What Does Commercial Real Estate Mean?

 

When you think of commercial real estate (CRE), it refers to buildings and land that are used exclusively for business purposes and not as living spaces. CRE includes everything from offices to shopping malls to warehouses to hotels and multifamily apartment complexes. While investors can buy and sell these properties, more often than not they are leased to businesses who use them for their own business purposes.

Because of this, the primary purpose of commercial property is to generate income. The most common way to do this is by charging businesses rent for the space that they occupy. However, there are many other ways in which a property can generate income such as through a sale or by renting the property to individuals for their living space (i.e. residential).

Commercial property is usually categorized by the type of business it is meant to support and the level of income it can generate. This helps in the evaluation of a potential investment and also in understanding how a property might be able to help with a business’s growth. The most popular types of commercial real estate include office buildings, retail buildings such as shopping malls, industrial buildings such as warehouses and multifamily rental properties (i.e. apartment complexes).

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There are a few other categories of commercial property that can be included depending on the type of building and its use. These can include:

Special purpose: This is a catch-all category for properties that aren’t one of the main types, and may be something like an amusement park or church. This is also the category for any property that doesn’t fit into the other sectors, but still earns revenue through commercial real estate.

The most common type of commercial real estate is office buildings, which can be occupied by a variety of different companies and organizations. The other major type of commercial real estate is industrial buildings, which can be anything from a large manufacturing plant to a small garage. Other forms of commercial real estate can include flex industrial, which is the combination of office and industrial space; a hotel, which can be both high-rise and low-rise; or multifamily housing buildings, which can range from duplexes to apartments to manufactured homes communities.

 

Investing in commercial property can offer an excellent source of stable, reliable income, especially when it comes to long-term leases with tenants that won’t go anywhere if the economy gets rocky. However, it is important for those considering investing in commercial real estate to carefully evaluate their short- and long-term goals before making a decision.

It is not usually practical for individual investors to own commercial property directly, but it is possible to gain exposure through crowdfunding or other crowdsourcing sites. This is a growing sector of the real estate industry, which allows many small investors to pool modest sums in order to acquire larger and more attractive properties. In addition, there are a number of commercial real estate funds that provide an opportunity to invest in the sector alongside larger institutional investors.

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