As the president and CEO of VCM Development Group, Vaughn Miller of Dallas, TX, understands the nuances of commercial real estate development. More than residential projects, commercial real estate has numerous factors to consider before construction can even begin. “When you’re dealing with commercial real estate, you’re not just dealing with construction; you’re also dealing with the economic engine of an entire community,” says Vaughn Miller of Dallas.
According to Vaughn Miller, commercial real estate considerations include:
- Zoning. Some zoning restrictions are very heavy and limit certain uses in the marketplace. For instance, there is a limited supply of General Industrial zoning, which increases the demand of this type of zone. The opposite is true, says Vaughn Miller. Too much zoning can have negative results.
- Title issues. Easements, covenants, and deed restrictions can all half a major commercial development project.
- Physical condition. The physical maintenance of the property must be considered before a renovation or construction project begins. According to Vaughn Miller of Dallas, understanding the physical condition of property is paramount to improving the bottom line ant the end of the day.
- Net operating income. Commercial real estate managers and developers such as Vaughn Miller must take into consideration the leases and revenue sources of these properties. In other words, what expenses are controllable? Does this leave room for improvement when you consider the expensive development costs?
- Financing. Factors like physical condition could negatively affect a property’s current value. Low valued properties are harder to get financed – even for renovation, says Vaughn Miller.
Regardless of the scope of the project, Vaughn Miller of Dallas understands that ultimately all commercial real estate considerations boil down to the profitability of the project for all parties involved. The developer, financer, and tenants all want to profit from the same thing, which makes each consideration important during this process