Skip to main content

Creative Approaches To Financing Your Shopping Center Development

By May 11, 2024No Comments

If you are looking to develop a shopping center in an area with a lot of family members, look into the principles of fannin family or clan. These principles suggest that members of the same family should remain close to each other and share resources, such as land.

Using family rules can also help fund your development. For example, if members of the clan cannot build a mall in their neighborhood, then they will not build one because it will not be allowed by their relatives.

The same principle applies to development permissions. If someone wanted to build a mall in their neighborhood, the authorities would give them an exception since they belong to the fannin family.

If you find yourself being limited by your development rules, look into changing them.

Approach high-net-worth individuals

Creative Approaches to Financing Your Shopping Center Development

If you are looking to develop a shopping center in the suburbs or countryside, you may be hesitant to seek out financing from large banks or credit unions due to the higher fees they charge. Fortunately, there are still opportunities for development professionals and developers seeking high-net-worth clients.

It is possible to find opportunities to develop your center into a high-end neighborhood. For example, you could build a college-educated audience that enjoys shopping and lifestyle amenities. Or you could combine a good retail component with an entertainment element like an amusement park or theme park.

You may also look for opportunity in small towns or larger cities that have none of these features. For example, if your area has no theme park or amusement park, you can build a good quality shopping center that combines retail, education, and culture. You can add some fun elements like a theater or event venue.

Look to family members

Creative Approaches to Financing Your Shopping Center Development

If you are looking to develop a shopping center, consider developing a large portion of your center with property your family or business owns. This can be useful for expanding the size of your shopping center, providing additional income sources for expansion.

In addition to helping build your reputation as a developer, owning a portion of your development can help mitigate conflicts with other owners and developers.

If another developer purchases a piece of your complex, they must negotiate the purchase with the members of your complex who own property there. This can be useful when one owner wishes to sell their piece of land but others wish to hold on to it.

The trouble with trying to acquire land through negotiation is that it can take some time. In the meantime, someone else is buying and occupying land that you wanted to sell.

If you are looking to develop additional housing in your community, consider looking at what family members or business associates have done.

Approach private equity firms

Creative Approaches to Financing Your Shopping Center Development

If you are looking at developing a shopping center, there are several approaches developers can take to help lower their investment cost. These include financing through private equity firms, marketing contracts with landlords, or developing agreements with multiple landlords.

Mostly-known-as-shopping-center developers also may be able to earn some additional funding by joining a land-use plan. This plan would specify what areas of the center will be used for specialty and retail stores and other attractions.

As a developer, you would be responsible for building the project and meeting any regulatory requirements, but you could potentially earn some more money by working with government officials.

Bridgewave currently is not developing a shopping center, but we have been thinking about what types of stores we want in our development. We want our store to be special enough to gain community support, but affordable enough for the majority of shoppers.

Seek federal funding

Creative Approaches to Financing Your Shopping Center Development

Even though the majority of shopping centers are privately funded, there is a small percentage that receive funding from the government.

Many of these government-funded centers are located in large cities, making it very accessible to apply. If you need help finding funding, look into the assistance programs offered by your city or state.

If you seek out federal funding, make sure your development site fits within current guidelines for land use and construction. Doing research and following through with plans will help make this process go faster!

By seeking out federal funding, you must meet all regulations and standards for development. Make sure to have proper plans and assurances that your site meets all requirements before the end of construction!

bullet point | Changing Construction Timing Guidelines in Future Development Projectsettairation is an effective way to financeyour shopping center developmenttthefttextBullet point|Changing Construction Timing Guidelines in Future Development ProjectsWhen conditions change on a site, such as construction delays or expanded use areas being approved by authorities, new guidelines must be applied.

Use tax credits

Creative Approaches to Financing Your Shopping Center Development

Tax credits are a very affordable way to develop your community. If you can apply tax credits in your development, you can create a neighborhood where no one has to pay expensive luxury homes but instead people with modest incomes can live together.

Many towns and cities offer neighborhood redevelopment tax credits (NDTC) in conjunction with their municipal government money. The NDTCs are applied to development plans and applications, and the applicant is required to pay any overheads such as property valuations and legal fees.

The end result is a development that was originally planned as a luxury home, but which was successfully re-assigned the appearance of a middle-class family home by the addition of some nice furniture and decorations.

The added benefit of having an attractive, livable neighborhood is that people in my research were more likely to seek information from their neighbors and communities about what type of home they needed to invest in their neighborhood.

Utilize a REIT structure

Creative Approaches to Financing Your Shopping Center Development

Many shopping center developers choose to create a REIT structure, or real estate investment trust, called a structured mortgage. This utilizes preexisting loans and structures them into a new property that can be valued and profitable.

This is a very attractive option for those who do not have many readily available funds, or who would like to leverage more in the development of their property. A structured loan can carry interest rates as low as 3%!

In return for providing ownership rights and participation in the loan process, the ownership group receives a higher value for their property. The bank or lenders take on the responsibility of lending money to current owners and developers, but not to those with the new owners and developers when they obtain financing.

This gives both more power to get projects off the ground, but it also requires advanced knowledge of banking policies and practices which some consider risky.

Consider B shares

Creative Approaches to Financing Your Shopping Center Development

A share is the most common type of financing available for center developments. A share grants you access to the ownership unit without buying a property, though.

As a share owner, you receive regular updates on changes to your property and can also elect to purchase a share as an additional piece of property.

In return, you receive partial ownership of the property and have the ability to influence decisions such asunicipal valuations, construction trends, installation of technology tools and interior design services.

A share is highly recommended for those who do not want to miss any of the updates but would like full ownership. Consider giving yourself some extra time before giving up your rights as a shareholder in your development.

Researching these alternative financing options is worth doing before any development work begins to ensure adequate coverage is in place.

Convert to a LLC or corporation

Creative Approaches to Financing Your Shopping Center Development

Instead of PHDs, MCOs, or business entities named companies, can develop as your shopping centerarenthood. This is an approach for a relatively small shopping center to create a more complex structure with separate entities.

It is possible to convert your corporation or limited liability company (LLC) into your tax filing entity. This can be helpful if you need to do some additional paperwork during Tax Time, like update your address.

If you decide to go this route, make sure you have the proper documents in place to ensure compliance with the new rule. Otherwise, you will have to abide by the old rules that apply to corporations and LLIs.

Another option is the creation of a Roster Company, which is an entity that specializes in collecting fees from businesses within a geographic area. These companies are created when two other entities join together in order to create a new entity called an association .


Author admin

More posts by admin