BiggerPockets

What Is Commercial Real Estate?

Let's start by defining commercial real estate. Commercial real estate is a broad term used to describe properties that are not single-family residences and that are used for work, income generation, and/or investment purposes.

When we speak of investing in commercial real estate, we are talking about individuals who put capital to work in a commercial property seeking to earn a profit from three potential areas: property appreciation (either a market-driven increase in value or from adding value such as making improvements or solving a vacancy problem); from cash flow from rent collected (after expenses), and from potential tax benefits of ownership.

Generally speaking there are two main categories of commercial property: multi-residential (or multi-family) commercial property and non-residential commercial property. Multi-residential properties include any properties intended to house more than one family-from duplexes, to small apartment buildings, to large apartment complexes and rental communities.

Non-residential commercial property is real estate in every other form (except single-family residential). Office, industrial and retail properties make up the dominant portion of the non-residential market. The remainder of non-residential commercial property includes hospitality, medical buildings, civic buildings, care facilities such as nursing homes, and land zoned for commercial purposes.

Comments