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DEVELOPMENT AND ENTITLEMENT

Once your site plans are created, due diligence research has been done, and purchase contract signed, it’s time to get down to the development details. This next phase focuses on critical sign-offs and approvals required for the newly proposed commercial real estate developments to come to life through municipality approval.

Hiring Architects, Engineers and Consultants

Getting a commercial development off the ground often starts with bringing in a number of consultants including architects and civil engineers. Their role is to ensure the most viable development plans and processes are going to be put into place, resulting in a successful and under budget development project.

Architects


The goal of the architect is to draw up an initial concept scheme, and a good architect will ultimately add considerable value to your project by designing a project that is functional for the tenant and appealing to the marketplace and neighborhood it’s located in.

Landscape Architect


The landscape architect’s job is to design municipality required landscaping around the site plan. This typically means natural plants and trees to offer shade and a natural aesthetic appeal.

Mechanical, Plumbing, Electrical Engineer


These engineers ensure the HVAC is designed adequately for conditions, plumbing is meeting the correct connections and draining properly, and electrical wiring is properly placed in needed areas to meet building codes.

Structural Engineer


Structural engineers work with architects to factor in the weight and loads of construction materials on the ground they sit on. This is to ensure the building will support itself and not sink into the ground. Their main goal is to develop a structural design that is both functional and cost effective.

Civil Engineer


A civil engineer is used to identify many of the technical issues relating to the civil design of project elements. Storm drainage, parking lot and sidewalk design, driveway connections, and conforming to grade requirements are managed by civil engineers. Factors such as topography, environmental issues, or utilities play major roles in how sites are laid out and designed. The engineer's explanation of these issues may result in a different development strategy for the property — one that provides a better project at a lower cost.

 

Community Outreach and Comunications

The commercial real estate development process is one that not only involves active parties, but impacts the surrounding communities and businesses as well. The goal of community outreach during commercial development is to keep a projects neighbors informed of the proposed development plans, including benefits, potential rezoning, community impact, etc. The ultimate goal is to inform and hopefully improve community sentiment for the project’s approval while taking consideration for their input.

Municipality Submittal and Review

In order for projects to become realities, they must first get the approval of the appropriate municipal and government entities. Submittal and review often entails the following:

Zoning Review


Zoning review is meant to ensure the compliance with standards and provisions set by each municipality, while encouraging quality development. It’s intended to encourage the most appropriate use of the land, enhance aesthetic value, and facilitate adequate provision of transportation, schools, parks, and other public requirements.

Site Plan Review


A detailed site plan is submitted, along with associated documents to particular government departments, agencies, utility companies, etc. for review and initial comments. The purpose of the review is to address how the particular development is designed and to address any issues related to public safety, water supply, sewage disposal, utilities, traffic, emergency access, public obstructions, and a variety of other elements.

Design Review


Provide architectural building elevations, landscape plans, and drawings related to design principles and meeting the aesthetic requirements.

Once the site plan and design are approved during design review process, you are generally allowed to submit construction drawings for review by the building department.

 

City Entitlement Process

Before a project can commence, you must be granted permission from local regulatory agencies and the community. It is crucial to be prepared for this stage of the development process, as you may be asked many questions from city planners, local residents, and government leaders.

Examples of Entitlement can be:

  • Rezoning

  • Zoning Variances

  • Use permits

  • Utility approvals

  • Road approvals

  • Landscaping

 

City Council or City Planning Commission Approval


Oftentimes, new commercial development must first receive approval from city council, city planning commission, or some municipal body. Working with, and gaining approval from the city’s planning department generally allows for a planning commission or city council to approve the project at a formal public hearing. However, not all projects need the official approval of a city council or planning commission.

Public Hearing


A public hearing will take place for local property owners and residents, in order to hear feedback on the proposed commercial development. Any individual or community group including a neighborhood council has the right to speak on the proposed project.

 

Pre-Construction Coordination

In the preparation for the commercial construction process, commercial developers will dive into handling construction bids. Based on the proposed scope of work, general contractors will prepare and submit estimate bids of the project cost and schedule for completion.

Through this process, developers are not only able to narrow down the search for general contractors, but also apply the estimates towards finalizing the budget.

 

Construction Drawings and Building Plan Submittal

Once a project receives approval from the city planning commission or city council, you move into construction drawing/building plan submittal with the building department.

The municipality will then review the plan for compliance with the approved preliminary site plan, project conditions of approval, the required building plan checklist, and all applicable codes and ordinances. The site planner reviews the site plan for final approval with the building plans.

 

Finalize Budget

As the project works its way through the entitlement and approval process, a commercial real estate developer will begin to get a much better sense of what cost and timing is required to construct the project successfully.

Some important keys to successfully budgeting are: familiarizing yourself with all relevant government building codes; understanding which line items are necessary and which are flexible; accounting for hidden costs; and being flexible with your budget.

Creating a final budget takes into account factors such as:

  • Permits

  • Site preparation

  • Insurance

  • Construction costs (both hard and soft)

Building Permits Approval and Inssuance

Once plans have been reviewed during the usual rounds of the review process, and determined to be in compliance with the city/municipality codes, building permits are then issued. These permits give the developer authority to start construction work and allows for appropriate inspections to be performed.

Close of Escrow

This is essentially the final step in the execution of the initial real estate purchase transaction. A title company or other trusted party will transfer funds and the deed of trust to the involved parties.

For some commercial real estate developers, this step in the process may come at a different stage. Some developers may prefer to close on a property once all of the permits and approvals are in place, while others may actually close before the final permitting process.

 

Getting a property fully approved, entitled, and closing on the land requires time, experience, relationships, and persistence. But once the project has been given approval and is entitled, it’s ready for contractors and builders to bring the commercial development to life.