Commercial real estate (CRE) development is more than just constructing buildings—it’s about transforming spaces, shaping communities, and realizing visions that begin as little more than pencil sketches and spreadsheets. From site selection and zoning hurdles to financing, construction, and ultimately filling the space with paying tenants, the process of bringing a commercial property to life is complex, multifaceted, and laden with risk and reward.
David Shulick, an experienced developer of commercial real estate, walks through every major step of the commercial real estate development lifecycle. Whether you’re a new developer, an investor, a student of urban planning, or simply curious about how buildings go from concept to completion, you’ll gain detailed insight into what it really takes to turn dirt into destination.
1. Site Selection and Feasibility Analysis
Opportunity Identification and Market Research
The development lifecycle starts with one fundamental question: Where is there unmet demand? Developers scour markets to identify emerging neighborhoods, underutilized parcels, or shifts in consumer behavior that suggest an opportunity.
David Shulick explains that this phase includes intensive research such as:
- Demographic analysis: Age, income, household size, and lifestyle trends.
- Market demand: Vacancy rates, rental growth, sales comps, absorption rates.
- Competitive landscape: What supply already exists? Who are the major players?
- Economic trends: Job growth, major employer moves, infrastructure projects.
Data sources include public records, broker reports, proprietary software tools, and consultants.
Selecting the Site
A perfect site balances accessibility, visibility, infrastructure availability, zoning compatibility, and long-term potential. David Shulick shares some factors considered that include:
- Ingress and egress to major roads.
- Access to utilities (water, sewer, power).
- Proximity to complementary uses (restaurants near office parks, for example).
- Soil stability, floodplain presence, and topographical challenges.
A good site enhances the chances of tenant demand and reduces friction in later development stages.
Feasibility Study and Initial Underwriting
Before proceeding, a detailed feasibility study evaluates whether the project is worth the time and investment. David Shulick explains that this includes:
- Pro forma financial models: Projecting construction costs, income, expenses, and returns.
- Sensitivity analyses: Examining how interest rates, leasing velocity, and construction delays affect ROI.
- SWOT analysis: Weighing strengths, weaknesses, opportunities, and threats.
This process culminates in a go/no-go decision. Only if the numbers and risks align with goals will the developer proceed.
2. Zoning and Land Use Regulations
Understanding Local Land Use Controls
Zoning laws govern what can and can’t be done on a property. Every site is assigned a zoning designation, which outlines permissible uses (e.g., commercial, industrial, residential), building heights, setbacks, density, and even architectural style in some districts.
David Shulick explains that common issues developers face include:
- Misaligned zoning: The site may be zoned for industrial use when the developer wants to build retail.
- Overlay districts: Additional restrictions for historical preservation or environmental protection.
- Density limitations: Floor Area Ratio (FAR) or units per acre caps.
Rezoning, Variances, and Entitlements
If the site’s existing zoning doesn’t support the planned development, the developer may need to apply for:
- Rezoning: Changing the land’s use classification.
- Conditional Use Permits (CUPs): Allowing special uses under certain conditions.
- Variances: Exceptions to certain zoning rules (e.g., building height or parking minimums).
These processes are public and often political. Developers present to planning commissions and city councils and must address community concerns.
Entitlement Risk and Timeline
Entitlements can take months or even years to obtain. During this time, developers are spending money but earning no income. If entitlements are denied, David Shulick explains that the project may be abandoned entirely—making this phase among the riskiest in the entire lifecycle.
3. Environmental Impact and Permitting
Environmental Site Assessments (ESA)
Before construction, developers must ensure the land is environmentally sound. The process begins with a Phase I ESA, a report that investigates the site’s history to identify risks like underground storage tanks, industrial contamination, or hazardous materials.
David Shulick understands that if red flags are raised, a Phase II ESA will involve actual sampling of soil and groundwater. Remediation—if necessary—can be extremely expensive and time-consuming.
Environmental Compliance and Sustainability Mandates
Many jurisdictions require developers to submit Environmental Impact Reports (EIRs) or Environmental Assessments (EAs) that evaluate how the project might:
- Affect wildlife or vegetation.
- Increase noise or air pollution.
- Influence traffic patterns.
- Interfere with water drainage systems.
Additionally, many cities now impose green building standards, requiring:
- Solar panels or green roofs.
