Reviewed by Aug 16, 2023| Updated on
Commercial property is real estate that is used for commercial activities like offices of companies, large residential properties that are rented out, etc. The owners of these buildings or lands need to pay additional taxes in compliance with the government’s policies and laws. While there are ways to put these commercial real estates to use, in most cases, they are leased to tenants and used as workspaces or living space (on a large scale) and used for income-generating activities. Thus CRE includes everything from a small store to huge restaurants, shopping malls and resorts.
There are mainly four main types of commercial real estate which are listed below:
These commercial spaces are used for setting up offices of multinational corporations, call centres, etc. Office spaces are further categorised into 4 classes, Class A (top-tier, well-maintained buildings), Class B (need restoration and fixing before reselling) and Class C (poorly maintained buildings built over 20 years ago located in less popular areas).
It includes small stores, outlets, grocery stores along with other and anchor stores for brands located in small localities, highway and outlet malls. It also includes restaurants and cafes.
Companies that require large workshops, assembly lines and various other workshops across industries like automobiles, steel, etc invest in industrial spaces and to meet their business requirements.
Apartment complexes or high-rise buildings that rent out living spaces to tenants are included in multi-family rentals.
This category includes all other non-residential properties like hospitals, storage developments, hotels, etc.
Investors looking for higher returns outside of stock markets can consider investing in commercial real estate if they have the necessary budget, expertise and resources to manage, resell or lease out CRE according to the government’s rules and regulation without incurring any losses.
You can also invest indirectly by buying securities of Exchange-traded funds or other trusts that invest in companies catering to the real estate market.
Investing in CRE can prove to be beneficial as this stable source of income has attractive leasing rates, higher returns and fewer overhead expenses.