What Is Commercial Real Estate Development?
We’re a residential and commercial construction company in Palm Beach County, which means we’ve worked on many real estate development projects over the years. That said, we know the terms can be confusing to people who have never been involved with real estate before.
What’s the difference between a broker, developer, and contractor? What role do commercial real estate developers play, and what do their day-to-day lives look like? In this article, we’ll explain everything you need to know.
Are Commercial Real Estate Developers Different from Brokers and Contractors? Yes! Developers, brokers, and contractors fill three different roles:
Brokers enable the sale of property by representing either a buyer or a seller. They can assist during the negotiations like a real estate agent, but it’s important to note that brokers must make sure that every aspect of the transaction (e.g., paperwork, transfer of money) is lawful.
Contractors are required to oversee the actual construction of the project, helping it stay on time and follow any building codes. They often rely on subcontractors who have specialties (e.g., electrical, plumbing) they draw on to perform a specific part of the project.
Developers take a piece of land and try to extract value from it. This can be done by taking over an existing building, but it’s also common for developers to buy a piece of land, hire a contractor, and eventually sell or rent the property.
There is some overlap. For instance, it’s common for people to work as real estate brokers before trying to become real estate developers. It can also be useful for brokers and developers to have contracting experience, as this gives them better insight into the construction process.
That said, the roles of broker, contractor, and developer are often fulfilled by three different people.
How Do People Become Real Estate Developers? There are several different paths to becoming a developer. Given the level of responsibility involved, it’s often a good idea to have some previous real estate experience. Therefore, you’ll often see developers with experience as brokers.
Another major concern for developers is financing. Especially in the commercial space, it’s important to make sure you have the level of capital required to buy land successfully, build a property, and wait for revenue to begin covering your costs.
It’s also generally advisable for developers to start small before taking on grand projects. While skyscrapers and high-rises hold a certain level of appeal, starting with smaller office spaces can give you room to learn and grow when mistakes are less costly.
This experience is important because of the different tasks that developers need to complete; along with finding the land and developing it to make it more valuable, they also need to have a plan in place to find renters or buyers.
When done correctly, development can result in significant ROI.
Need Help with a Construction Project in West Palm Beach?
You’ve come to the right place. At Fischman Construction, we have years of experience in the high-end construction field, helping property owners realize their vision and maximize their investments.
Do you have any questions about what we can do for you? Would you like to speak with one of us to get a quote for a project? Please don’t hesitate to contact us. We’re excited to speak with you!