Identifying Commercial Property Types
Let’s get familiar with the different property types.
We know that the residential market exclusively deals with homes. The commercial world, on the other hand, features a variety of properties. From offices to warehouses and multifamily buildings, there’s more to work with in this market.
Below is a list of some of the most common types of commercial properties
There are three loosely grouped classes of office buildings: classes A, B, and C.
Class A buildings typically represent the best types based on location and the facilities they have available. They are usually situated in the most productive areas (think big cities).
Class B buildings may be of high quality from a construction sense and have good facilities, but their location is less desirable than a Type A building (think suburbs).
Class C buildings are the lowest-ranked office buildings and are often in remote areas without desirable facilities. (think rural areas).
Industrial buildings are often located on the outskirts of towns and cities, away from the main areas. There are four main types of industrial properties:
- Heavy Manufacturing
- Bulk Warehouse
- Flex Warehouse
- Light Assembly
These properties can sometimes face a great deal of turnover, but they also get a lot of foot traffic and have the potential to bring in consistent revenue. There are a few different types of retail buildings, including strip malls, strip centers, convenience stores, restaurants, and more.
This property type is similar enough to residential properties, which makes them the ideal shift for those residential brokers who want to start closing commercial.
The key difference here is the number of units. While residential properties may have up to 4 units, multifamily buildings have five or more units. One example is an office in an apartment building that has multiple tenants.
A mixed-use property includes both residential and commercial components. A common example of a mixed-use building is a convenience store that includes an apartment on the second level.
We see more of these properties in the Northeast region of the United States. In most scenarios, the owner of a mixed-use building rents the commercial space to a business owner and the residential portion to a separate tenant.
These include single-family, duplex, and short-term term rentals. You’ll often see these with clients looking to finance investment properties. For example, a borrower who wants to buy and rent out a vacation home outside the city.
Our experts are here to help with commercial real estate financing. Contact our office today to discuss any commercial scenarios you may have.