Commercial real estate (CRE) refers to properties that are used exclusively for business-related purposes or to provide a workspace rather than a living space, which would instead constitute residential real estate. Most often, commercial real estate is leased to tenants to conduct income-generating activities. This broad category of real estate can include everything from a single storefront to a huge shopping center. Commercial real estate comes in a variety of forms. It can be anything from an office building to a residential duplex, or even a restaurant, coffee shop, or warehouse. Individuals, companies, and corporate interests can make money from commercial real estate by leasing it out, or holding it and reselling it.
There are four main classes of commercial real estate:
Each of these categories may also be further classified. For instance, there are different types of retail real estate such as hotels and resorts, strip malls, restaurants, and healthcare facilities. Commercial real estate differs from residential real estate because it has the potential to generate profit for the property owner through capital gain or rental income. Publicly traded real estate investment trusts (REITs) are a feasible way for individuals to indirectly invest in commercial real estate.
There are several reasons why many people consider now to be a good time to invest in commercial real estate. One of the primary reasons is that interest rates are currently low, making it easier to obtain financing for commercial real estate investments.
Additionally, the demand for commercial real estate is high, particularly in urban areas, which can lead to higher rental income and property appreciation.
Another reason is that commercial real estate has historically been a good hedge against inflation. Inflation can erode the value of money over time, but commercial real estate has the potential to appreciate in value over time, which can help offset the effects of inflation.
However, it’s important to note that investing in commercial real estate can be risky and requires careful consideration. It’s important to do your research and understand the market before making any investment decisions.
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