If you are beginning a career in commercial real estate it may be a good idea to brush up on the types of sectors that make up the industry. Commercial real estate is defined as properties that have potential to generate profit through rental income or capital gain. Although, you may remember the basics, it’s important to know what type of properties make up each sector.
Here is a break down of the six types of commercial real estate properties.
Industrial buildings are usually located outside of urban areas near major highways and other transportation routes. These low-rise buildings are often times grouped into industrial parks. There are four types of these properties: Heavy manufacturing, light assembly, bulk warehouse, and flex industrial. There are also research and development facilities that fall under the industrial type of commercial real estate.
There are two categories that make up the office sector; urban and suburban. Urban buildings are, of course, found in cities and can include high-rise properties and skyscrapers. Suburban office buildings often built in office parks and usually much smaller in size.
There are single-tenanted and multi-tenanted office buildings, with many being built for which ever the developer has is mind. Office buildings are ranked in three tiers; Class A, B, and C. These tiers help to establish the cost of rent, building standards, and market presence. Medical buildings are also a sub-sector of office buildings.
The retail sector of commercial real estate can be complicated. These properties are what house businesses such as restaurants and shops. Usually multi-tenanted, think of a shopping center where a big company like Target is used to bring traffic to the property.
Things that dictate what type of shopping center a place is (mall, strip center, etcetera) are the number and type of tenants, concept, and trade area. Big box centers include national chains such as Walmart, Best Buy, and Dick’s Sporting Goods. Single-tenant buildings are often called pad sites, and usually consist of things such as a drug store, a bank, or a restaurant.
This type of real estate includes all types of buildings. Things such as apartments, condos, townhouses, and co-ops fall into this sector. Similar to office buildings there are three classes to classify each type. Furthermore, there are six different types of apartment rental buildings, ranging from high-rise to garden-style.
This sector involves any establishment that provides accommodations, services for travelers, or meals. Hotels can be part of a major chain or an independent boutique. There are six types of hotel groups ranging from limited-service to casinos and resorts.
These special purpose properties don’t fit into any of the other types of commercial real estate. This includes places like churches, bowling alleys, self-storage facilities, and amusement parks.