Types of Commercial Real Estate

There’s a lot to know before you start investing into commercial real estate. One of the most important parts is knowing what property type you are wanting to invest in. 

There are six main types of commercial real estate.

-Office

-Retail

-Industrial

-Multifamily

-Hotel

-Special Purpose 

What is commercial real estate?

It’s a property that an investment can offer a steady income stream through rentals or the potential for capital gain when the property is sold. The key to successful investing in commercial real estate is to choose a property that is well-located and in good condition. Since commercial properties are often leased out, it’s also important to make sure that the property is situated in an area that is popular with businesses or tenants. 

Residential vs Commercial

Commercial real estate requires a larger upfront investment than a residential property does but the potential rate of return is often higher. In commercial real estate you are able to take advantage of the different lease types. Residential is based off of a B2C relationship when you are dealing with live in renters while commercial real estate deals with a B2B relationship because you are working with business owners. 

The Types of Commercial Real Estate

1.Office

Office types are commonly categorized into two types: urban or suburban. Urban office properties are found in cities which are high-rise properties and skyscrapers. Suburban office buildings are smaller structured and can be found in office parks.

Office buildings are also ranked in three tiers: Class A, Class B, and Class C. Class A office buildings are the best of the best, offering the highest quality finishes, amenities, and locations. Class B office buildings are still high quality, but they may not be as luxurious or well-located as Class A buildings. Class C office buildings are functional but may be outdated or in need of repairs. There are pros and cons to each type of office building, so it’s important to choose the right one for your needs.

2.Retail

Retail properties can be can be multi-tenant, single-use or standalone buildings. There are many metrics including size, types, number of tenants, trade area, and concept. 

3.Industrial 

Industrial properties house the operation for a large variety of tenants. These properties are low-rise buildings and can be found in an industrial park. These types of properties are categorized in four different types: heavy manufacturing, light assembly, bulk warehouse, and flex industrial. 

4.Multifamily

The section of commercial real estate covers all residential types of real estate. From single-family to apartments, condos, to townhomes. Multifamily also gets categorized into classes but are split by property type: high-rise, mid-rise, garden-style, walk-up, manufactured housing community, special-purpose house. 

5.Hotel

This sector covers venues covering accommodations, meals, and other services that tailor towards tourists and travelers. There are six separate categories for hospitality. 

-Limited-Service

-Full-service

-Boutique

-Casino

-Extended-stay

-Resort

6.Special Purpose

Special purpose real estate includes amusement parks, churches, self-storage, bowling alleys, and so much more. These properties have listed utility and marketability other than what it is originally used for. 

There are many types of commercial real estate but trying to find you the right property type for your portfolio is the most important. Connect with me today to help you invest in the right commercial real estate property! 



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