What is Commercial Development?

Commercial development is the development of land for commercial purposes. Commercial purposes means that it will be used for businesses or services, not as a private residential space or industrial space. If you’re looking to learn more about what commercial development is, read our comprehensive guide!

What Does Commercial Development Mean?

Commercial development means that a building or development is designated for commercial purposes – or, commerce. In other words, commercial development is the construction of a building for businesses to work out of. Commercial development could mean taking an existing building and renovating it to become a more useable space (sometimes referred to as commercial redevelopment) or developing unused land from scratch. Examples of commercial redevelopment include renovating private homes into businesses, taking warehouses and renovating them into smaller commercial spaces, or taking a commercial space and renovating it to be used for a different commercial purpose.

Commercial Development vs Mixed-Use Development

Mixed-use development means that a building is being used for commercial purposes as well as residential purposes. Modern development practices often encourage mixed-use development as they create more liveable, walkable communities. An example of a mixed-use development would be a building that has a coffee shop or store on the first floor and condos on the above floors. 

What Kind of Buildings are Considered Commercial Development?

Commercial development projects are related to any building that performs a public, commercial function. Commercial developments can be big or small and include (but aren’t limited to) the following business types:

  • Office spaces
  • Medical offices
  • Restaurants
  • Retail stores
  • Shopping centres
  • Hotels
  • Gyms or health and wellness spaces
  • Warehouses
  • And More

Construction that Isn’t Considered a Commercial Developments

Commercial construction only relates to businesses and developments that are meant for the buying and selling of goods or services. A few examples of construction types that aren’t considered commercial developments are residential construction (homes or buildings meant for residential purposes), civic construction (roads, sewage systems, bridges, parks and greenspaces, etc.), or industrial construction, which differentiates from commercial development due to the scale and production (such as refineries for the oil and gas industry or manufacturing plants). 

What is a Commercial Developer?

A commercial developer is a business entity that develops commercial properties. Commercial developers own the land that is being developed, they then work with architects and engineers to create a commercial concept that is then developed with the help of a commercial construction company. When the development is complete, a commercial developer will either sell the property to other businesses, or they may choose to lease out different commercial spaces to small businesses. 

Commercial developers are often focussed on creating more booming commercial opportunities in an area, so they will look for land/properties that have high business potential. This may mean that they are developing a commercial property in an area that has very little commercial development, or it could be a high-traffic area that has a lot of commercial activity. Commercial developers need to be able to assess an area for value and return on investment and make informed decisions on whether land will make a profitable commercial development.

How Do Commercial Real Estate Developers Make Money?

Commercial Real Estate Developers make money through the leasing and sale of the commercial space they develop. Commercial developers only make money if they succeed in developing commercial properties that appeal to business owners. In order to successfully work in commercial development, it’s important to perform market research and have a clear plan to ensure the commercial development is attractive to businesses. Whether the commercial property is being sold to a business or leased out, the space needs to be priced, designed beautifully, and constructed soundly.

Construction site of an industrial warehouse with a mobile elevator

Commercial Development vs Commercial Construction

Commercial development is the developer of a commercial property – a commercial developer owns the land and develops the building. Commercial construction, on the other hand, is the company a commercial developer hires to build their commercial property. Once a commercial developer has the property drawings complete, they will typically put the project out to bid where multiple commercial construction will bid to have the lowest project costs and a preferred timeline. Commercial construction companies put together bids that include the estimated timeline, trades and their quotes, material costs, their fees, and everything else related to the project construction.

Commercial construction companies work with the developer to bring their project to life, but once the project is completed the commercial development is owned by the developer. 

How ABC Performs Commercial Development

Alexander Business Corporation performs commercial development within our communities. We’ve designated over 2000 acres of land to commercial development. Our expert team oversees the appraisal process, environmental engineering and studies, commercial planning and building validation, surveys, insurance, and security bonds. If you’re looking to learn more about ABC’s commercial development process, please contact us!

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