What is Commercial Real Estate?
Commercial Real Estate refers to properties exclusively reserved for business purposes. Just as the name implies, the common object between commercial real estate owners and tenants is commerce.
Commercial Real Estate (CRE) is quite the opposite of residential estates, which are used to build homes and other residential buildings.
Commercial real estate, otherwise known as commercial properties, is divided into four categories:
- Offices: These are often small or large blocks of office spaces. Some areas contain more office spaces/buildings.
- Industrial: This comprises manufacturing, processing, and heavy plants that require space and churn out products in large quantities. Warehouses may also come under this category.
- Retail: These are shopping units, shopping complexes, malls, plazas, and trade zones.
More substantial funds are required for investing in and maintaining commercial real estate. Potential investors may invest in commercial real estate through direct investment such as the purchase of commercial real estate properties or indirect investments via Real Estate Investment Trusts, exchange market funds, and other market securities.
More often than not, estate planning authorities usually zone commercial properties differently from residential estates. Property owners and managers regularly run higher costs to maintain commercial properties to the taste of respective tenants. However, there is also greater cash-flow and turnover compared to yields from residential properties.