A Look at the Pros of Owning Various Commercial Property Types

Looking to spend money on commercial real estate, but don’t know which property type to consider? Here is a comprehensive guide on the five most typical types of commercial properties or retail space for sale or rent.

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Homeowners dwell in their properties about eight years typically. The tenant must pay the number of hire along with several different expenses that are usually borne by the landlord in a normal residential lease contract. Therefore, the rent is also known as net-net-net rent or NNN. Know Commercial Leasing Once you decide on a suitable Florida Commercial Real Estate property that is suitable for your enterprise, reviewing and knowing everything in the industrial lease terms is necessary. Contemplating the absence of commerce, a person would think that business space local rental would be lower in the region.

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1) Multifamily (Apartment Complexes) – Multifamily refers to apartment buildings of all sizes. It really is categorized into garden rentals, walk-up rentals, mid-rise rentals, high-rise rentals, and special-purpose property.

Garden apartments are low-rise apartments with typically significantly less than 3 reviews, built-in a garden-like environment. Walk-up apartments are 4-6 storyline apartments without an elevator. Mid-rise flats are 4-8 storyline apartments rentals with an elevator. High-rise is 9+ reviews with at least one elevator. The special-purpose cover is a multifamily property that targets a population portion, which includes learner housing, senior property, subsidized real estate, etc.

Positives of Multifamily Properties:

  • Easy to get into with smaller properties and gradually transition to larger properties
  • Tax benefits
  • Use rents in place for financing

Cons of Multifamily Properties:

  • 24/7 tenant management
  • Pro-tenant legislation
  • Rent control

2) Industrial – Industrial is normally used for producing, creation, or storing products. It includes warehouses, garages, syndication centers, etc. It really is oftentimes separated into heavy processing, light set up, flex warehouse, and a large warehouse, with regards to the size and use of the property.

Heavy processing oftentimes heavily utilizes machinery and usually takes a significant amount of reconstruction before renting to another tenant. The light assemblage includes a storage area, product assemblage, and office space, which is better to reconfigure than heavy processing. Flex warehouse normally includes both professional and office space, making it an easily convertible space. Large warehouse is massive properties, typically 50,000-1,000,000 sq ft space, usually used for local syndication of products.

Advantages of Industrial Properties:

  • Deal with sole tenant
  • Long-term and secure leases
  • Relatively small original investments

Cons of Industrial Properties:

  • Area specialization, so that it is harder to find new occupier
  • Hefty and intensive reconfiguration expenses
  • Higher duty rates, depending on area

3) Office Complexes – This category includes single-tenant properties, small professional office properties, downtown skyscrapers, and everything in between.

Office complexes are either Central Business District (CBD), which is in the center of a city, or suburban office properties. A couple of three categories: Category A, Course B, or Category C, which depends upon the grade of building and desirability of the positioning of the office.

Pros of Office Buildings:

  • Less turnover
  • Longer rent terms

Cons of Office Buildings:

  • Less frequency to raise rents
  • Emphasis on parking
  • Expensive financing options

4) Retail/Restaurant – Retail includes strip centers, community retail centers, electricity centers, regional malls, and out parcels.

Strip centers are small retail properties which may offer an anchor tenant, which really is a greater, more well-known tenant that will attract small retail tenants. Community retail centers are between 150,000-350,000 square legs with multiple anchors, usually food markets and medication stores. Electricity centers have several smaller shops with a few pack suppliers such as Wal-Mart, Lowes, Staples, Best Buy, etc. occupying between 30,000-200,000 square legs, including several out parcels. Regional malls are between 400,000-2,000,000 square legs with a whole lot of anchor tenants. Out parcel island reserve for specific tenants such as fast-food restaurants or banks.

Positives of Retail/Restaurant Properties:

  • Security and profitability of a complete Triple World wide web (NNN) lease
  • Less turnover
  • Less tenant management

Cons of Retail/Restaurant Properties:

  • Less frequency to raise rents
  • Reliant on tenant performance
  • Location and feet traffic is really important
  • Focus on parking
  • Visual upkeep

5) Land – Land is rather self-explanatory. It is categorized as Greenfield land, Infill land, and Brownfield land.

Greenfield lands are underdeveloped land such as farms and pastures. Infill land is vacant land positioned in cities which may have already been developed. Brownfield lands are usually environmentally impaired land that was previously used for other commercial or commercial use. The land is designed for re-use.

Positives of Land:

  • Tax benefits
  • Less expensive
  • More rental opportunities (depend on location)

Cons of Land:

  • No immediate income from tenants
  • Few financing options
  • Requires ground-up development

These are the most common types of commercial property types. There are several others that contain not been discussed above such as hotels, funeral homes, assisted living facilities, theaters, etc, that are special-purpose type properties.

News Reporter
DIY type of gal with a lot of experiences in architecture, crafts and basic house renovations