Five Different Types of Commercial Real Estate

Are you planning to invest in the commercial real estate? Well, whether it is your next step or your future plan, it is important to know that commercial real estate is a large market. It can be broken into sub-sectors and therefore offers you a variety of investment options. Commercial real estate investment is expensive and risky, but can be very profitable. To be successful in this investment, you need to place your money in the option that makes the most sense of your individual financial goals. The more you know about the investments beforehand, the better your chances of succeeding as a commercial property investor.

Here are different types of commercial real estate to consider when investing.

Land/Land Development

Land development is one of the most exciting types of commercial property. You can agree that land is one of the scarce commodities with constant demand. For an investor who understands the market, this can be an extremely lucrative investment. You can increase the value of the raw land if you choose to the build the land into something valuable. When it comes to land development, there are many stages to go through before the land can be of value. Your schedule for completing this project of land development will be highly dependent on different circumstance. Although there’s a high potential to make huge profits, this investment is not for the fainthearted. Ensure you know what you’re doing because it is basically speculative and capital intensive.

Retail Centers

Retail shopping centers are a profitable sector in the commercial property market. As a commercial real estate investor, you will have a wide variety of tenants in your retail property. Here, your returns will keep getting better and better. However, you must consider location when investing in retail shopping centers. You need to ensure the location is highly visible with a steady stream of traffic. Otherwise, you may end up with units that lack tenants, lowering your profit margins.

Office Buildings

Office space is another sector of the commercial real estate that can yield huge profits. As an investor in office buildings, you will have more benefits because office tenants sign longer leases. This allows you to have a steady stream of income from the tenants for a longer duration. However, it takes a longer period to find office tenants in comparison to other types of commercial tenants. This implies that your vacancies in the office space can last longer.

Apartments/Multifamily Housing.

For investors who want to build passive income, this is the ideal investment. Despite being residences for people who rent units, multifamily housing is still under the category of commercial property. However, you need to keep in mind that investing in multifamily housing can turn out to be management intensive. Here, residents only commit to a lease of one year. Having a management plan is therefore vital because of tenant turnover. You need to ensure the units are well-furnished and occupied by tenants who pay their rent.

Industrial Real Estate

Industrial buildings are mostly located outside urban areas but along major transportation roads. They house industrial operations for a variety of tenants. This sector requires much expertise because of the environmental, legal and zoning issues. Look at the broader market to determine how you can find tenants because it may be easy to gauge demand.

Conclusion

Go through each investment option in commercial real estate before you start investing. Understand that each type of commercial real estate has different risks and rewards. Feel free to make inquiries.