The 5 Types of Commercial Real Estate

The 5 Types of Commercial Real Estate

Investing in commercial real estate starts with knowing its five major types.

One of the first things to know about investing in commercial real estate is what commercial real estate is. This type of real estate covers a broad range of properties, typically divided into five categories. Each category has its own subdivisions. Learn about all the types of commercial real estate so you can start your investing journey on the right foot.

1. Office

Office buildings are the most common type of commercial space. A building can be either urban or suburban, distinguished by location and typically size. An urban office building could be a skyscraper, while a suburban one might be in an office park. Besides this categorization, office buildings come in three classes: A, B, and C. 

  • Class A: These are the classiest and highest-end of the ranking. They are more recently built, have state-of-the-art facilities, and are located in a prime business spot. 
  • Class B: Office buildings that have an average price in an average location but also have decent facilities do not compete with the Class A tier. 
  • Class C: Older buildings or places with potential for development are placed in this category.

2. Retail

Retail buildings are also a popular type of commercial property. They include all retail and restaurant sites. The retail category may be more complex than you’d expect, as there are eight types of shopping centers. These eight types order the retail property market more or less by size and number of tenants.

3. Industrial

Industrial properties also give a fair share of investment opportunities. Warehouses, assembly lines, and large manufacturing sites make up this category. One can usually find these types of buildings on the side of major highways, outside the urban and suburban settings.

4. Multi-family

Multi-family units also have specific categories within itself. While they can be classified as Classes A, B, and C like office properties, they also come in different shapes and sizes. Apartment complexes, condominiums, townhouses, and more count as multi-family properties.

5. Special Purpose

Special purpose buildings cover many different types of commercial buildings. Hotels of all kinds, stadiums, airports, amusement parks, and other out-of-the-box commercial properties go here.

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