Architecture / office tower

Types of commercial real estate

If you are looking to invest outside high-tech stocks, a potentially very lucrative option is commercial real estate. This means properties that are rented or leased for business activities. As an investor, there are several options from which you can choose. You can stick with one type of commercial property if it suits you, or you can diversify your portfolio. This could potentially help you mitigate issues as the market changes.

Remember that you are ultimately responsible for it when you acquire property, not the renter. Yes, they should take care of the property they are using, but you need to make sure that you protect it. Security systems, maintenance, and regular upkeep are all ways to keep your buildings and your tenants safe. The most important thing you can do is get a commercial property policy for each property you own. This will ensure that your property is protected from theft, vandalism, water damage, natural disasters, and anything else that your policies cover.

Here are the different types of commercial real estate that you may want to invest in.


Office buildings are widespread in every type of municipality. There are massive structures with dozens of floors, and there are the small, one-story buildings that are seen regularly in the suburbs and rural communities. They can be very lucrative for investors because the rents can be high. However, they also cost a lot to get up to speed for tenants, with infrastructure and utility costs. If you invest in a building with the potential for many possible tenants, you have even more opportunities to bring in revenue.

Office buildings are categorized into three different classes. Class A office buildings are at the top of the drawer. They command higher rents and are usually newly renovated. They are primarily found in large urban centers and are in great locations that are close to popular amenities.

Class B buildings tend to have rents that are right at market rates. Sometimes, the locations are the only thing that differentiates Class B buildings from Class A. They tend to not be as central and close to amenities.

Class C buildings are not as desirable as the other classes. They are not newly renovated and are not in great locations. However, they could present a buying opportunity if you think there is potential for the building or the area surrounding it to improve.


Multi-family properties are buildings with more than a single unit and are meant to house people instead of businesses. Much like with office buildings, the more units you have to rent, the more revenue streams you will have. This will help protect you as people come and go. Having an empty unit while the other ones are full will not cause you too much financial stress.

There are many types of multi-family buildings in which you can invest. For example, there are duplexes, apartment buildings, mid-rises, high-rises, and garden apartments. In addition, student housing and senior living are also considered multi-family properties.


For the most part, industrial properties will only have a single tenant, but they can command large rents because of their specialized nature. They often have low overhead costs, and you benefit from long-term leases from companies looking to set up a base of operations. Industrial properties such as warehouses are very much in demand at the moment as more people have products shipped to their homes through eCommerce. If you can invest in a warehouse located along a transit artery, it will be very lucrative.

Industrial properties are not just warehouses; They can also be manufacturing facilities, light assembly, refrigeration, and storage. With housing prices being what they currently are, many Americans have chosen to move into smaller spaces, which necessitates the need for exterior storage. You can invest smartly and make a great profit with this type of property.


Retail commercial property is designed to house businesses that sell goods. These can take many forms. There are single-tenant properties, but more and more, they take the form of larger commercial shopping centers. There are strip malls, which have several storefronts that are not connected otherwise. Then there are shopping malls, which can be power centers or regional malls. They tend to use big box stores as anchors and then have many different specialty stores that provide revenue streams as well. As eCommerce becomes more popular, retail spaces are less in demand. However, with the pandemic restrictions winding down or gone in most areas, they may get more popular in time.

Hotels and hospitality

Hotel and hospitality properties provide services to travelers and those looking for entertainment. Yes, they include hotels, motels, resorts, and other places to stay. However, this type of property also includes entertainment venues such as amusement parks and theaters. They tend to cater to tourists and visitors from out of town. Short-term rentals have become very popular in recent years with the rise of services such as Airbnb and VRBO. Many travelers are looking for comfortable and private accommodations at an affordable price, and many investors provide those options.


Buying land can be risky. If there’s nothing there already, you will have to convince possible renters of its potential. Plus, zoning could change within your jurisdiction, which could lessen the value of the land. However, there are several purposes for land that you could purchase. For example, it might be agricultural land. You can also buy empty plots in an area being developed with commercial property. This can be a good buying opportunity if you already know that it will be surrounded by other properties and will be growing and improving.

As you can see, buying commercial properties can present many different opportunities. As an investor, it’s up to you to find properties that work with your budget and that you think you can manage. You will have to find tenants and provide maintenance and other services for every property you own. However, your investment will be worth it if you buy in the right places and find the right people and businesses to rent them.