Key Takeaways: When allocating capital to commercial real estate, especially for properties like shopping centers, understanding risk is crucial. Unlike easily quantified metrics, risk in commercial real estate is often assessed on a relative basis. This is where the concept of “development spread” comes in with commercial real estate investment analysis. Development Spread: A Quick Risk-Reward Gauge In ground-up developments or value-add projects, the development spread is a simple calculation that helps determine if the potential reward justifies the inherent risk. It’s essentially the difference between the “going-in cap rate” (the property’s cap rate at purchase) and the “going-out cap…