Commercial Real Estate And Its Types
Commercial Real estate as the name suggests deals with the property that is solely used for business purposes. It includes warehouses, offices, restaurants, shopping centers and the list goes on. Commercial Real Estate happens to be one of the primary types of the Real Estate along with residential and industrial real estate. The businesses that occupy commercial real estate usually lease the space and an investor usually owns the building and collects rent from each business that operates there.
The commercial Real estate is further subdivided into four categories, namely,
Office Buildings and Office Complexes
Multi-Family Commercial Real Estate
Retail Space Real Estate Properties
If we consider land/land development, then we will see that we are dealing with a very rare commodity and that is land and they say they don’t create this any longer we can surely realizeits importance. However, the prospects of raw land becoming a great investment will depend upon the investor’s ability to develop the land into something of value. You have to accomplish several steps before you get to the final stage and even then there are number of variables to hinder your progress.
The retail space real estate properties covers single buildings used as stores for clothing, electronics and other consumer products, as well as malls, strip centers and the like.
In it the valuations can be based on size and land value, retail sales per square foot or other investment return calculations. One thing that you should be very careful about is the location. Where there is maximum human traffic, you can definitely have this sort of businesses thriving over there.Investment in apartment buildings can be a great business strategy. There is always going to be some demand for rental housing at some or one because where there are people, there is housing. So investing your money in Multi family commercial real estate property types are very feasible and definitely with a return profit. However it can take its toll on you considering the management it requires.
Unlike other forms of commercial real estate, residential tenants generally only commit to 1 year lease terms. This can cause more tenant turnover, thus it is important to have a management plan in place in order to constantly keep the units up to date and occupied with paying tenants. Last but not the least another sector of commercial real estate that can be responsible for large profits is the office market. Its most beneficial feature is that in the cases of offices the tenants that come up, they sign up leases for longer periods of time typically in between the time period of three to more years. So in return there is this open door through which there is a steady inflow of rental income for you for longer time period. However, tenants signing up for such long lease periods are not easily found so this is one of the setbacks of this category.