Commercial real estate is a type of property rented out for business and retail uses. Investing in commercial real estate entails purchasing or developing facilities that are specifically geared to house commercial tenants. Commercial real estate investors, unlike residential real estate investors, lease their buildings to companies and earn rent from them rather than from residential tenants. It's also worth noting that this term includes raw land acquired for commercial property development. Commercial properties may be divided into five different kinds.
The 5 Types Of Commercial Real Estate
It's crucial to understand the different sorts of commercial properties before we get into the practicalities of how to invest in commercial real estate. As a result, you may begin to consider the business asset category in which you wish to concentrate. Commercial properties can be used for a variety of reasons, however, they are often divided into the following categories:
· Office: Office space is the most popular sort of commercial real estate. These structures can range in size from single-tenant offices to skyscrapers.
· Retail: Retail buildings are another common sort of commercial real estate. Strip malls and community shopping complexes, as well as banks and restaurants, are frequently found in metropolitan settings.
· Industrial: Industrial buildings, which range from warehouses to big production sites, are often targeted toward manufacturing businesses because they provide areas with height specifications and docking availability. Furthermore, these commercial buildings are more conducive to investment prospects.
· Multifamily: Apartment complexes, high-rise condominium apartments, and smaller multifamily units are all examples of multifamily buildings. When a property has more than one unit, it is classified as multifamily real estate, but if it has more than four units, it is classified as commercial real estate. Many residential investors start in commercial real estate before moving on to bigger multifamily buildings. Tenant turnover is a problem to consider because residential renters have shorter lease periods than office and retail tenants.
· Special Purpose: In general, special purpose facilities are built for a certain function to the point that repurposing the facility for another purpose would be challenging. Special-purpose properties include car washes, self-storage facilities, and schools, to name a few. The leisure and tourist industries also account for a significant share of special purpose real estate. Hotels, airports, sports stadiums, and amusement parks are all common examples in the sector.