What Are The Four Main Types of Commercial Real Estate?
If you are a business owner or CEO who is investing in or selling real estate, then it is important to familiarize yourself with the four main types of commercial real estate: retail, industrial, office space, and multi-family rental. Let’s take a closer look at each type and how you might benefit from investing in each type.
Retail real estate refers to real estate that is devoted to businesses that sell consumer goods or services, such as department stores, strip malls, clothing outlets, and, for these purposes, restaurants. Retail real estate is where people go shopping. Many retail buildings, such as large malls, will have what’s known as an “anchor store,” or a store that entices people to the area (in a large mall, for example, this could be a department store).
Investing in retail real estate can be very profitable, depending on the property, location, and level of opportunity in the area. You should also consider what other retail establishments are located in the area where you are considering investing. For example, if there is a popular supermarket nearby, there will be lots of reliable traffic passing through the area, which could be good for business. At the very least, it will make your real estate more visible.
Industrial real estate is used to produce, ship, and store goods, and includes factories, warehouses, and distribution centers. Depending on the particular property, industrial real estate can be a good and affordable investment. Warehouses and distribution centers store equipment and goods that will be sent elsewhere, so unlike office spaces and retail properties, industrial real estate does not require the same level of upkeep. Industrial tenants typically do not have the same variety of needs as those renting other forms of commercial real estate. Industrial real estate is often the most bare-bones of the four main types of commercial real estate,
and as long as the space is functional and meets the basic needs of the tenants, the tenants won’t require much else.
One potential thing to look out for is the profitability of a tenant or prospective tenant’s enterprise. Conduct due diligence on tenants to ensure that their products are in high-enough demand to ensure their profitability — and consequent ability to pay rent.
While this type of commercial real estate requires you to offer up much more capital at the outset, the right tenant could be incredibly lucrative in the long run. Office space tenants will pay for the whole package — maintenance, taxes, insurance, and more. If you can’t afford the capital upfront, you could consider financing opportunities as well.
You should ensure that whatever business you rent to is profitable. Some common, reliable office space tenants include law firms, doctors, dentists, and other professionals.
While condo buildings and apartment complexes may not seem like commercial real estate, they actually are — and they can be an excellent investment, too. Mult-family real estate provides property owners with a steady stream of income from rent, and isn’t particularly risky, as housing is often in high demand. Even if you experience quick tenant turnover, everyone needs somewhere to live, and apartment complexes are not like hotels — you will rarely encounter an apartment complex with low occupancy. This type of commercial real estate can be incredibly lucrative.
Discuss Your Needs with a Commercial Real Estate Attorney in North Carolina
If you have questions about commercial real estate investing or have a legal question related to a real estate investment, reach out to Mullen Holland & Cooper to discuss your options with a North Carolina real estate attorney. Our team can protect and advocate for your interests at every step. Contact us today for a free consultation.