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Different Types of Commercial Real Estate

There are many different types of commercial real state property. In this blog article we are going to do a little commercial real estate 101 and describe the most common types of commercial real estate.

Office

Office buildings can come in many shapes and sizes from one-story to large high-rises with several floors. They can house one tenant or several different tenants, typical office building tenants would include business, medical, or dental professionals. Office real estate buildings are broken down into three classes A, B, and C.

  • Class A Office Buildings: Class A typically describes a new or premium office building with high-end amenities, best locations, and can bring in a premium rent price. Sometimes class A office buildings will be broken down further into A+, A, and A- ratings.
  • Class B Office Buildings: Class B buildings will be older and in need of a facelift or minor renovations, are pretty well located, and have limited or no amenities.
  • Class C Office Buildings: Class C buildings are more aged, need major facelifts and upgrading, are in less than desirable locations and will bring in lower rent prices.

Industrial

Industrial office buildings cover a number of different commercial uses and are broken down in category by their specific building use.

  • Flex Industrial Buildings: These are buildings with a mix of warehouse and office spaces; they usually have a loading dock or drive indoor.
  • Heavy Manufacturing Industrial Buildings: These are more customized properties geared up with heavy-duty machinery for a very specific type of tenant or user.
  • Light Assembly Industrial Buildings: This is similar to heavy manufacturing but is outfitted with special use customized smaller machinery for a specific type of tenant or user.
  • Warehouse Industrial Buildings: A very large building that is usually a wide-open space with high ceilings used for storage and distribution of goods/products. These buildings are most often located near freeways/highways.

Related: 7 Tips for Making a Great Deal on Commercial Real Estate

Retail

There are various different retail building set-ups in commercial real estate and many different sub-categories. The most common types of retail spaces include:

  • Shopping Mall: This is an enclosed shopping center with a significant amount of different tenants that can include department stores, clothing retailers, food stands, restaurants, movie theaters, and more.
  • Power Center: This is an area with multiple big box stores (i.e. Target, Costco, Walmart) surrounded by a few other smaller stores and maybe a few restaurants with a shared parking lot.
  • Neighborhood or Community Center: These are more commonly referred to as strip malls and are also sometimes called a plaza. Many times the main retailer in a strip mall is a grocery store or sometimes a pharmacy with other smaller retail spaces filled out by quick-service restaurants, boutiques, and other small retailers.

Multi-Family

Multi-family real estate is comprised of multiple residential units and can include an apartment building, condos, townhomes, etc. Any building with more than four home units is considered commercial multi-family.

Mixed-Use

A mixed-use commercial property is simply what the name implies, a mix of uses within one property. This can include a mix of any of the above types of commercial real estate. The most common mixed-use commercial buildings include apartment buildings with retail or restaurant space usually on the first floor.

Special Use

This is a category of commercial real estate to encompass properties that do not really fit into the other categories but are clearly commercial. It is sort of the catch-all category. This can include self-storage, hotels, hospitals, and more.

Undeveloped raw land that is zoned for future commercial development. City zoning codes determine what type of commercial property can be built on a plot of land.

Related: 5 Steps for Valuing Land for Development

For more information about commercial real estate and buying or sellingcommercial real estate in Snohomish County please contact me at any time.
 

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