Real Estate Development Timeline Guide

What Does a Typical Real Estate Development Timeline Look Like?

The real estate development timeline spans 3 to 5 years from initial concept to stabilized asset. Understanding each phase, its duration, and its financing requirements is critical for developers, investors, and stakeholders who need to plan capital deployment and manage risk effectively.

Most commercial projects move through four distinct phases: pre-development (3 to 12 months), construction (12 to 24 months), lease-up (6 to 18 months), and stabilization (ongoing). Each phase carries unique risks, costs, and financing structures that directly impact project feasibility and returns.

Whether you are planning a multifamily complex, an office building, or a mixed-use development, this guide breaks down every stage of the process so you can anticipate challenges, secure the right financing, and keep your project on schedule. For a deeper look at early-stage planning, see our pre-development financing guide.

How Long Does Pre-Development Take and What Does It Involve?

Pre-development is the foundation of every successful project and typically lasts 3 to 12 months depending on project complexity and local regulatory environments. This phase encompasses site selection, feasibility analysis, entitlements, zoning approvals, and initial design work. Skipping or rushing pre-development is the single most common reason commercial projects fail or exceed their budgets.

Site Selection and Market Analysis

Site selection begins with identifying target markets, evaluating demographic trends, and analyzing supply and demand fundamentals. Developers typically evaluate 10 to 20 potential sites before narrowing the list to 2 or 3 finalists. Key criteria include zoning compatibility, infrastructure access, environmental conditions, and proximity to demand drivers like employment centers or transit hubs.

Developers should also evaluate local tax incentives, opportunity zone designations, and infrastructure improvement plans that could impact property values over the hold period. Proximity to public transit, major highways, and amenity-rich neighborhoods consistently correlates with stronger absorption rates and higher achievable rents.

A thorough real estate feasibility study at this stage can save months of wasted effort by identifying fatal flaws early. Market analysis should include absorption rates, comparable rental rates, construction cost benchmarks, and projected capitalization rates for the finished product.

Entitlements and Zoning Approvals

Securing entitlements is often the longest and least predictable part of pre-development. Depending on the jurisdiction, this process can take anywhere from 2 to 12 months. It includes zoning applications, environmental reviews, community meetings, design review board approvals, and building permit applications.

Developers should budget 5% to 10% of total soft costs for entitlement-related expenses, including legal fees, engineering studies, and application fees. Our entitlements and zoning approval guide provides a detailed breakdown of this process.

Pre-Development Financing

During pre-development, most developers rely on equity capital or bridge loans to fund soft costs. Traditional lenders rarely provide construction financing until entitlements are secured and plans are approved. Pre-development capital covers land acquisition deposits, architectural fees, engineering studies, legal costs, and permitting expenses.

Ready to discuss financing for your development project? Contact our development lending team to explore bridge loan options that can fund your pre-development phase.

What Happens During the Design and Engineering Phase?

Design and engineering typically overlap with the entitlement process, running 4 to 8 months from schematic design through construction documents. This phase translates the project concept into buildable plans that meet code requirements, budget constraints, and market expectations.

The design process moves through three stages: schematic design (establishing building form and layout), design development (refining systems, materials, and specifications), and construction documents (producing the detailed drawings and specifications contractors need to build). Each stage requires sign-off before advancing to the next.

Value engineering, the process of optimizing design decisions to reduce costs without sacrificing quality, typically occurs during design development. Experienced developers can reduce construction costs by 10% to 15% through strategic value engineering decisions made before construction documents are finalized.

Coordination between architects, structural engineers, MEP (mechanical, electrical, plumbing) engineers, and civil engineers is critical during this phase. Poor coordination leads to change orders during construction, which are 3 to 5 times more expensive than design-phase corrections.

How Does the Construction Phase Work From Start to Finish?

Construction is the most capital-intensive phase, typically lasting 12 to 24 months for ground-up commercial projects. It begins with site preparation and horizontal construction (grading, utilities, roads) before moving to vertical construction (foundations, structural framing, building envelope, interiors).

Site Preparation and Horizontal Work

Site preparation includes demolition of existing structures, environmental remediation (if needed), grading, and installation of underground utilities. This phase typically takes 1 to 3 months and can reveal unexpected conditions like contaminated soil, underground obstructions, or unstable subsurface conditions that require additional time and budget.

Horizontal construction encompasses roads, parking areas, stormwater management systems, and utility connections. For larger developments, horizontal work may proceed in phases to allow vertical construction to begin on completed pads while site work continues elsewhere.

Vertical Construction

Vertical construction follows a predictable sequence: foundations, structural framing, building envelope (roofing, exterior walls, windows), rough-in of mechanical/electrical/plumbing systems, interior finishes, and final inspections. The timeline depends heavily on building type, structural system, and project scale.

Construction Financing

Construction loans are the primary financing vehicle during this phase. These loans are structured as interest-only facilities with funds disbursed in draws as work is completed and verified by third-party inspectors. Typical construction loan terms include 60% to 75% loan-to-cost ratios, floating interest rates, and 18 to 36 month terms.

