If you are looking to invest in commercial real estate, you'll need to decide which type of commercial property you want to purchase. And in today’s market, you certainly have options.
Here is a list of some of the most popular types of commercial property and some reasons why they make sound investments.
There are three loosely grouped classes of office buildings: classes A, B, and C. Type A office buildings typically represent the best types based on location and the facilities they have available. They are usually situated in the most productive areas, such as in big cities.
Class B buildings may be of high quality from a construction sense and have good facilities, but their location is less desirable than a Type A building.
Class C buildings are the lowest ranked office buildings and are often in remote areas without desirable facilities. Naturally, Class A buildings cost the most, but the potential return is also greater.
Industrial buildings may not always look like a glamorous type of commercial property, but they have the potential to produce great returns. They are often located on the outskirts of towns and cities, away from the main areas. There are four main categories when it comes to industrial buildings, and they include:
● Heavy Manufacturing
● Bulk Warehouse
● Flex Warehouse
● Light Assembly
Retail buildings can sometimes face a great deal of turnover, but they also get a lot of foot traffic and have the potential to bring in consistent revenue. There are a few different types of retail buildings, including:
● Strip Malls or Strip Centers – these comprise several small businesses that may include dry cleaners, convenience stores, restaurants, nail salons, and so on. Some strip malls also have anchor tenants, which is usually a major retailer.
● Community Retail Center – these larger retail centers may occupy up to 350,000 square feet and have multiple anchor tenants.
● Regional Malls – These are the largest type of retail building and can occupy up to 2,000,000 square feet.
As the name suggests, multifamily commercial buildings house multiple families and include properties like apartments or townhouses. Just like offices, there are Class A, B, and C multifamily buildings. The four main types include:
● High-Rise – At least nine floors and at least one elevator.
● Mid-Rise – These have 5 to 9 stories, and most have elevators.
● Garden Apartments – These have three stories at the most and usually no elevator.
● Walk-Ups – These have 4 to 6 stories and usually no elevator.
A mixed-use property includes both residential and commercial components. A common example of a mixed-use building would be a convenience store that includes an apartment on the second level.
These types of properties are most common in the Northeast region of the United States. In most scenarios, the owner of a mixed-use building rents the commercial space to a business owner and the residential portion to a separate tenant.
The properties listed above are some of the most common types in today’s market, but investors also regularly take advantage of opportunities involving warehouse, mobile home park, self-storage, restaurant, and other commercial properties.
If you’d like to learn more about commercial real estate or want to apply for a commercial real estate loan, visit our website today!