Different Types of Commercial Real Estate
Commercial real estate is more than just retail space. While there are no official commercial realty classifications, since they vary from state to state and even city to city, there are some general categories that most real estate professionals acknowledge. Here are a few examples:
Multifamily properties are technically commercial and residential due to the fact that they primarily serve as a residence. However, they are still considered to be commercial properties since they generate cash flow and profit, and depending on their size, they are run by a management company. Multifamily properties include everything from duplexes all the way to 100-unit skyscrapers.
Office buildings are another type of commercial real estate. They are usually grouped into three categories, and those are A, B, or C buildings. Class A buildings are in the best locations and made from finer construction. Class B buildings straddle the line between the best and the. And, Class C buildings are in areas that are less desirable, and they likely need a lot of remodeling. Many of the better office buildings are located in the central business districts of larger cities or in campus-like office parks in the suburbs.
Industrial buildings will usually stand on their own or be grouped together in industrial parks. These buildings are used for heavy manufacturing, light industrial and assembly work, and warehouse space. Heavy manufacturing buildings are customized for creating particular pieces and are hard to resell. Whereas, light industrial and warehouse space can be more easily converted.
Of course, when most people think of commercial real estate, they think of retail, and there are many variations of this category of commercial space. Below are explanations of a few different types of retail property.
One that most of us are familiar with, are strip centers, which are smaller than most retail plazas. They tend to house smaller retailers like dry cleaners and nail salons. There are also community retail and power centers. These tend to have multiple anchors, or larger stores that draw in customers (think Walmart, Target, or Best Buy), mixed with smaller stores.
Shopping malls are a large sector of retail real estate, though they are dwindling in popularity. Both malls and community/power centers have out parcels, or individual tenants, like banks or fast-food restaurants, that are part of the same property, but not connected to the main building.
Hotels, Motels and Inns
Hotels tend to be found in central business districts for business travelers and in tourist areas. Full-service hotels can be quite prestigious and are usually parts of chains like Sheraton and Four Seasons. There are also hotels that are designed for extended stays that have a greater amount of amenities than usual, such as an included kitchenette.
Included under the hotel banner are, of course, smaller inns, bed-and-breakfasts, boutique hotels, and motels, which are all considered commercial.