind, as well as competition and other nearby points of interest that could draw customers to the area.
Building a comprehensive budget
Before you can calculate profit, you need an accurate budget. Your budgeting process should be as comprehensive and precise as possible, detailing every expenditure from the big-ticket construction items, like materials, wages, and equipment rentals, to the smallest details, like office stationery and other miscellaneous expenses.
As a general rule, you should tack on an additional 10% of the total costs to allow for any unforeseen problems that may incur additional expenses. This can include delays to the construction process, zoning and planning issues, or price hikes.
Communication is key
In large-scale construction projects, establishing strong communication practices from the get-go is critical for the project’s success. If there is a problem, communication will be essential for devising swift and appropriate solutions. From the moment you find a contractor, sub-contractor, engineer, site owner or any other potential associate, it is important to establish a clear communication system.
Part of the vetting process for contractors, sub-contractors, and engineers should include researching previous clients and asking about their communication. If you need help, you can find commercial engineering services here.
Getting familiar with the legal side
Laws and regulations surrounding commercial real estate and development are constantly shifting. New legal requirements could drastically alter the budget or incur significant delays to the project. Before construction begins, it pays to familiarize yourself with the local laws and regulations surrounding your building type and location.
The contractor you hire to work on the project should be knowledgeable with the legal side of commercial real estate development. They should be able to warn you of any potential legal challenges long before they occur and make you aware of your legal responsibilities.
Keeping these four key components in mind at every stage of the construction process will help you keep your project on-track and within the time and budgetary constraints. If problems do occur, understanding the law and establishing strong channels of communication will help you troubleshoot effectively, and quickly, to keep additional costs to a minimum.