Commercial real estate is property that is typically leased out for business and retail purposes. Investing in commercial real estate involves the purchase or development of properties that have been designed with the intent of housing commercial tenants. Unlike a residential real estate investor, commercial real estate investors lease out and collect rent from the businesses that occupy space in their properties, rather than from residential tenants. It should also be noted that raw land purchased for the development of commercial property is also included in this definition. Commercial properties can generally be categorized into five main types. Keep reading to learn more about each one.
Before we get into the mechanics of how to invest in commercial real estate, it’s important to understand the various types of commercial properties. This way, you can start thinking about the commercial asset type in which you want to specialize. Commercial properties serve a broad range of purposes, but are generally grouped into the following types:
1. Office , 2. Retail , 3. Industrial , 4. Multifamily , 5. Special Purpose
1. Office
The most common commercial real estate type is office space. These buildings, which can range from single-tenant offices to skyscrapers, are defined by one of three categories: Class A, Class B, or Class C.
Class A commercial real estate properties are typically newly built or extensively renovated buildings located in excellent areas with easy access to major amenities. They are typically managed by professional real estate management companies.
Class B commercial real estate properties are often older buildings that require some type of capital investment. Although they are well-maintained and managed, these properties require minor repairs and upgrades—making them a popular target for investors.
Class C commercial real estate properties are typically used for redevelopment opportunities. They are generally poorly located, require some type of major capital investments to improve out-of-date infrastructure, and their high vacancy rates are much higher than higher-classed buildings.
2. Retail
Another popular commercial real estate type is retail buildings. These properties, which range from strip malls and community retail centers to banks and restaurants, are often located in urban areas. The size of these real estate properties can extend anywhere from 5,000 square feet to 350,000 square feet.
3. Industrial
From warehouses to large manufacturing sites, industrial buildings are typically geared towards manufacturing industries, as they offer spaces with height specifications and docking availability. In addition, these commercial properties generally lend themselves more to investment opportunities.
4. Multifamily
Multifamily properties are comprised of apartment complexes, high-rise condominium units and smaller multifamily units. A property is qualified as multifamily real estate any time it has more than one unit, but can also be considered a commercial property if it has more than four units. Many residential investors get their start in commercial properties by expanding into larger multifamily properties. Residential tenants tend to have shorter lease terms than office and retail tenants, so tenant turnover is a factor that should be considered.
5. Special Purpose
In general, special purpose properties are designed for a specific use, so much so that it would be difficult to repurpose the property for another use. Car washes, self-storage facilities and schools are all examples of special purpose properties. The leisure and tourism industries represent a large proportion of special purpose real estate as well. Common examples within the industry include hotels, airports and sports stadiums, and amusement parks.
Mixed-use development properties are also prevalent in the commercial real estate sector, and continue to grow in demand. These properties represent a mix of different uses, such as residential, retail and even public sector. A mixed-use building could have shopping and services on the first floor with apartment units on the upper floors, for example. Read our guide to mixed-use developments to find out why they have become so popular in recent years.
Owner occupied commercial real estate (OOCRE) is when investors purchase commercial real estate with the intent of utilizing the building for their own purposes. This strategy can be applied to any of the five commercial real estate types discussed above.
Having the option to occupy the commercial real estate in which you invest is just one of the many benefits associated with commercial investing. Keep reading to find out some of the other benefits that may pique your interest.
Often on request Investment Funds and Key Accounts, We conduct careful research in a designated region or country. Often also our agents and partners offer us business that seems interesting to them.
After careful study of our specialists we give our agreement or not.
Architects start plans, details. They are submitted to companies. When the quotes are selected, our specialists contact institutions and large companies to submit long-term rental offers.
When agreements are signed, work can begin. The building is integrated into our real estate portofolio.
Of course this process is very complicated and time consuming. But we are used to it. This is our work since 1999
We invest mainly in Russia and the countries of the former Soviet Union. We also invest in a few European countries in North America. We have projects in Asia but these have not been completed yet.
When Real Estate Investment Funds are registered, they are then open to commercialization.
The minimum amount to hold a commercial building share is € 150,000 or equivalent in USD $ or RUB.
There is no maximum. You can buy as much as you want.
The guaranteed annual income is 7%.
The capital is not guaranteed. Real estate prices can "flare up" and also can decline depending on the circumstances.
But everyone knows that real estate investing is one of the safest investments.
Payment of income: Once a year
Duration of the investment: 15 years
Management fees: 3.2% per annum
Entrance fees: 1.5%
More details? Contact Us
Own shares of our commercial properties and receive a regular, passive income
Income guaranteed for investors: 7% NET p.a.
Old Gloucester Street - LONDON WC1N 3AX - UK. Phone: + 44-203-318-23-35 / 7-977-659-97-97
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