Commercial real estate encompasses a diverse group of structure types, uses and vacant land that should all be evaluated differently.
The five main types of commercial real estate property are: Multifamily, Retail, Office, Industrial and Hotel/Lodging. Other types of commercial real estate property include Healthcare, Self-Storage and Land.
Multifamily properties are considered any property that has multiple living quarters (generally more than four) that are paying separate rents. This category includes apartment complexes or high-rise apartment buildings. Leases for multifamily properties are typically short-term and range from one to two years. Economic drivers include demographic trends, home ownership and employment growth.
Retail properties range in size and tenancy from a small single-tenant free-standing building to super-regional shopping malls with over 1 million square feet and a mix of local, regional, national and international tenants. Leases for retail properties typically range from shorter terms of a few years for local tenants, and longer term for national tenants. Economic drivers that influence retail properties include population growth, traffic flows and household income.
Office properties are designed to be used as a place of business and include single-tenant properties, small professional office buildings and downtown skyscrapers. Leases for office properties tend to be longer term. The main economic driver for this property type is employment growth.
Industrial properties are typically used for research, development, distribution and/or manufacturing. These leases tend to have longer terms and the main economic drivers that influence these properties are the growth of imports and exports along with corporate inventory levels.
Hotel or Lodging properties are generally establishments that provide lodging and sometimes meals, entertainment and various personal services for the public. Main economic factors that influence Hotels can include economic trends, financial factors and location.