What is Commercial Real Estate?

What is Commercial Real Estate?

Commercial real estate, also known as CRE, is any property owned to produce income. From the point of view of an investor, the commercial real estate encompasses any property that has the potential to bring income; this includes land. From the point of view of a businessperson, commercial real estate are any offering of retail, office, medical, hospitality, and other commercial space that can be leased or even bought for the use of a business. 

Office Properties

Commercial real estate office properties include small professional buildings, single-tenant buildings, and skyscrapers. These buildings fall into three separate categories, which are known as Class A, Class B, and Class C. Class A buildings are in the top tier of buildings, and they are often luxurious. This category of buildings has either state-of-the-art infrastructure or they have been extremely renovated. You can find these buildings in primary locations, and the buildings themselves are universally accessible and are professionally managed. On the second tier of quality, buildings are Class B buildings, which are the ones that are most sought after by investors. Class B buildings are targeted by investors because these buildings usually indicate a high return on investment through renovations and improvements. These buildings are well-maintained, but they can benefit from capital investment. Contrary to both Class A and Class B buildings, Class C buildings are old, often falling apart, and are in dire need of a renovation because of their out-of-date infrastructures. To compensate for the lack of quality and space found in Class C buildings, they usually offer the lowest rental rates. Office buildings are typically defined by the neighborhood they are in, rather than by the features the buildings come with. 

Retail Properties

Retail properties, which include restaurants, can be freestanding buildings, but they can also be found on the lower floors of office buildings or of apartment complexes in urban areas. The strategic placement of retail buildings next to apartment complexes works to the benefit of investors since this is a safety risk to take. Strip centers will usually contain an anchor tenant, which is either a popular department store or a large retail chain. With their broad appeal, anchor tenants are designed to attract several customers to a shopping center. Common anchor units include grocery stores, fitness centers, office supply stores, and many other big stores. The stores that surround an anchor tenant are usually small retail units such as nail salons, dry cleaners, local coffee shops, as well as other family-owned businesses. Power centers contain a blend of major big-box retailers and anchor tenants. Expect to find several out parcels in power centers, which include gas stations and banks. Regional malls are designed to host a multitude of anchor stores and well-known restaurants, as well as several small, medium, or large stores. 

Are you an investor looking to make use of commercial real estate in the bountiful lands of Eagle Mountain? EM Founders Group is ready to work closely with you on your commercial development plan. Contact us today, we’re more than happy to help you execute your business goals.

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