Investment opportunities are in every type of property, whether commercial or residential. Certainly, commercial real estate can often provide a better return on investment than residential properties.
Commercial real estate is properties only used for business purposes. Otherwise, a living area rather than a workspace would be residential real estate. A property that can earn from capital or rental is the best meaning of commercial real estate. So, if you can generate money by leasing or holding it and reselling, it's a commercial property. While official classifications differ, commercial real estate has eight primary groups in general.
Office Space
Office buildings with workplaces offered are office spaces. The types of office buildings have two categories: urban and suburban. Also, urban office buildings are prevalent in cities and include skyscrapers and high-rise complexes. Suburban office buildings are usually smaller and sometimes combined in office parks.
Industrial Space
Industrial buildings are outside metropolitan areas. They are also along transportation routes and host industrial operations for various tenants. The low-rise structures can also be industrial parks. Industrial properties have four categories:
- Heavy manufacturing: manufacturing companies need these buildings to operate and create goods and services.
- Light assembly: these are not as customizable. They are for the assembly or storage of products.
- Bulk warehouse: these properties are often big properties that serve as distribution centers.
- Flex industrial: these properties combine industrial and office space.
Multifamily Complexes
Multifamily properties are residential rental properties with more than five units. They are also commercial spaces because they generate rental income. Apartment rental buildings, in particular, have six property types:
- High-rise: a building having nine or more stories and at least one elevator.
- Mid-rise: in an urban environment, a multistory building with an elevator.
- Garden-style: apartments with a garden style are usually suburban, rural, or urban locations. Buildings also may or may not have elevators.
- Walk-up: a four- to six-story structure that does not have an elevator.
- Manufactured housing community: a community in which the operator leases ground sites to manufactured homeowners.
- Special-purpose housing: a multifamily facility caters to a demographic like student housing and elder housing.
Retail Spaces
Any building used for retail purposes defines retail properties. Additionally, single storefronts, strip malls, and shopping centers are examples of this. An anchor tenant will often attract other stores to larger properties, such as malls.
Hotels
There are three different types of hotels. Large, multi-room hotels with at least one bar or restaurant are full-service hotels. Concierge, 24-hour desk services, and turn-downs are features limited-service hotels may not provide. Extensive stay hotels have larger and more similar rooms to the average apartment.
Mixed-use Properties
Any combination of the mentioned categories describes mixed-use properties. Some examples include multi-family apartment buildings with retail areas on the first floor. It is likely a mixed-use asset if you think of a typical downtown high-rise structure. Mixed-use properties are a mix of office, residential, retail, and industrial space. These properties are increasingly popular!
Land
Investors search for land that will have high-interest rates in the future. Underdeveloped suburban or urban lot or undeveloped urban infill are examples of this. Other examples include farmland used for industrial or commercial purposes.
Special-purpose
There are many other sorts of commercial real estate that investors create and own. That is where the idea of "special purpose" property comes into play. Also, commercial properties like amusement parks, zoos, and parking lots are special-purpose real estate.
Final Thoughts
There is a lot to learn about commercial real estate. Understanding the various types is an excellent place to start. So, whether you are buying, selling, there are ways to get started in commercial real estate. Some methods include reading blogs and learning about local commercial real estate market.
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