What characterizes speculative development?

Speculative development is specifically characterized by the construction of real estate projects without having pre-leased or pre-sold units or spaces prior to the commencement of construction. This approach carries inherent risks as it relies on the assumption that the market demand will be sufficient to sell or lease the property once it is completed.

In speculative development, developers may take the chance to build based on market research or trends, anticipating that they will find buyers or tenants once the project is finished. The lack of secured long-term tenants at the outset distinguishes speculative development from build-to-suit projects, where developers wait to finalize agreements before breaking ground.

The other options present alternative aspects of real estate development that do not align with the core definition of speculative development. For instance, securing long-term tenants before development indicates a more cautious approach, while pre-construction marketing is a strategy that may or may not be utilized in speculative projects. Development of agricultural land generally refers to land-use changes rather than the speculative nature of real estate projects.