- Stormwater retention systems.
- Energy-efficient HVAC and lighting systems.
Developers may also pursue LEED certification or comply with state and federal regulations like CEQA (in California) or NEPA (national).
Permitting
Multiple permits are required before and during construction, including:
- Building permits
- Grading and erosion control
- Utility connection approvals
- Tree removal and landscaping permits
- Right-of-way and curb cut approvals
Missing one permit—or having one delayed—can shut down an entire project. Hence, managing the permitting calendar is a full-time job on many development teams.
4. Financing and Securing Investors
The Capital Stack
Real estate development is highly capital-intensive. David Shulick explains that most projects are financed using a “capital stack” that includes:
- Equity: Developer’s money and investor funds.
- Debt: Bank loans, construction loans, mezzanine debt.
- Preferred equity: Investors who receive fixed returns before common equity gets paid.
This layered approach spreads risk and aligns interests. Commonly, a developer might contribute 5–10% of project equity and raise the remainder from limited partners or funds.
Sources of Capital
Developers typically tap into:
- Commercial banks: For senior construction loans.
- Private equity: Institutions or high-net-worth individuals seeking real estate exposure.
- Crowdfunding platforms: Aggregated retail investment.
- Real Estate Investment Trusts (REITs): Particularly for large-scale developments.
Each funding source has different return expectations, reporting requirements, and holding periods. Negotiating favorable terms requires sophisticated financial modeling and a compelling development narrative.
Construction Loans and Draw Schedules
Construction loans are short-term and paid out in “draws” as project milestones are completed. Lenders inspect the work before releasing each payment. The developer must manage cash flow closely to avoid shortfalls, delays, or interest overages.
5. Design, Architecture, and Engineering
Programming the Space
Before blueprints are drawn, the project must be “programmed.” David Shulick explains that this means defining:
- Use types: Retail, office, industrial, medical, hospitality.
- Square footage allocations: Common areas, tenant spaces, parking, utilities.
- Target users: Luxury retailers? Tech startups? Light manufacturers?
This phase involves collaboration between the developer, architect, leasing team, and sometimes anchor tenants.
Design Process
The architectural journey typically includes:
- Schematic Design (SD): Conceptual visuals and space planning.
- Design Development (DD): Detailed plans and engineering coordination.
- Construction Documents (CDs): Full blueprints for permitting and construction.
Engineering and Coordination
Architects work closely with:
- Civil engineers: Grading, drainage, utilities, road design.
- Structural engineers: Foundations, load-bearing systems.
- MEP engineers: Mechanical, Electrical, Plumbing systems.
- Traffic consultants: Parking, ingress/egress, traffic signal adjustments.
Coordinating these disciplines is vital. One mistake in system placement can result in thousands in change orders later.
6. Construction Management
Contractor Selection and Procurement
A General Contractor (GC) is hired either through a competitive bid or negotiated contract. Contract types include:
- Lump-sum (fixed price): GC absorbs cost overruns.
- Cost-plus: Developer pays costs plus agreed-upon fee.
- Guaranteed Maximum Price (GMP): Shared overrun risk.
Subcontractors are selected for each trade: concrete, electrical, drywall, HVAC, landscaping, etc.
Pre-Construction and Mobilization
Before pouring concrete, the team:
- Sets up site fencing and trailers.
- Applies for utility tie-ins.
- Orders long-lead-time materials (e.g., steel, glass).
- Finalizes project timelines and safety plans.
Vertical Construction
Construction phases include:
- Earthwork and foundation: Excavation, slab, or pier installation.
- Framing: Structural steel or wood frames.
- Envelope: Roofing, windows, waterproofing.
- MEP installation: Internal systems.
- Interior finishes: Paint, fixtures, flooring.
- Punch list and inspections: Final QA/QC tasks.
Each stage is subject to inspections and must meet code before proceeding.
Delays and Contingencies
David Shulick understands that weather, labor shortages, material price spikes, and regulatory delays are common. Savvy developers build in 10–15% contingency funds and pad their construction schedules accordingly.
7. Marketing, Leasing, and Tenant Acquisition
Brand Development and Launch Strategy
Branding is vital, especially in competitive markets. Developers create:
- A project name and visual identity.
- Renderings and fly-throughs to attract tenants.
