What Is Commercial Real Estate?

Commercial real estate is a category of property used for businesses or other purposes that generate income. It includes office space, shopping malls, hotels, hospitals, and apartment buildings, as well as land that can be used for these purposes.

Unlike residential property, commercial properties can’t be owned outright by individuals, and instead must be rented to tenants. These are usually businesses, but some nonprofits and government organizations also lease facilities for their operations.

What Is Commercial Real Estate?

There are many different types of commercial properties, and each one has its own characteristics. For investors looking to gain exposure to a specific type of property, it’s important to know what each type entails and how to find the best opportunities for investment.

Office Buildings

As commercial investment properties, office buildings are favored by many real estate investors because of their long term leases and high quality business tenants. They can be found in both dense urban areas and suburban settings, and offer a diverse tenant base to diversify the risk and maximize potential profits. More info https://www.kindhousebuyers.com/wa/seattle/

Retail Space

Retail space is another popular asset class among commercial real estate investors. It provides a steady revenue stream that can be leveraged to invest in other assets, such as bonds and stocks.

Industrial Realty

In addition to office space, many commercial buildings include heavy manufacturing spaces, such as factories and warehouses. These buildings often house a variety of machinery and equipment, and they may have storage space for finished products in between manufacturing runs.


These types of commercial buildings can be found across the country and can serve a variety of purposes, including hotels, restaurants, medical offices, and self-storage facilities.

The primary classifications of commercial properties are multifamily, office, and retail. Each of these categories is further subdivided into building classes based on factors such as location, condition and finish.

For example, Class A commercial properties are newest, cleanest, most expensive and feature the most desirable locations. These properties are favored by real estate investors because of their long term leases, dependable tenants and high-quality finishes.

They are also favored because of the scale that comes with having all tenants in one property, which makes management more efficient.

Class B Commercial Real Estate

This type of property is older, less appealing, and located in less-than-ideal locations. These buildings don’t have the same amenities and aren’t as visually appealing as other options.

These buildings are also more expensive than their Class A counterparts, but they offer lower maintenance costs and lower vacancy rates, which can help keep rents down.

Generally, commercial real estate is an asset that can be difficult to sell and that can be volatile in value. However, it can be an excellent way to build wealth over time and a good option for investors with the right risk tolerance and time horizon.

When buying or selling commercial property, it’s important to understand the zoning laws in the area where you plan to buy. These laws can impact how the property is built, where it’s located and who can live on the property.