Commercial real estate project management is a complex and multifaceted field, encompassing everything from site selection, site acquisition and design to construction and leasing. Within this field, there are several hidden risks that can pose significant challenges for retail and restaurant projects in particular. In this article, we will explore 3 of these hidden risks and offer insights into how project managers can mitigate them.
Risk 1: Regulatory Compliance
One of the biggest challenges facing retail and restaurant projects is navigating the complex web of regulations and zoning laws governing commercial real estate and development. These regulations can vary significantly from one jurisdiction to another thus making it essential to work hand in hand with local officials and experts who understand the intricacies of the regulatory landscape.
To minimize the risks associated with regulatory compliance, retail commercial real estate project managers should take a proactive approach to any planning, zoning and permitting. This means working closely with architects and engineers to ensure that plans comply with local codes and regulations, as well as building strong relationships with local officials and community leaders.
Risk 2: Budget Overruns
Commercial real estate projects are notorious for their tendency to exceed budgets, actually over 70% of them do! This is particularly true for retail and restaurant projects, which often require significant investments in equipment, fixtures, and finishes. In addition, unforeseen construction delays or changes in project scope can quickly drive up costs.
To mitigate the risk of budget overruns in commercial real estate project management, project managers should create detailed budgets that account for all potential expenses, including carrying contingencies for unforeseen circumstances. They should also work closely with contractors and suppliers to ensure that all costs are accounted for and that any changes in project scope are carefully managed and documented and communicated properly to the team and stakeholders.
Risk 3: Scheduling – Missing Deadlines
Schedule overruns can have significant consequences, including delayed store openings, missed revenue targets, and increased costs. In addition, they can impact tenant relationships as delays can impact their ability to launch marketing campaigns and attract customers.
To mitigate the risk of schedule overruns, commercial real estate project managers must take a proactive approach to project scheduling. This involves developing a detailed project schedule that accounts for all critical path items, including design, approvals, permits, and construction. It is also essential to create contingency plans for potential delays, such as inclement weather, unexpected construction issues or the all too common logistical and supply chain delays many commercial real estate project managers have encountered as of late.
In addition, project managers must communicate regularly with their contractors and suppliers to ensure that they are adhering to the project schedule. This involves conducting regular site visits and progress meetings to ensure that everyone is on the same page and that any issues are addressed promptly.
Commercial real estate project management is a complex and challenging field, particularly for retail and restaurant projects. Ultimately, the success of a retail or restaurant project depends on the ability of commercial real estate project management to deliver the project on time and on budget. By taking a proactive approach to regulatory compliance, budget management and schedule management, retail project managers can mitigate risks and ensure that the project is completed successfully. By staying vigilant and focused on these hidden risks, retail commercial real estate project management can help businesses succeed in these competitive markets.