Lenders require detailed draw schedules, monthly progress reports, and independent inspection sign-offs before releasing funds. Developers should maintain 10% to 15% contingency reserves to cover unexpected costs without triggering loan default provisions. Lenders evaluate the borrower's development experience, project feasibility, market conditions, and guarantor financial strength when underwriting construction loans. First-time developers may face higher equity requirements or need to partner with experienced sponsors to secure financing on competitive terms.

Construction loan interest is typically capitalized into the loan balance during the build period, meaning developers do not make monthly cash payments. However, this capitalized interest increases the total loan balance at maturity, which must be factored into permanent financing projections. Developers should also account for lender-required reserves, including interest reserves, completion guaranty reserves, and operating deficit reserves that reduce available loan proceeds. Use our commercial mortgage calculator to model construction loan scenarios for your project.

Planning a ground-up development? Talk to our construction lending specialists about competitive construction loan programs designed for commercial developers.

What Should Developers Expect During the Lease-Up Phase?

Lease-up begins when the first units or spaces receive certificates of occupancy and typically takes 6 to 18 months to reach stabilized occupancy (usually defined as 90% to 95% occupied). This phase bridges the gap between construction completion and permanent financing, making it one of the highest-risk periods in the development cycle.

Pre-Leasing Strategy

Successful developers begin marketing 6 to 12 months before construction completion. Pre-leasing reduces lease-up risk and can accelerate permanent financing timelines. For multifamily projects, achieving 30% to 50% pre-leasing before delivery is considered strong performance. For office and retail projects, securing anchor tenants before or during construction is often a lender requirement.

Marketing costs during lease-up typically run 3% to 5% of projected gross revenue for the first stabilized year. These costs include broker commissions, advertising, model unit buildout, signage, and leasing staff compensation.

Lease-Up Financing Considerations

During lease-up, the property generates insufficient income to support permanent financing. Developers typically extend their construction loans or secure bridge financing to cover debt service and operating expenses until the property reaches stabilization. This transitional period requires careful cash flow management since debt service payments continue while revenue ramps up gradually.

Bridge loans during the lease-up phase typically carry higher interest rates than construction financing, ranging from 7% to 12% depending on the property type and lease-up progress. Developers should negotiate construction loan extensions with their existing lender before pursuing third-party bridge financing, as extensions are typically less expensive and involve simpler documentation.

The DSCR calculator can help you determine when your project will generate sufficient cash flow to qualify for permanent financing. Monitoring your trailing three-month and six-month net operating income trends will help you identify the optimal refinancing window.

When Does a Development Project Reach Stabilization?

Stabilization occurs when the property achieves consistent occupancy of 90% to 95% and generates predictable, sustainable cash flow. For most commercial developments, stabilization happens 24 to 42 months after construction begins, though this varies significantly by property type, market conditions, and project scale.

Permanent Financing

Once stabilized, developers typically refinance construction or bridge debt with permanent loans that offer lower interest rates, longer terms (5 to 30 years), and amortizing payment structures. Permanent financing is based on the property's demonstrated income performance, with lenders typically requiring a debt service coverage ratio (DSCR) of 1.20x to 1.35x.

The transition from construction to permanent financing is a critical milestone that directly impacts investor returns. Delays in stabilization extend the period of higher-cost construction debt, eroding project profitability. Every month of delayed stabilization can reduce investor IRR by 0.25% to 0.50%.

Post-Stabilization Asset Management

After stabilization, the focus shifts to maximizing net operating income through proactive property management, tenant retention programs, and strategic capital improvements. Developers who plan to hold the asset long-term should budget 2% to 4% of effective gross income annually for capital reserves.

For developers planning to sell, stabilization typically triggers a 6 to 12 month hold period before disposition to demonstrate consistent performance to prospective buyers. Most institutional buyers require 12 to 24 months of stabilized operating history before acquisition.

What Are the Biggest Risks at Each Phase of Development?

Every phase of the development timeline carries distinct risks that can derail schedules, inflate budgets, or reduce returns. Identifying these risks early and building appropriate contingencies into project plans is essential for successful development.

Pre-development risks center on regulatory uncertainty, market shifts, and site conditions that may not become apparent until environmental or geotechnical studies are completed. Construction risks include cost escalation (materials and labor), schedule delays (weather, supply chain, permitting), and quality issues that require rework.

Lease-up risks involve market absorption rates falling below projections, competing properties entering the market, or economic downturns reducing tenant demand. Stabilization risks include tenant turnover, operating expense increases, and interest rate movements that affect refinancing terms.

For projects requiring flexible, fast capital to navigate unexpected challenges, hard money loans can provide bridge financing while longer-term solutions are arranged. Learn more in our ground-up commercial development guide.

How Do Development Timelines Vary by Property Type?

Development timelines vary significantly based on property type, project scale, and local market conditions. Understanding these differences is critical for realistic project planning and accurate financial modeling.

