Business What Is Commercial Real Estate?

What Is Commercial Real Estate?


Commercial real estate is any non-residential property used for commercial, profitmaking

purposes. That includes stores, malls, and office buildings, as well as

industrial parks and warehouses. Investors typically purchase commercial property

for the purpose of renting it out to businesses that use it to conduct their daily

operations. The value of commercial real estate generally appreciates over time,

which makes it a more stable investment than residential properties.

Most people who invest in commercial property do so with partners. This is because

a single commercial property is much more expensive than a home, so it would be

hard to buy and maintain one without partners. The number of partners in a

commercial real estate deal will vary depending on the size of the investment and

how involved the investors want to be with the property management and leasing

process. Also read

There are two main ways that people get into commercial real estate investing:

direct investment and indirect investment. With direct investment, the investor will

buy a building and either manage it themselves or hire a management company to

do it for them. This is the best way to enter commercial real estate investing if you

have plenty of cash and are comfortable being the landlord of a property.


Indirect investment into commercial real estate is done through Real Estate

Investment Trusts (REITs), crowdfunding, and exchange traded funds (ETFs). These

types of investments allow an investor to own a piece of a leased commercial

property without taking on the day-to-day responsibility of managing it. It is a good

option for people who don’t have enough cash to invest directly but are looking to

diversify their investment portfolio with stable income-generating assets.

The most common type of commercial real estate is office buildings, which include

office spaces and retail spaces. These can be multi-tenant buildings with multiple

tenants or single-use, standalone structures that are occupied by one business.

Often, these buildings are located in high-traffic areas, such as downtown districts or

major shopping centers.


Another popular type of commercial real estate is retail, which consists of the shops

and restaurants that we visit in our everyday lives. These can be multi-tenant, with

large retailers like Target or Walmart, or they can be single-tenant, such as a

department store or gas station.


There is also special-purpose real estate that falls under the category of commercial,

such as open land for fairs and amusement parks or storage units. These buildings

don’t have the same purpose as the other property types, but they can still be

profitable for investors if they are managed properly.

As a general rule, commercial buildings have longer lease terms than rental

residential property, with some retail and office spaces having leases that last five to

ten years. This gives the tenant more stability in their financial planning, which is a

key factor for many companies when deciding on where to locate their operations.

However, this can also lead to higher operating costs for the owner of the property.

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