What are the Different Types of Commercial Real Estate?

Commercial real estate is a diverse sector that composes of several property types that can provide different income streams and investment opportunities. This can be a lucrative investment, but it’s crucial to understand the various types of commercial real estate, and which property would suit your needs best. Let’s dive into the different types of commercial real estate and what each one enables you to pursue.

• Multifamily Properties

These properties are buildings that can house multiple residences. This can range from apartment complexes to townhomes and can have anywhere from a few tenants to hundreds. These can be a great source of income and can provide a steady cash flow as the tenants pay rent each month. Additionally, these properties appreciate in value over time.

• Office Buildings

Office buildings are commercial properties designed specifically for businesses or professional organizations. They range from single to multi-tenant arrangements and can be small spaces or large buildings. Office buildings provide stable rental income and appreciate in value over time.

• Industrial Buildings

These properties are built for manufacturing, production, storage, and distribution. Industrial buildings can range from small warehouses to large distribution centers and are often owned by investors or the business itself. These buildings often coincide with long-term leases, meaning they can provide stable cash flow for longer periods of time.

• Hotels and Hospitality Properties

These properties are designed for lodging and entertainment purposes. This can include anything from a motel to a resort, or even some short-term rental accommodations. These provide a secure stream of cash flow.

• Retail Properties

Retail properties are buildings designed for businesses that sell goods or services directly to the consumer. This can include a mall, shopping center, or even a stand-alone store. This type of property includes a secure sense of cash flow.

• Mixed-Use Properties

These types of properties combine two or more types of business properties. This can include residential, retail, office, and industrial sections combined into one property. These properties can provide diverse income streams and the potential for a boom in economic activity as the surrounding area develops.

• Land

This property type is an empty plot of land that can be converted into any of the other property types. Usually, these are purchased for investment purposes or development purposes. Investors can buy and hold the land with the intention of turning it for a profit down the line. If the land is in an area that has a developing infrastructure, it could appreciate greatly over time.

• Special Purpose Properties

These properties include buildings that are specially designed for a unique purpose, such as government buildings, religious institutions, educational facilities, healthcare buildings, and more. This type of property can have a limited potential for appreciation.