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What is Commercial Real Estate?

What is Commercial Real Estate?

Commercial real estate refers to real estate or property that is used for commercial operations, where businesses operate. Companies, shops, restaurants, malls, and other such commercial organizations need space to operate. Commercial real estate provides this space to organizations.

People who buy commercial real estate may construct an office building with space for offices and other businesses. They may give it out on lease or rent to businesses. Alternately, commercial real estate owners may partner with developers to build a large commercial complex or a mall that caters to different kinds of businesses like movie theaters, restaurants, retail outlets, etc.

Investing in commercial estate

Commercial real estate investments can be highly lucrative. However, it calls for huge investment, as more land is needed to construct commercial buildings. Also, the cost of commercial property is higher than that of residential property. Investing in commercial real estate is not as easy as residential real estate.

Purchase of commercial real estate involves many regulations. Local authorities in cities and towns designate certain areas as commercial areas. Commercial real estate ventures can be started only in such areas. This is referred to as zoning in some places. The zones may be further classified as commercial zones, industrial zones, etc.While investing in commercial estate, it is important to understand the local zoning regulations and laws related to commercial property.

Non-compliance with the regulations can lead to problems at the time of closing the sale and getting the property registered. There are more formalities involved in commercial real estate transactions. A lawyer’s help and guidance may be required to complete these transactions. Negotiations for commercial properties are more complicated and may involve several rounds of discussion before the price is finalized and the contract is agreed.

Types of commercial estate

The following are the types of commercial real estate. These include:

1) Offices

The property here is used for building offices that would be used by different types of companies. These may be small complexes or large office complexes housing the offices of many companies and businesses.

2) Industries

This is a special type of commercial real estate, where factories can be commenced. Usually, industries are located outside the city or in areas separated from residential places.

3) Apartments

Apartments are also considered commercial real estate sincethe apartment buildings are constructed not for the personal use of the owner but for sale or rent. Apartments can include small complexes, large residential communities, and high-rise apartments.

4) Retail

This type of property is where retailers set up stores and outlets to sell a variety of products. The retail or shopping complexes may include different types of stores. Large department stores and supermarkets are examples of retail stores. Malls are also an example of retail property.

5) Hotels

Hotels offer accommodation for guests. Apart from rooms, condos, and suites many hotels have amenities like restaurants, spas, casinos, etc. Resorts are also a type of hotel that are larger in size.

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