Multifamily projects generally have the most predictable timelines because residential construction methods are well-established and lease-up periods are relatively short in strong markets. Office and retail projects often face longer pre-development periods due to more complex tenant requirements and longer lease negotiation timelines.

Industrial and warehouse projects typically have the shortest construction periods because their building systems are simpler, but they may face longer entitlement timelines in markets where industrial zoning is limited. Mixed-use developments are the most complex, combining multiple property types with different construction methods, lease-up strategies, and financing structures.

Need financing tailored to your property type? Reach out to our lending team for a customized development financing plan that accounts for your specific timeline and capital needs.

How Can Developers Keep Projects on Schedule and Under Budget?

Keeping a development project on schedule requires disciplined project management, proactive risk mitigation, and contingency planning at every phase. Projects that exceed their timelines by even 10% to 15% can see returns drop dramatically due to extended carrying costs and delayed revenue.

Here are proven strategies that experienced developers use to maintain schedule and budget discipline:

Pre-Development: Complete all due diligence before acquiring the site. Engage entitlement consultants with local jurisdiction experience. Submit permit applications with complete documentation to avoid resubmittal delays.

Design: Freeze the design scope before starting construction documents. Require weekly coordination meetings between all design disciplines. Complete value engineering before finalizing construction documents, not during construction.

Construction: Use a guaranteed maximum price (GMP) contract structure when possible. Require weekly schedule updates from the general contractor. Maintain a minimum 10% contingency reserve throughout construction.

Lease-Up: Begin marketing 6 to 12 months before delivery. Engage experienced leasing brokers with local market expertise. Offer competitive concession packages to accelerate initial absorption.

Frequently Asked Questions About Real Estate Development Timelines?

How long does a typical commercial real estate development take from start to finish?

Most commercial developments take 3 to 5 years from initial site selection through stabilization. The timeline breaks down as follows: pre-development (3 to 12 months), design and permitting (4 to 8 months), construction (12 to 24 months), and lease-up to stabilization (6 to 18 months). Larger, more complex projects can extend to 7 years or more.

What is the most time-consuming phase of real estate development?

Construction is typically the longest single phase at 12 to 24 months, but pre-development (including entitlements) is often the most unpredictable. Zoning changes, environmental review requirements, and community opposition can extend pre-development timelines by 6 to 12 months beyond initial projections.

How much does it cost to carry a development project through the full timeline?

Carrying costs, including interest on construction loans, property taxes, insurance, and project management, typically represent 15% to 25% of total project costs. For a $20 million project, this means $3 million to $5 million in carrying costs over the full development timeline.

When should developers start marketing a commercial property?

Marketing should begin 6 to 12 months before the anticipated certificate of occupancy date. For office and retail projects, anchor tenant negotiations often begin during the design phase, 12 to 18 months before delivery. Early marketing reduces lease-up risk and can improve permanent financing terms.

What financing is available during each phase of development?

Pre-development is typically funded with equity or bridge loans. Construction is funded with construction loans (60% to 75% LTC). Lease-up is covered by construction loan extensions or bridge financing. Stabilization triggers permanent loan refinancing at lower rates and longer terms. Contact our team for phase-specific financing guidance.

How do interest rate changes affect the development timeline?

Rising interest rates increase carrying costs and can reduce project feasibility, potentially causing developers to delay or cancel projects. A 1% increase in construction loan rates on a $15 million loan adds approximately $150,000 in annual interest expense. Developers should stress-test their pro formas against rate increases of 1% to 2% above current levels.

What permits and approvals are needed before construction can begin?

Required approvals typically include zoning approval or variance, site plan approval, environmental clearance (NEPA/CEQA where applicable), building permits, grading permits, utility connection permits, and stormwater management permits. The specific requirements vary by jurisdiction, and missing even one approval can halt the entire project.

How do developers manage construction cost overruns?

Experienced developers manage cost overruns through contingency reserves (10% to 15% of hard costs), guaranteed maximum price contracts, regular budget-to-actual reporting, and proactive change order management. When overruns exceed contingency reserves, developers may need to contribute additional equity, renegotiate loan terms, or value-engineer remaining scope.

Sources and References?

1. Urban Land Institute (ULI). "Real Estate Development: Principles and Process," 6th Edition, 2023. Comprehensive industry reference covering all phases of commercial real estate development.

2. National Association of Home Builders (NAHB). "Cost of Constructing a Home Survey," 2024. Provides benchmark data on construction timelines, costs, and regulatory approval periods across U.S. markets.

3. Deloitte. "2024 Commercial Real Estate Outlook." Analysis of development trends, construction cost escalation, and financing market conditions affecting project timelines.

4. Federal Reserve Bank. "Senior Loan Officer Opinion Survey on Bank Lending Practices," 2024. Data on construction lending standards, terms, and availability that directly impact development financing timelines.

5. CBRE Research. "U.S. Real Estate Market Outlook 2024." Market-level data on absorption rates, vacancy trends, and lease-up timelines by property type across major U.S. markets.