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What does a Commercial Developer do?

By Carol Francois
Updated Mar 02, 2024
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A commercial developer is responsible for the purchase, building, management and leasing of commercial real estate. Commercial real estate is a term used to describe any building or property purchased for the purpose of creating profit. This type of property includes malls, stores, shopping centers, industrial property and office buildings. A commercial developer can be either an individual or a business. The role of the developer is to coordinate the use of space for business purposes.

In the purchase phase, the commercial developer may decide to purchase a plot of land or an existing building. The developer is responsible for confirming that the land is zoned for commercial use before purchasing it. Although a submission can be made to change the zoning status, this process is time consuming.

The purchase is typically financed with a mortgage on the property. In a typical arrangement, the commercial developer purchases a plot of land. The developer obtains financing to build an office tower, and signs the lease agreements with tenants for space in the office tower. The profit from this type of business is generated from the sale or lease of space to other businesses or clients.

If the developer purchased an existing building, he may decide to renovate the building or simply to complete maintenance work required for basic upkeep. The level of effort and investment required depends on the condition of the building and the number of current tenants, if any. Management of a commercial building can be completed by the commercial developer, or by a property management firm. This role is focused on daily management issues, including tenant applications, structural building maintenance, standard repairs and tenant relationship management.

Commercial real estate leasing contracts are quite different from residential contracts. They may include minimum maintenance clauses, security, signage access, business type restrictions and other details. These contracts are typically multi-year, with renewal every three to five years.

Many commercial developers focus on a particular niche in the marketplace, specializing in serving a specific community or business model. For example, a commercial developer may focus on providing medical services buildings. These clients tend to follow a specific pattern of requirement, with standard hours, maintenance needs and overall support service needs. A detailed approach improves the business model, as it allows for the creation of a targeted consumer base, reputation-building within a sector and the development of a client base. All these items are helpful when attempting to secure stable, long-term tenants.

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Discussion Comments

By Babalaas — On Jun 06, 2011

@parmparsley- If you are looking to become an independent energy developer, your career path would likely be much different. It will require an interdisciplinary approach so it may require an educational background in multiple fields like business, engineering, physical sciences, and environmental policy.

You would probably want to look for a specialized program for graduate school that focuses on energy engineering, resource management, or something along those lines. Which one you choose will depend on what you study during your undergraduate years.

You may also want to work for an energy developer or utility to build a strong understanding of the industry. Working as a researcher or project manager on a government environmental, planning, or energy agency would be other career options that would prepare you to develop energy projects.

Good luck!

By Georgesplane — On Jun 04, 2011

@parmnparsley- The career path for a commercial real estate developer can vary, but here is a sample career path that will help you accomplish your goals.

1. Obtain a Bachelor's in a business concentration. If possible, take electives related to real estate development.

2. Obtain a real estate development certificate. This will further advance your knowledge in this specific area of business.

3. Go for your MBA with a concentration in real estate development. An MBA is not necessary, but can greatly improve your chances of finding employment.

4. Become a licensed RE. Once you have your real estate license, you will be able to buy and sell property professionally.

5. Find a transition career. Work as a real estate broker or property manager, which will give you the applied experience necessary to crossover to the field of commercial developing. You also may be able to find employment at a commercial development company to give you this experience.

By parmnparsley — On Jun 03, 2011

What type of training and certification is required to become a commercial land developer? Would an independent energy developer fall under the same category or would that require a different skill set? I would be interested in developing cheap rural land for energy developing once I graduate from college.

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