Types Of Commercial Real Estate
Commercial real estate includes properties that are used by businesses, such as offices, retail spaces, warehouses, and industrial sites. These properties can be divided into several different types, each with its own unique characteristics and uses.
Office Buildings
Office properties are used for administrative and professional purposes, such as law firms, accounting firms, and other businesses that require a traditional office space. Office buildings can be single-tenant or multi-tenant and can range from small, single-story buildings to large, multi-story skyscrapers.
Investing in office buildings can provide stable income, as there's often little turnover between medical practices, insurance agencies, tax accountants, and similar businesses.
Retail Properties
Retail properties are used for the sale of goods and services, such as department stores, shopping centers, and strip malls. Retail properties can be freestanding or part of a larger shopping complex, and can range from small local shops to large national chains.
Investing in retail properties can provide great returns in high-traffic areas, especially where there's foot traffic from pedestrians.
Industrial Properties
Industrial properties are used for the manufacturing, distribution, and storage of goods. Industrial properties include warehouses, factories, and distribution centers. They often have large open spaces, high ceilings, and loading docks.
Investing in industrial properties can sometimes be easier, as industrial buildings are often in places with lower property values. These properties might be cheaper to purchase.
Multifamily Properties
Multifamily properties are used for residential purposes and usually include apartment buildings and condominiums. They can be low-rise, mid-rise, or high-rise buildings and can range from small, older buildings to large, modern structures.
There are many federal programs for multifamily property financing. While these take work to navigate, apply for, and attain, they can make multifamily properties a high-reward, low-risk category of commercial real estate.
Hospitality Properties
Hospitality properties include hotels, resorts, and other types of lodging. They can be luxury or economy properties and can range from small, independent hotels to large, national chains.
Investing in hospitality properties can be a high-risk, high-reward venture. While properties can command top-dollar rates during peak season, demand is subject to weather. Fewer people will stay during bad weather periods.
Special-Purpose Properties
Special-purpose properties are used for unique or specialized purposes, such as schools, hospitals, and government buildings. They may have special design requirements and may require special permits or zoning.
Experienced investors might have success specializing in a certain type of property. These properties generally aren't for new investors, though.
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