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Commercial Property

What is Commercial Real Estate?

Commercial real estate, or CRE as it is often more commonly known, ‘is property used exclusively for business-related purposes or to provide a work space rather than a living space, which would instead constitute residential real estate.’ It is an extremely broad term however, including property ranging from shopping centres to office blocks to hotels.

Although some businesses own the units that they occupy for their business practices, most commercial real estate is owned by an investor, who then rents out units to other companies and individuals. Commercial leases are usually calculated by annual rental dollars per square foot, which is very much opposed to residential real estate which operates via an annual or monthly sum. In addition to this, differences between the two differ in the way that the most common tenancy lease for a commercial property is five to ten years, as opposed to the average residential property, which is one to two years.

Commercial real estate can be categorised into multiple different types, which include:

Office space, which is often characterised within three subtypes:

Class C buildings involve those which are over 20 years old and in need of maintenance. Rents are below the average for the area and are therefore for the buyer that is on a budget. They are also often located in areas that are less attractive for the buyer.

Class B buildings are also likely to be in need of maintenance, but are in better condition and not as old as buildings in the Class C category. They are usually in somewhat of a good condition and therefore attract a wide range of buyers. These buildings are often good targets for those investors who are interested in a restoration project.

Class A buildings are those which are the most attractive in all terms, including the age, build quality and area.

In addition to office space, other commercial properties also include:


Industrial properties include factories and warehouses and are often low rise and can be grouped into industrial parks, which are a collection of factories in the same area together. They are usually on the edge of urban areas.


These are usually in more expensive areas and include shops and shopping centres.


This includes anything from cinemas, to restaurants and bars.

What makes investing in Commercial Real Estate different?

Commercial Real Estate is a more dynamic and more potentially advantageous market than residential real estate is. However, it is also more volatile and a less secure market with a higher upfront cost.

For the landlord, the downside of owning commercial real estate is that they are not able to live in the building and therefore save on costs there. However, working with business owners allows for more reliable and stable payment, with a B2B instead of a B2C relationship there is usually no worry about getting paid.

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