Commercial Property Development


A Commercial Property is a real estate anticipated for use by profit making businesses and falls between residential and industrial property. These commercial property businesses include shopping malls, office complexes, service stations and restaurants among others. Notably, commercial property can be totally acquired by developers for upcoming projects or leased through a real estate broker. This is possible because real estate agents may treat commercial property as residential property (Pollick n.d.).

When initializing the development of commercial property, there are some key factors which affect its location. These factors that determine the location of commercial property include:

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Zoning Laws

In every integrated city, there are zoning laws and a zoning system which is used to regulate the use of property within the city’s jurisdiction. For the development of commercial property, the city government determines whether the proposed area is indeed commercial property and grants permission for the development of such property. This is because the zones which differentiate industrial, residential and commercial property are visibly marked on city maps. For instance, if the proposed commercial property is in an area zoned for commercial use, the city government will allow the development of such property. However, if the proposed area is zoned for industrial or residential use, the city government may not allow the development of such property.


This is the other major factor to be considered when determining the location of a good commercial property. Although neighborhoods that appeal to a commercial property investor is largely a matter of personal choice, the appearance of the neighborhood is important in the development of commercial property. The neighborhood which appeals to the investor will greatly dictate the choice or kind of the commercial property to be developed. The designs of commercial property in a particular location will greatly influence the final design that a developer will settle down for. In determining the location of a commercial property, a truly good neighborhood should incorporate key factors such as accessibility, appearance and amenities (Struyk 2010).

Environmental Health and Safety:

Consideration of the environmental health and safety of a commercial property also determines the location of such kind of a property. Prior to the development of the commercial property, the investor should check with the Environmental Protection Agency to ensure that the business wont unintentionally infringe the existing and applicable local, state of federal rules. This also ensures that the business meets the established standards for dust, noise and odors among others. The investor should also consult the local and state fire marshals concerning building and fire safety codes as well as the Occupational Safety and Health Administration (OSHA) regarding the employee safety requirements (BNET Editorial n.d.).


This is the other major factor that determines the location of a commercial property. Centrality determines how much the investor will pay for the development of the property in a specific location. Given the fact that land is a limited commodity, places that are highly developed and have minimal chances of additional growth will tend to have higher prices as compared to areas with additional room for expansion. In the purchase of an existing commercial property, the investor should also consider the sources of information about the specific property he/she is looking for. In fact, there are several sources that provide information about where one can find a particular property he/she may be looking for.

Economic Factors that Affect Commercial Property Development

There are several economical factors which affect the development of commercial property such as:


This is a major economic factor that affects the development of a commercial property given the fact that no business can exist without constant financing. Despite the fact that conditions and situations differ, commercial property is always financed for close to 25 years by loans which amount to 60 or 70 percent of the property’s valuation. Consequently, the lending financial institution charges customary fees in addition to expecting a security deposit. There are various sources of funding which include small business administration as well as local banks.

Government’s Economic Policies:

Government regulations and economic policies is the other economic factor that affects the development of commercial property. The government institutes a legal jurisdiction which specifies the forms of ownership that a business can take while creating a body of commercial laws for each type of business. Some of the government policies which have an economic impact on the development of commercial property are tax regulations. These tax regulations and laws have different structures for different businesses. These policies affect the structuring and financing of the commercial property, sustainability of the business, funding of the business and its taxation (“Structuring & Financing n.d.)


In conclusion, lot location of the commercial property is also important in the development of such kind of a property. Lot location is the specific locality where the property is to be located. For instance if the property is on busy highway, the price of the property will relatively be low because not many people will have the time to stop and make purchase or if it’s a residential area, there may be association of noise that will be coming from passing vehicles. This will automatically cause the price of the property to be low.


  1. BNET Editorial n.d., Acquiring Commercial Property, BNET: The go-to place for management, viewed 11 May 2010, <>
  2. Pollick M n.d., What is Commercial Property?, WiseGeek, viewed 11 May 2010, <>
  3. Struyk T 2010, The 5 Factors of a ‘Good’ Location, Yahoo Real Estate, viewed 11 May 2010, <>
  4. “Structuring and Financing” n.d., Structuring & Financing Commercial Property Developments, Conferenz: Bright Star viewed 11 May 2010,<>


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Commercial Property Development. (2016, Sep 14). Retrieved from