The term "commercial real estate" encompasses a diverse category of real estate assets sold to businesses with the primary objective of generating investment returns through a combination of rental income and potential price appreciation. Listed below are the five types of commercial properties.
1. Land
The land is the fundamental building block of commercial real estate. While it may not seem like a conventional property type, vacant land holds immense potential for development. Investors can purchase land for future development, resale, or even to generate revenue through agricultural or recreational uses. The land is divided into three categories:
Brownfield Land: This type of land can be used for commercial or industrial purposes.
Infill Land: Situated in the city, infill land is currently vacant but can be developed.
Agriculture Land: Greenland refers to vacant and underdeveloped land that can be utilized for agricultural purposes like pasture or farming.
2. Multi-Family Residential
Any single property that comprises four or more residential units is categorized as commercial real estate. The multi-family residential sector encompasses a diverse range of real estate, including apartments, condominiums, cooperative housing, and townhouses, excluding single-family homes. Multi-family properties are commonly stratified into Classes A, B, and C based on their respective characteristics and quality.
3. Office
Designed to accommodate organizations or businesses, office buildings can be classified into three classes: A, B, and C, based on amenities, location, and quality. There are primarily two types of office buildings:
Suburban Office Buildings: Consists of mid-rise buildings covering 400,000 to 80,000 square feet of land outside the city.
Central Business District: These are located in the center of the city.
4. Hospitality/Hotels
The hospitality commercial real estate investment sector includes properties that provide accommodation, meals, and services to tourists and travelers. These comprise motels, resorts, casinos, and hotels.
5. Retail
Retail properties are commercial spaces designated for selling goods and services to the public. These can range from shopping malls and strip centers to stand-alone stores and power centers. The success of retail properties is closely tied to consumer behavior, location, and the popularity of nearby attractions.
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