With the constant surge of the Toronto real estate market, developmental pressure is growing. Taking on a project to develop commercial real estate can change the stakes for any business. Building a new commercial property can be essential to your company’s reputation, growth, and future prospects - even a small build can drastically change your company’s equity! But no matter the size of your project, there are some things you need to consider before diving head-first into the rocky waters of building commercial real estate.
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1 - EVALUATE YOUR NEEDS
The first step for any real estate project is knowing exactly what it is you want to gain. Going into a high-stakes venture without knowing your end goal can sink your project before it’s even started. So before you begin, make sure you know:
● What does your company hope to gain from this?
● How much space does this project require?
● Where do you want the development to be located?
● What is the scope of work?
● How do you want to go about developing it?
● How many concessions are you willing to make?
Once these questions have been answered, you can begin to see the bigger picture.
2 - HAVE A FINALIZED PLAN
If knowing what you need is the first step, digging into that and breaking it down to the fine details is the second - and arguably most important - step. Having secured financing, a realistic budget and timeline, and informed expectations are essential to your business thriving during the stress of the development project. Instead of straining your resources or employees under unrealistic deadlines or running out of financing and putting your company at risk, make sure to have everything securely planned before beginning the development process.
3 - FAMILIARIZE YOURSELF WITH REGIONAL REGULATIONS
Zoning restrictions and building permits change drastically from region to region. Before starting your project, make sure you understand the requirements for each permit and familiarize yourself with each of them. Don’t risk your real estate investment by overlooking regulations - have the right permits acquired, conduct the right inspections, and follow the regulations set in place in the area you are developing in.
4 - CREATE A STRONG SAFETY NET
It’s never possible to predict problems that may arise. From additional costs to potential complications, there must be flexibility in your timelines, plans, and most importantly, in your budget. Plan to have a contingency budget of approximately 5-10% of your total project costs to ensure that any surprises don’t break the bank.
5 - SECURE THE RIGHT TEAM
Every development project is a complex machine. Every piece has an important part to play, and getting the right parts is an integral part of a successful build. Do your research to find a suitable architect, designer, contractor, and supplier. Find a team that specializes in commercial development, and hire a project manager familiar with GTA real estate to get a good leg-up in this competitive market.