top of page

Types of Commercial Properties


photograph of a city scape with tall buildings and blue sky in the background

Commercial real estate is a dynamic, multifaceted world that goes far beyond the confines of residential property. With its varied inventory of spaces that cater to a wide range of business needs, understanding the different types of commercial properties can serve as a profitable education for real estate investors and a strategic tool for business owners. Understanding the nuances of commercial property is crucial, whether you're looking to invest in the next business hub or find the perfect space for your growing enterprise.




What are the different types of commercial properties?

Commercial real estate (CRE) encompasses income-generating properties that serve as business premises, excluding multifamily properties and hospitality buildings designed for residential living. Typically, investors own these properties, collecting rent from the businesses operating within.


Office Spaces

Office spaces are the quintessential commercial property, often serving as the corporate nerve center. Ranging from traditional to contemporary setups, office spaces are designed to facilitate the administration and operation of a business. With a key focus on professional environments, these spaces come in various configurations, including open-plan offices, co-working spaces, and executive suites. The appeal of an office space to businesses lies in its ability to offer a professional address, a dedicated work environment, and often, a range of support services within a business park or office complex.


Retail Centers

Retail centers are the bustling crucibles where commerce and consumer meet. These properties come in many forms, including shopping malls, strip malls, and standalone retail stores. What unites them is the emphasis on the customer experience, with retail properties often featuring amenities such as parking, food courts, and entertainment options. When considering a retail investment, location is vital, as visibility and ease of access can significantly impact success. The right retail property has the potential to attract high foot traffic and provide a lucrative platform for a diverse range of businesses.


Hotels and Lodging

Leisure and tourism are big business, and hotels or lodging facilities are at the heart of this industry. They offer a temporary abode for travelers and can cater to varying levels of comfort, luxury, and service. From boutique hotels to large corporate chains, the diversity within the lodging segment is vast, allowing for specialized investments or services to cater to both niche and broad markets. For investors, understanding the trends and patterns of travel, as well as the unique demands of different travel demographics, can be the key to a successful hotel property investment.


Industrial Properties

Industrial properties, which include warehouses, distribution facilities, and manufacturing plants, provide the infrastructure for commercial activities on a grand scale. These properties often feature large, open spaces with high ceilings to accommodate heavy machinery and materials storage. Location is critical for industrial properties, with proximity to transportation hubs and logistical necessities being of prime importance. The industrial sector is currently undergoing a transformation with the rise of e-commerce, leading to a demand for flexible, tech-empowered spaces to support modern supply chain needs.


Multifamily Properties

Multifamily properties are commercial real estate properties designed to house multiple families or individuals in separate housing units within one building or complex. These types of properties are classified as 'commercial' if they have more than 5 units. These residential investments can range from duplexes and fourplexes up to high-rise apartment towers. The distinguishing factor of multifamily properties in the commercial sector is that they contain multiple rental income streams, making them potentially more resilient to vacancy risks than single-tenant properties. Investors value multifamily units for their consistent cash flow, and as the population grows, so does the demand for residential space, often translating to a stable and lucrative investment opportunity.


Institutional Properties

Institutional properties house organizations that provide essential community services. These include educational facilities such as schools and universities, as well as healthcare institutions like hospitals and medical centers. These properties are unique in that they must not only be functional and efficient in their use of space, but they must also comply with strict regulatory and safety standards. When it comes to investment, institutional properties often offer long-term leases and the stability of being tied to essential public services.


Industrial Properties

Industrial properties are critical components of the production, distribution, and storage sectors of the economy. These are robust facilities designed to house specialized operations such as manufacturing, assembly, and warehousing. Oftentimes large and situated in strategic locations close to transportation hubs like airports and seaports, industrial properties facilitate efficient logistical operations. They typically offer expansive floor space, high ceilings, and often include loading docks, truck doors, and warehouse infrastructure to manage goods.


Undeveloped Properties

Developers and investors often start with nothing more than a plot of land and a vision. Development properties are those earmarked for future commercial use, which might involve building from the ground up or repurposing existing structures. The value of development properties lies in their potential; savvy investors can capitalize on this by identifying areas with future growth potential, securing the right permits, and creating spaces that meet the shifting demands of a market.


Special-Purpose Commercial Properties

Rounding out the commercial property landscape are special-purpose properties, which can include everything from sports stadiums to amusement parks, coworking spaces to self-storage facilities. These properties cater to a specialized clientele or serve a unique function in the commercial sector. Understanding the specific regulatory, technological, and consumer demands of these niche spaces is crucial for those considering investment.


Mixed-Use Properties

A mixed-use property can be a combination of any of the other property types listed above. For example, there could be an office space on the ground floor and apartment units on the top floor of a mixed-use property.



Commercial property investment involves individuals or groups committing funds to a profit-driven business or property, with the expectation of generating a return on investment (ROI) based on the venture's profitability. This can encompass an individual investing in a multifamily complex or a group of investors pooling resources for an office building. When purchasing commercial real estate (CRE), investors primarily seek to generate income or enhance the property's value.


Navigating the commercial property market can seem daunting with its varied offerings and unique considerations. For those looking to invest in commercial property, thorough research and a deep understanding of the particular needs of the market segment are vital, as there are many different types of real estate investment risks. LandApp can help commercial property investors make well-informed purchasing decisions using our in-depth proprietary data and analytics. Similarly, current commercial property owners can learn more about their property's value and discover potential income-generating opportunities for their property using LandApp.



Comments


Commenting has been turned off.
bottom of page