Investing in commercial real estate is a riskier venture than investing in residential property, but it offers higher returns. Those who wish to take the direct investment route must have deep-pocket cash and considerable market knowledge.
Others may want to diversify their portfolio with commercial properties owned by REITs. REIT ETFs work like mutual funds, and can offer diversified exposure to commercial real estate without the need for large sums of money to buy individual buildings. Contact Las Vegas Commercial Real Estate now!
Office space is any area within a building dedicated to office-related activities. These spaces can be in a single- or multi-tenant structure and are typically leased on a gross (or all-inclusive) basis. Office properties can range in class from trophy properties to a more modest tenancy, with classes based on a variety of factors, including office amenities, location and age of the property.
Generally speaking, Class A commercial office space is the highest quality available. These properties are usually newer buildings located in sought-after areas and may feature top-of-the-line infrastructure, eco-friendly upgrades and other upscale features. They also tend to come with hefty price tags, reflecting the premium value of the space.
Other classes of commercial office space include Class B and Class C. While there are no hard-and-fast rules about how a building can be classified, these classifications generally reflect the amount of money you can expect to spend on the property. Class A buildings are the most prestigious, while class B buildings are more functional but still offer a good level of amenities. Class C space is often more bare-bones, and while it is functional it lacks the amenities of higher class buildings.
Unlike residential real estate, most businesses rent their office spaces rather than buying them outright. This allows them to get the best possible location without having to commit a large chunk of their assets upfront. Nevertheless, there are some situations in which it makes more sense to buy than lease, such as when a business anticipates significant growth and wants to establish a long-term presence in the same area or when they need a lot of storage space for inventory.
Retail Space
Retail space in commercial real estate is any property used to sell consumer goods and services. This can include everything from a standalone coffee shop to an entire mall full of big box retailers. The most common retail properties are shopping centers, which include a variety of retailers in one location. These locations are typically located near other, larger “anchor businesses,” like grocery stores or department stores, in order to draw more consumers into the area and help their smaller tenants gain more exposure.
Retail spaces can also be found in individual buildings, such as strip malls or community retail centers. They may be single-tenant structures or multi-tenant facilities. In general, retail spaces are ideal for businesses that rely on a lot of foot traffic, such as clothing stores, convenience shops, and even some restaurants. The best location options are those with good visibility and easy access to major roads and thoroughfares.
Commercial property investment is a big opportunity for investors seeking income-generating assets. Whether you’re considering a direct investment or investing in a REIT, having a basic understanding of the industry is critical. The more you know, the easier it will be to understand how different kinds of commercial space function and what they can offer to investors or business owners.
There are many benefits to investing in commercial property, from its higher prices and shorter lease terms to its diversified tenant base and steady cash flow. Those interested in pursuing this type of investment should consult with a CRE broker to get more information about available opportunities. These professionals can help you find and evaluate the right property for your needs. They can also help you avoid mistakes that might lead to expensive, time-consuming missteps in your deal-making process.
Industrial Space
Despite its relatively obscure profile in the commercial real estate market, industrial space plays an essential role in supporting the broader economy. Typically speaking, manufacturing, warehousing and distribution are considered industrial property, and they are one of the four major commercial real estate “buckets” (along with office, multifamily and retail).
When it comes to finding industrial space for sale or lease, companies looking to expand should consider a wide range of factors, including the type of facility they need. For instance, warehouses are primarily used for storage and shipping of goods, while manufacturing buildings are places where products are created or assembled.
In addition, the location of industrial space is a significant factor, with businesses seeking locations with easy access to highways and other transportation hubs. Likewise, a good amount of parking is necessary to support truck traffic and employee vehicle use.
Another important consideration is zoning, which can have a substantial impact on the property’s potential. For example, a warehouse that requires special equipment may need to be located in an area with appropriate zoning and building codes.
There are many specialized types of industrial spaces, too. Some examples include research and development, data centers and showrooms. In general, these properties are designed to accommodate different uses and typically offer more flexibility than other industrial spaces. For instance, a research and development space may combine office space with testing areas and light manufacturing spaces. A data center, on the other hand, is more focused on network connectivity and security.
Lastly, a showroom space is generally designed for display and sales of goods. Typically, showrooms feature a combination of offices and warehouse spaces with client-facing showroom areas at the front of the building.
Mixed-Use Space
This type of commercial real estate blends office, retail, and residential space within a single complex or building. It’s becoming increasingly popular as businesses seek out locations that cater to a variety of needs in one convenient location. The spaces can be whole buildings or rooms within a building, like an apartment over a storefront in an old East Coast city.
The scalability of mixed-use space appeals to many small business owners. As a result, the number of small businesses in urban areas continues to rise. Moreover, many consumers prefer to shop and dine at properties that offer a blend of living and working environments.
These trends have fueled the popularity of commercial mixed-use properties, particularly in downtown neighborhoods. As a result, they are a great investment choice for investors seeking diversification in their portfolios. This type of property also provides a diversified income stream that allows owners to operate their businesses with relative stability and consistency.
The benefits of commercial mixed-use space are numerous for both the tenants and investors alike. For tenants, the convenience of having residential and commercial space in one place helps them to reduce their commutes, which can help cut down on fuel consumption. In addition, the synergy between different uses creates a dynamic environment where shoppers and residents can interact with each other in an enjoyable manner.
For retailers, the advantage of locating in a mixed-use space is that they have a built-in customer base that is already established. This is especially useful given the increasing demand for online shopping and the COVID-19 outbreak, which has changed consumer habits. In addition, the visibility and foot traffic of a mixed-use space can help businesses thrive in a highly competitive industry.
Multi-Family Space
While most people are familiar with commercial real estate as office buildings, retail properties and the like, many don’t realize that multi-family space also falls under this category. This includes everything from apartments to seniors housing and student housing. Multi-family spaces typically include anywhere from two to four separate units that are located under one roof. They can even be stacked on top of each other (think duplexes or triplexes).
Apartments are probably the most popular form of multi-family space, and are often the first type to come to mind when someone mentions commercial real estate. They are a great option for anyone looking to buy a home but doesn’t want to commit to a single-family house with its own backyard and front yard. They are also a good choice for investors who want to earn passive income through rent payments.
There are three major property classes for multifamily spaces: Class A, Class B and Class C. Class A multi-family properties tend to be newer with more amenities, are located in desirable locations and cater to higher credit rated tenants. Class B and Class C properties are usually older, less well located and more affordable, but still have good potential for returns.
Investors interested in buying a multi-family property will need to be comfortable with being a landlord, and understand that this type of investment is not for everyone. It requires a lot of time and patience, as you will need to maintain the property while finding and managing tenants. It is a good idea to seek the help of a professional property management company if you are not sure you are ready to handle all that responsibility.