Any project, regardless of industry or size, requires a lot of legwork and preparation. Well before the shovel hits the ground, development teams have to work through market and feasibility studies, perfect the design and planning process, and set up legal documentation and financing.
But once you sort through that headache, you still have to pay the bills. While multiple factors determine the cost of commercial construction, you’ll likely pay $289 to $1272 per square foot.
Fortunately, you can save hundreds, even thousands of dollars on your real estate development projects, whether you’re at the pre-development, construction, or project completion stage.
After completing your market research, determining project demand, and locating a good site, you can start the pre-development stage. This involves coming up with a concept plan. Here, You’ll focus on due diligence, planning, researching, permitting, branding, and marketing.
Here are the most common steps in the pre-development stage:
- Market analysis and securing a potential site
- Environmental assessments and a concept plan
- Land acquisitions followed by site plans
- Permitting and infrastructure improvements
- Arranging financing and marketing
Managing pre-development commercial real estate costs can be time-consuming without the right tools. For example, Northspyre can remove spreadsheets from project management workflows, which reduces or eliminates common budget discrepancies and project errors.
Besides using data-backed tools, hiring a quality team can significantly lower costs, as they have the skill and expertise to find trusted low-cost suppliers. With that said, a low credit score can give you access to affordable loans, while market analysis will improve your ads.
The construction stage is all about construction and project improvements. While project risks are greatly reduced, they aren’t eliminated, especially if you’re staying in the construction phase for a year. With the right construction team at your side, you could save a lot of money here.
Here are the most common steps in the construction stage:
- Vertical construction and project marketing
- Draw review and pre-sales/leasing
- Schedule control and quality control
- Project accounting and contractor payment auditing
- Arrange permanent financing and property management
Developers must know when to save and when to spend. Maybe you’ll save a buck now, but it could cost you down the line. However, it’s always a good idea to shop for quotes in January and break ground in February, as you’ll receive the lowest prices from subcontractors.
It pays to organize your project management process. Any unexpected hiccup can mean additional costs, so stay on top of your construction schedule. If at all possible, go green. By making simple eco-friendly choices, you can reduce your utility bills and attract a new crowd.
Project Completion Stage
Once you finish the construction stage, you’ll move into the project compilation phase. This marks the first phase of the building’s life and focuses on selling the property or finding tenants. Keep in mind that you don’t formally leave this stage until you get an occupancy permit.
Here are the most common steps in the project completion stage:
- Ongoing marketing used to find a ready buyer
- Determining a hold strategy (if not selling)
- Construction and document completion
- Title registration and closing of sales
- Move-in day followed by stabilization
How you’ll save money at this stage depends on what you want to do with the property. If you want to sell it, you need to find a buyer. That means finding an experienced commercial real estate agent that can show the property to you. Remote showings could reduce your costs.
While you’ll still need a real estate agent to help you rent out your building, you also need to hire a property manager, janitorial staff, and security agents to watch the property. We recommend paying a living wage in your city, as that will reduce turnover costs and increase productivity.