4 Classes of Commercial Real Estate

Have you recently developed an interest in commercial real estate? Are you considering purchasing, investing in or selling real estate? Maybe you have already taken steps towards your real estate goals, such as researching real estate for sale or contacting a Denver commercial real estate company. Regardless of what stage you are in, you should know more about real estate before you proceed further. So as a brief intro to commercial real estate, here are the four function based classes that commercial real estate can be categorized as.

4 Classes of Commercial Real Estate

1. Industrial

The first class of commercial real estate is industrial. As you can probably guess from its name, this class of commercial real estate is comprised of those buildings used for manufacturing. A factory would be an example of a building that falls under the industrial class of commercial real estate. Garages, warehouses and distribution centers are also classified as industrial commercial real estate. Industrial commercial real estate can further be broken up into the zoning subcategories of heavy, medium or light industry.

2. Retail

The second class of commercial real estate is the retail class. Retail commercial real estate is property utilized solely for business purposes. Specifically, retail commercial real estate consists of buildings used to sell products. Malls, stores and boutiques all fall under the umbrella of retail commercial real estate. Retail commercial real estate is usually leased, with there being four kinds of leases: The four types of leases for retail commercial real estate are gross lease, triple net lease, single net lease and double net lease.

3. Office

Next is the office class of commercial real estate. The office class consists of office buildings. It is further subdivided into the three classes Class A, Class B and Class C. How these buildings are classified varies based on market and location, with Class A buildings being considered the “best” (newest buildings with the best location) and Class C the “worst” (older buildings in less desirable locations). These classifications are used for more than assessing office space quality though. They are also used by investors, tenants and brokers to make and justify market decisions.

4. Multifamily

Finally, the multifamily class is composed of housing, specifically apartments. Like office commercial real estate, multifamily buildings are also placed into classes designated by letters, though they have four classes, Class A, Class B, Class C and Class D, instead of three.

These are the four ways that commercial real estate can be classified based on function. However, commercial real estate is more complex than this. This is only a general overview. So as you continue your real estate journey, make sure to continue to thoroughly research real estate.

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