Commercial real estate development is a complex, multi-phase process that requires the collaboration of various stakeholders, including developers, investors, architects, engineers, government agencies, general contractors, and end-users. Among these, the Construction Manager (CM) plays a pivotal role in ensuring the project’s success by bridging the gap between vision and execution.
This article will explore the commercial development process, emphasizing the CM’s responsibilities at each phase. It will also examine how evolving factors such as technology, hybrid work environments, high interest rates, labor challenges, and material availability are reshaping the industry. Additionally, it will highlight how commercial development in California differs from other states, particularly regarding regulatory requirements and sustainability initiatives.
The Commercial Development Process: A Phased Approach
Commercial development follows a structured process that moves from concept to completion. The CM is involved in varying capacities throughout each phase, ensuring cost control, efficiency, and adherence to project goals.
1. Pre-Development Phase: Laying the Groundwork
Key Stakeholders Involved:
• Developers
• Investors & Lenders
• Market Analysts
• Architects & Planners
• Local Government (Zoning & Permitting Agencies)
• Construction Manager (early involvement preferred)
The pre-development phase focuses on site selection, feasibility studies, financial modeling, and entitlement approvals. This is where developers analyze the financial and market viability of a project. California, with its complex zoning laws and stringent environmental regulations (such as CEQA – the California Environmental Quality Act), requires a meticulous entitlement process, which can take significantly longer than in other states.
Role of the Construction Manager in Pre-Development
While traditionally brought in later, experienced developers increasingly engage CMs early to provide cost analysis, constructability reviews, and risk assessment. In today’s market, where labor shortages and material costs fluctuate unpredictably, CMs help refine budgets and mitigate risks before major capital is committed.
Technology’s Impact:
• BIM (Building Information Modeling) is now used during feasibility studies to provide early-stage cost modeling.
• AI-powered risk analysis helps developers predict potential project delays.
2. Design & Planning Phase: Refining the Vision
Key Stakeholders Involved:
• Developers
• Architects & Engineers
• Environmental Consultants
• Local Planning Authorities
• Construction Manager
• Cost Estimators
The design phase involves translating conceptual plans into detailed architectural and engineering drawings. In California, this phase must comply with rigorous sustainability mandates, such as Title 24 Energy Code and the CalGreen Building Standards Code, which are stricter than codes in most other states.
Role of the Construction Manager in Design & Planning
CMs are critical during this phase for:
• Value engineering: Identifying cost-saving design modifications without sacrificing quality.
• Scheduling coordination: Ensuring the design accounts for realistic material lead times.
• Permitting assistance: Navigating California’s complex regulatory landscape.
The Changing Landscape:
• The rise of hybrid work environments has shifted commercial space demands, leading to flexible and mixed-use developments.
• Prefabrication & modular design are being integrated more due to labor and material challenges.
3. Pre-Construction Phase: Procurement & Mobilization
Key Stakeholders Involved:
• Developers
• General Contractors
• Subcontractors
• Suppliers & Vendors
• Insurance & Bonding Companies
• Construction Manager
Pre-construction focuses on securing contracts, finalizing budgets, and developing execution plans. Inflation, high-interest rates, and supply chain volatility have forced developers and CMs to rethink procurement strategies.
Role of the Construction Manager in Pre-Construction
CMs coordinate bidding, negotiate contracts, and create contingency plans for potential material shortages. Given today’s market conditions, CMs are leveraging:
• AI-driven procurement platforms to secure materials early at locked-in prices.
• Alternative financing models to mitigate the impact of expensive money.
• Local sourcing to reduce shipping delays.
How California Differs:
• Prevailing wage laws & labor regulations significantly impact contractor costs. Not every project requires prevailing wage or union labor but when they do, it’s a significant cost impact to the project.
• Seismic safety requirements require additional structural considerations and specialized labor.
4. Construction Phase: Execution & Oversight
Key Stakeholders Involved:
• General Contractor
• Subcontractors
• Construction Manager
• Inspectors & Compliance Officers
• Safety Consultants
The construction phase brings designs to reality, but it is also where delays, cost overruns, and labor shortages are most likely to occur. Given the current labor market, with shortages in skilled trades across California, projects are increasingly turning to:
• Robotics & automation (such as robotic bricklaying or AI-driven site management).
• Digital project tracking tools (like Procore and Autodesk Construction Cloud).
• Prefabrication & off-site construction to reduce on-site labor needs.
Role of the Construction Manager in Construction
CMs serve as the project’s central coordinator, managing:
• Quality control & compliance with California’s strict building codes.
• Schedule adjustments due to labor shortages or supply chain issues.
• Conflict resolution among contractors and stakeholders.
California-Specific Challenges:
• Wildfire & seismic risk considerations increase safety measures.
• Water conservation mandates impact plumbing and irrigation strategies.
5. Post-Construction & Closeout: Delivering the Project
Key Stakeholders Involved:
• Developers
• Property Managers
• Tenants/End-Users
• Local Building Authorities
• Construction Manager
Project completion is more than just finishing construction—it involves final inspections, commissioning, occupancy permits and transitioning to operations.
Role of the Construction Manager in Closeout
CMs oversee:
• Final punch list resolution to ensure quality.
• Building system commissioning (e.g., HVAC, security, smart tech integration).
• Regulatory closeout & final inspections, which in California can be more rigorous due to environmental and energy-efficiency mandates.
How Closeout Is Changing:
• Smart buildings & automation require additional commissioning steps.
• Remote monitoring & maintenance are becoming industry norms.
• Longer permitting closeout times in California compared to other states.
The Future of Commercial Development in California
As the industry evolves, Construction Managers must adapt to new challenges and opportunities. The following trends are shaping the future:
1. Technology Integration
• AI-driven predictive analytics to reduce project delays.
• Digital twins for real-time building performance monitoring.
• 3D printing for faster, cost-efficient building components.
2. Labor Market Evolution
• Growth in union labor & training programs to combat skilled trade shortages.
• Robotics & automation to supplement human labor.
• Hybrid work impacting commercial space demands, leading to more mixed-use developments.
3. Material & Supply Chain Strategies
• Increased use of sustainable, locally sourced materials to mitigate shortages.
• Shift towards modular & prefabricated construction.
4. Regulatory & Environmental Pressures
• Stricter carbon reduction targets under California’s green mandates.
• Adaptive reuse projects gaining traction as an alternative to new developments.
• Resilience planning for wildfires, earthquakes, and extreme weather.
In closing…
The commercial development process is inherently complex, with many moving parts and stakeholders. A Construction Manager plays a crucial role in ensuring efficiency, cost control, and risk mitigation throughout the project’s lifecycle.
In California, commercial development faces unique challenges, including lengthy entitlement processes, rigorous environmental standards, and a high-cost labor market. However, by leveraging technology, innovative procurement strategies, and evolving construction methodologies, CMs are helping developers navigate these obstacles while delivering high-quality projects.
As the industry continues to change, Construction Managers will be at the forefront of innovation, sustainability, and resilience, ensuring that California’s commercial development remains both forward-thinking and economically viable.