What is Commercial Real Estate?
Commercial real estate (CRE) is used for business purposes rather than as a living space, meaning the property is used to generate income. These types of commercial real estate investment are often apartments, retail stores, and industrial units.
Types of Commercial Real Estate
CRE property can fall in the following six categories:
- Multifamily: Residential properties with more than five units.
- Office space: They're designated as low-, mid-, or high-rise based on size and allow for multiple tenants.
- Retail: Designated for businesses that sell goods or services to consumers.
- Industrial: Host industrial operations such as heavy manufacturing or light assemble.
- Hospitality: Designated for establishments that service travelers, providing accommodations, meals, and other services.
- Special Purpose: Anything outside of the previous five categories - churches, self-storage, etc.
Grading of Commercial Real Estate Buildings
- Class A: This represents the highest-quality buildings available. They're typically newer with top-tier construction.
- Class B: These can still be high-quality properties, but they're usually older compared to Class A.
- Class C: These are generally distressed and older. Class C properties require maintenance.
