Key Differences Between Commercial and Residential Property Development

The field of real estate development is broad, incorporating everything from tall skyscrapers to cosy residential neighbourhoods. But within this field lies a sector specifically geared towards businesses: commercial real estate development. Commercial development, in contrast to residential development, deals with a wider variety of property kinds, including office buildings, retail centres, warehouses, and hotels.

The first step to commercial property development is embracing the diversity of properties it involves. This industry encompasses everything from retail stores to office buildings where ideas are born. However, simply identifying the property type is just the beginning. Developers must also consider critical factors like zoning regulations, market demand, and financial viability of the project before laying the groundwork.

Developing commercial property is a process with distinct stages. It all starts with a well-defined business plan and a feasibility study to assess the project’s potential. Once the groundwork is laid, securing financing and assembling a team of experts become crucial steps. The journey continues with design, construction, and finally, marketing the completed property to potential tenants or buyers. This provides a foundational understanding of commercial real estate development.

What is commercial property development?

Commercial property development involves investing in land to build new property on or buying an existing property and enhancing it to increase its value. It can apply to any type of commercial property, from office space and industrial property to shops and cafes.

Typically, a commercial property developer will acquire a suitable property, plan and manage improvements to the property and sell it on for a worthwhile profit margin. To succeed in commercial property development, one must have certain skill sets such as financial and project management skills, in addition to a strong understanding of the commercial property market. Having the right connections within the construction industry will also be very beneficial to agree rates that maximise profits.

What is the difference between residential and commercial building?

The first thing to take note of in commercial real estate development is that the term commercial refers to many different types of property. Everything from retail and food outlets to office blocks, hotels, petrol stations–and more–are classified as commercial real estate. The trick is not only figuring out what you want to build, but also where you can build, and whether there is a market for your planned development.

The main difference between residential and commercial building is related to intended purpose (end project results), permits, building materials, construction, time, location, and costs.

While residential real estate development refers to housing and living spaces, commercial real estate development covers a broader range of property types. The process of commercial real estate development may even be more complicated. While there are different types of residential spaces such as apartments, townhouses, and freestanding homes, there are several different types of commercial real estate spaces.
Commercial real estate development offers exciting opportunities but demands careful planning. While the process shares similarities with residential development, the complexities of the tasks at hand increase with the variety of property types and the legalities involved.

Now that you know what commercial real estate development is, you don’t need to be daunted by the word commercial. With the right mindset, work ethic and organisational skills, the opportunities are endless. Contact us to know more.