Hassle free commercial finance from UK experts

Commercial development, like any other project, has its own set of risks and benefits. Commercial Mortgages Store is here to assist you in understanding and warning you about factors to think about before investing in commercial construction.

What is Commercial Development?

The term “commercial development” refers to the construction of a business on private property without heavy industrial or residential use that generates income.
Commercial development is the process of creating a new space for business or industry. It can involve renovating an existing building, or constructing a new one from scratch. The goal is to create a space that’s appropriate for the type of business or industry that will be occupying it.

What categories are included with commercial development finance?

This category includes but is not limited to:

  • Hospitals, laboratories, nursing homes and other medical facilities
  • Educational institutions
  • Hotels, Public houses, restaurants, cafes, sports and other leisure facilities
  • Shopping centres, shops and other retail facilities
  • Multifamily housing (apartments and flats)

The benefits of investing in commercial development

When it comes to commercial development, there are several benefits you can enjoy as an investor. Here are five of the most important ones:

  1. Increased rental income: When you own a property that’s being used for commercial purposes, you can generally expect to see higher rental income than if it were being used for residential purposes. This is because businesses are usually willing to pay more for the use of commercial space than individuals are for residential space.
  2. Increased property value: Not only can you expect to see increased rental income from commercial development, but you can also expect to see an increase in the value of your property. This is because commercial development generally results in an increase in the overall value of the surrounding area.
  3. Job creation: One of the most important benefits of investing in commercial development is the fact that it can lead to the creation of new jobs. This is especially beneficial if you’re investing in an area that’s struggling economically.

The risks of investing in commercial development

Investing in commercial development can be a risky proposition. Here are four of the most common risks associated with this type of investment:

  1. The risk of cost overruns. One of the biggest risks associated with commercial development is the possibility of cost overruns. This is because the costs associated with commercial development can be quite high. If the project goes over budget, it can be difficult to recoup your investment.
  2. The risk of tenant default. Another risk associated with commercial development is the possibility of tenant default. This means that if you lease your property to a tenant and they fail to make their payments, you could be left with an empty property.
  3. The risk of zoning changes. Another risk to be aware of is the possibility of zoning changes. This means that if the area in which your property is located is rezoned, it could negatively impact the value of your investment.

When it comes to commercial property development, it is critical to choose a firm that understands your specific and unique needs and can understand what will appeal to lenders.

How we can help with your commercial development finance journey

We provide a wide range of financing options for both existing and new commercial real estate projects. Our team of finance specialists is here to assist you with your next development project!

Get in touch with a member of our team to start your development finance enquiry

What can you use development finance for?

Most commonly used by landlords, homeowners and property developers to: