What is Commercial Real Estate?
Commercial real estate is a type of property that is leased out for business and retail purposes. In commercial real estate, properties that are designed with the intent of housing commercial tenants are purchased or rented out. In commercial real estate, raw land is also included in this type of purchase for the purpose of commercial developments. There are 5 types of commercial real estate.
5 Types of Commercial Real Estate
- Special Purpose
The office is the most common type of commercial real estate. These buildings are in the form of single-tenant offices to mid-rise or high-rise buildings. Offices are further categorized into 3 classes. I.e. Class A, Class B, Class C.
Class A, Commercial Real Estate
These types of commercial real estate properties are newly constructed or renovated. These buildings are in good condition. And primarily located nearby all amenities. These properties are managed by Professional Real Estate Management Companies
Class B, Commercial Real Estate
These buildings are relatively older than Class A buildings. These buildings require major capital investment for repair and upgradation. Although these buildings are well maintained and managed but require renovation for making them a popular target for investors
Class C, Commercial Real Estate
Class C, Commercial Real Estate are poorly located and typically used for redevelopment opportunities. It requires major investments to improve the infrastructure.
Retail buildings are another popular commercial real estate buildings. These properties are in the form of malls, restaurants, banks, and community retail centers. These are often located in urban areas. The general size of these properties ranges from 5000 square feet to 350,000 square feet.
Industrial commercial real estate includes warehouses to large manufacturing sites. These properties lend themselves to more investment opportunities.
Multifamily properties are in the form of high-rise or mid-rise buildings with the accommodation of single, 2 to 3-bed apartments. Residential tenants tend to invest in these units because they have shorter lease terms than office and retail tenants.
These properties are designed for specific use. These types of properties are difficult to reuse for another repurpose. These include car washes area, self-storage facilities, and schools. Tourism industries occupied large proportions of special-purpose commercial real estate. Hotels, airports, amusement parks, and sports stadiums are also some examples. Mixed-used buildings are also included in special-purpose commercial real estate.