- Websites, brochures, and leasing packages.
- PR campaigns and broker outreach.
A well-branded development creates excitement, drives tenant demand, and increases valuation.
Tenant Outreach and Leasing
Leasing begins well before completion. Strategies include:
- Pre-leasing anchor tenants: Like grocery stores or national retailers.
- Offering concessions: Free rent periods, TI (Tenant Improvement) allowances.
- Broker commissions: Paid to leasing agents for tenant introductions.
Lease structures vary:
- Triple Net (NNN): Tenants pay taxes, insurance, maintenance.
- Modified Gross: Landlord pays some operating costs.
- Full Service: All expenses included in rent.
Occupancy and Stabilization
Once permits are granted and tenant spaces are built out, move-ins begin. A building is considered stabilized when it reaches a high occupancy rate (usually 90–95%) and tenants begin generating rental income.
8. Post-Completion Asset Management and Property Operations
Once the ribbon is cut and tenants begin to move in, the development lifecycle transitions from creation to stewardship. The role of the developer often diminishes (unless they remain the owner), but the work of maximizing the property’s value and performance is only just beginning. David Shulick explains that explains that this stage—known as asset management and property operations—is essential for ensuring long-term profitability and success.
Property Management Functions
Professional property managers are typically hired to handle the day-to-day operations of the commercial asset. Their responsibilities include:
- Maintenance and Repairs: Ensuring HVAC systems, elevators, landscaping, plumbing, and electrical systems are in top condition.
- Tenant Relations: Addressing complaints, coordinating lease obligations, and ensuring tenant satisfaction to reduce turnover.
- Rent Collection and Lease Administration: Enforcing lease terms, processing payments, and managing renewals or escalations.
- Security and Safety: Hiring security personnel, installing surveillance, and maintaining emergency procedures.
Effective property management directly impacts tenant retention and building reputation.
Asset Management Strategy
Beyond operational oversight, asset managers take a broader financial and strategic view. David Shulick understands that their role is to optimize the investment performance of the property. This includes:
- Performance Monitoring: Tracking KPIs like net operating income (NOI), internal rate of return (IRR), and occupancy rates.
- Capital Improvements: Identifying opportunities for upgrades that enhance value—such as solar panel installations, lobby renovations, or technology integrations.
- Refinancing or Recapitalization: Depending on market conditions, asset managers may explore refinancing options to lower debt costs or improve cash flow.
- Disposition Planning: Deciding when to sell the asset based on market timing, ROI benchmarks, or fund lifecycle strategies.
Tenant Retention and Experience Enhancements
Today’s commercial real estate landscape is increasingly focused on tenant experience. Smart buildings, flexible workspaces, and wellness amenities are not just perks—they’re expectations. Asset managers must stay ahead of these trends by:
- Adopting PropTech Solutions: Integrating apps for tenant communication, maintenance requests, and community engagement.
- Creating Community Events: Hosting fitness classes, networking mixers, or food truck events to foster a sense of place.
- Prioritizing Sustainability: Implementing green initiatives like recycling programs, EV charging stations, and energy benchmarking.
Risk Management and Compliance
Ongoing regulatory compliance is critical. Property operators must:
- Adhere to ADA and fire safety standards
- Maintain insurance coverage and risk mitigation protocols
- Ensure environmental and zoning regulations are met during tenant build-outs or property improvements
Asset and property management are the unsung heroes of a successful commercial real estate project. Without their stewardship, even the best-located and beautifully designed property can fall into disrepair, suffer high vacancy, or underperform financially.
Turning Vision Into Value
The lifecycle of a commercial real estate development is long, challenging, and capital-intensive. David Shulick understands that it is also one of the most impactful and rewarding pursuits in business and urban development. From the first spreadsheet calculation to the final tenant signing, every step involves risk—but also the potential for massive value creation. Developers who succeed blend financial acumen, political savvy, design intuition, and logistical discipline. They don’t just build buildings—they build ecosystems.
David Shulick emphasizes that understanding the full development lifecycle equips stakeholders—from developers and investors to architects and tenants—with the insight needed to navigate this high-stakes, high-reward industry. The next time you pass by a sparkling new office tower or a vibrant new retail plaza, you’ll know: it didn’t appear overnight. It was the product of vision, planning, and relentless execution.
