Commercial real estate (also shortened to "CRE") refers to properties that are used for business purposes rather than residential living.
For investors these properties are intended to generate profit, either from rental income or from capital
gain upon resale.
For tenants these properties are intended to accommodate staff and provide a place where the public can interact with their product or service. These tenants / businesses generate profit and then pay rent to the investor landlord.
For owner occupiers commercial real estate can have multiple benefits, as the tenant they are able to control a major asset which accommodates their staff and provides a place where the public can interact with their product or service. And as an investor they can then hold a long term asset to support their business.
CRE can encompass a wide range of property types, including:
1. Office:
The office asset class ranges from high-rise office towers to suburban office buildings and smaller strata office.
2. Retail: The retail asset class provides properties designed for businesses that sell goods or services directly to consumers, such as shopping centres, supermarkets, strip retail, or standalone stores.
3. Industrial: The industrial asset class accommodates industrial uses such as production, manufacturing, assembly, warehousing, distribution and storage.
4. Medical: The medical asset class provides accommodation for healthcare uses such as medical centres, day surgeries, and hospitals.
5. Hospitality: The hospitality asset class includes all real estate that accommodates hospitality type uses such as hotels, motels, and resorts are also considered commercial real estate because they are operated as businesses.
6. Many others: There are many unique asset classes that don't fit into the standard categories or have become their own category, such as child care centres, retirement living, residential aged care, self-storage facilities, data centres and build to rent.
Commercial real estate has many differences to residential real estate due to factors like tenant leases, tenant demand, property management, and maintenance needs.
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