What is Commercial Property Anyway?

What is Commercial Property Anyway?

What is commercial property? Commercial property relates to a structure, property, or land used for business. This includes office buildings, shopping centers, apartment buildings, and vacant property that is zoned for business development. 

Commercial property is used for business purposes. Commercial property may consist of buildings for businesses to operate. Or, you can use commercial property can be land used to generate money. Think apartment complexes.

Commercial property is any property that is intended to earn income. In other words, income producing property. Or, at least property that you hope will generate income!

Types of Commercial Property

There are several types of commercial property. Commercial Property includes:

  • Office Buildings;
  • Medical Offices;
  • Hotels;
  • Apartment Complexes;
  • Farm land;
  • Warehouses;
  • Retail Stores;
  • Malls
  • Garages

The term “commercial property” refers to: retail buildings; office buildings; industrial buildings and multi family units.

Retail Commercial Property

Retail commercial property includes strip malls, clothing stores, eating places, and entertainment places. Retail commercial property is generally more expensive per square foot than office space.

Why is retail commercial property more expensive? Three words: increased foot traffic. Retail shops need high foot traffic. High foot traffic means more potential customers. More potential customers equals more sales. More sales equal more income. More income means more profit.

So, expect to pay more for a retail commercial property.

Office Commercial Property

Office buildings provide space for professional business operations. Office commercial property provides such items as cubicles, conference rooms, reception areas and individual offices. You either own or lease office buildings. Office leases are generally longer terms than residential leases.

There are three different groups or classifications of office buildings consist of three different groups: Class A, Class B; and Class C.

Class A Buildings are the highest quality. These buildings have luxurious lobbies, high ceilings and great quality amenities.

Class B Buildings are your average office buildings. Nice buildings with professional management. These buildings do not have all the amenities of a Class A Building and are typically older.

Class C Buildings are the lowest quality. These buildings are generally older buildings. Sometimes these buildings are located in undesirable locations. Most will require a lot of repairs and renovations. Rent is generally less for these buildings.

Industrial Commercial Property

Industrial commercial property includes warehouses, manufacturing companies and distribution companies. Usually only one tenant occupies the property.

Industrial commercial properties are located outside of urban or residential areas. The term industrial real estate includes all land and buildings used in production, manufacturing, assembly, distribution, research, storage and warehousing.

Multi Family

Multi-family commercial property differs from the other three commercial property classifications we have covered so far. You live in multi-family commercial properties.

A multi-family commercial property is any building with five or more units. Examples include apartment buildings or apartment complexes.

Similarly to office buildings, these properties have sub-classifications. What are the classifications? Glad you asked. These are the classifications: garden apartments, mid-rise apartments and high-rise apartments.

What is a garden apartment? A garden apartment building is any building less than four stories high. Contrast that with the mid-rise apartments. These apartments are between five and seven stories high. Finally, you have high rise apartments. These apartment buildings are seven and higher stories.

Commercial Property Uses

You buy commercial property to use for non-residential purposes. For example, you operate a hotel or own office space for lease. Essentially commercial property is real estate bought or developed for investment purposes. Commercial property can be very lucrative in the right market.

Interested in getting into the commercial property market? Contact us for your commercial property real estate needs.