Commercial real estate can be broken down into several different categories. When most people think of different types of commercial real estate, or before conducting a property search, they think about shopping centers, office buildings, or warehouses. But the commercial real estate industry is precise when it comes to defining property types. Below is a list of different types of commercial real estate with a description of how each category is typically defined.
Suburban garden apartments started popping up in the 1960s and 1970s, as young people moved from urban centers to the suburbs. Garden apartments are typically 3-4 stories with 50-400 units, no elevators, and surface parking.
These properties are usually 5-9 stories, with between 30-110 units, and elevator service. These are often constructed in urban infill locations.
High-rise apartments are found in larger markets, usually have 100+ units, and are professionally managed.
This category of industrial property is really a special use category that most large manufacturers would fall under. These types of properties are heavily customized with machinery for the end user, and usually require substantial renovation to re-purpose for another tenant.
These structures are much simpler than the above heavy manufacturing properties, and usually can be easily reconfigured. Typical uses include storage, product assembly, and office space.
Flex space is an industrial property that can be easily converted and normally includes a mix of both industrial and office space.
These properties are very large, normally in the range of 50,000-1,000,000 square feet. Often these properties are used for regional distribution of products and require easy access by trucks entering and exiting highway systems.
Office buildings are usually loosely grouped into one of three categories: Class A, Class B, or Class C. These classifications are all relative and largely depend on context. Class A buildings are considered the best of the best in terms of construction and location. Class B properties might have high-quality construction, but with a less desirable location. And Class C is basically everything else.
Central Business District (CBD)
Office buildings located in the central business district are in the heart of a city. In larger cities like Chicago or New York, and in some medium sized cities like Orlando or Jacksonville, these buildings would include high rises found in downtown areas.
Suburban Office Buildings
This classification of office space generally includes midrise structures of 80,000-400,000 square feet located outside of a city center. Cities will also often have suburban office parks which assemble several different midrise buildings into a campus-like setting.
Strip centers are smaller retail properties that may or may not contain anchor tenants. An anchor tenant is simply a larger retail tenant which usually serves to draw customers into the property. Examples of anchor tenants are Wal-Mart, Publix, or Home Depot. Strip centers typical contain a mix of small retail stores like Chinese restaurants, dry cleaners, nail salons, etc.
Community Retail Center
Community retail centers are normally in the range of 150,000-350,000 square feet. Multiple anchors occupy community centers, such as grocery stores and drug stores. Additionally, it is common to find one or more restaurants located in a community retail center.
A power center generally has several smaller, inline retail stores, but is distinguished by the presence of a few major box retailers, such as Wal-Mart, Lowes, Staples, Best Buy, etc. Each big box retailer usually occupies between 30,000-200,000 square feet, and these retail centers typically contain several out parcels.
Malls range from 400,000-2,000,000 square feet and generally have a handful of anchor tenants such as department stores or big box retailers like Barnes & Noble or Best Buy.
Most larger retail centers contain one or more out parcels, which are parcels of land set aside for individual tenants such as fast-food restaurants or banks.
Full Service Hotels
Full service hotels are usually located in central business districts or tourist areas and include the big-name flags like Four Seasons, Marriott, or Ritz Carlton.
Limited Service Hotels
Hotels in the limited service category are usually boutique properties. These hotels are smaller and don’t normally provide amenities such as room service, on-site restaurants, or convention space.
Extended Stay Hotels
These hotels have larger rooms, small kitchens, and are designed for people staying a week or more.
Greenfield land refers to undeveloped land such as a farm or pasture.
Infill land is located in a city that has already been developed but is now vacant.
Brownfields are parcels of land previously used for industrial or commercial purposes but are now available for re-use. These properties are generally environmentally impaired.
The above categories of real estate cover the major types of commercial real estate. However, there are plenty of other types of commercial real estate that investors construct and own. Examples of special purpose commercial real estate include self-storage, car washes, theme parks, bowling alleys, marinas, theaters, funeral homes, community centers, nursing homes, and churches.