Commercial real estate (CRE) is property used for the purpose of commerce or revenue generation.
Whether you’re interested in passive real estate investing or active real estate investing, there are multiple types of commercial real estate you should know about.
At the School of Commercial Real Estate Investing, we categorize it into seven types. Each type of commercial real estate has a distinct definition and purpose.
The 7 Types of Commercial Real Estate Property
1. Multifamily Real Estate
Commercial multifamily real estate is defined as a residential property with five or more units.
Real estate that contains one to four units—such as single-family homes, condos, townhomes, duplexes, triplexes, and fourplexes—is considered residential real estate. Since duplexes, triplexes, and fourplexes can house multiple families but are classified as residential real estate, you will often hear them referred to as “small multifamily.”
2. Office Space
Office space real estate is defined as any building that consists of offices for businesses.
Commercial office space is typically categorized into two types of office space: urban or suburban.
Urban office buildings are located in cities and include skyscrapers and high-rise properties. Suburban office buildings are typically smaller in their height and can be grouped into developments called office parks.
3. Industrial
Industrial real estate is used by businesses to develop, manufacture, store, or distribute goods and products.
Industrial real estate is typically comprised of a low-rise building with ample unfinished space inside for large equipment or storage capacity.
4. Retail
Retail real estate is used by businesses to sell products and services to consumers.
Retail real estate tenants include a wide variety of businesses such as clothing stores, pharmacies, banks, restaurants, and service providers.
Retail real estate is typically located in areas that are easy for consumers to access such as a shopping center, strip mall, or downtown pedestrian area.
5. Hospitality
Hospitality real estate is used to serve travelers—both long-term and short-term—for business and pleasure.
Hospitality real estate includes a wide variety of properties ranging from hotels with casinos in Las Vegas to boutique motels.
6. Special Purpose
Special purpose real estate includes properties that don’t fall into the other five types of properties and are usually more challenging to value because there usually aren’t many (if any) comparable properties in the area.
Special purpose real estate includes theaters, schools, amusement parks, churches, zoos, and parking lots.
7. Land
Commercial land is any plot of land that is—or will be—used for commercial purposes to generate a profit.
Land can be used in its raw form for agricultural and farming businesses, or it can be developed to house other types of commercial properties such as industrial, multifamily, hospitality, or retail.
Mixed-Use Real Estate
The seven types of commercial real estate can be combined into what’s called “mixed-use” property.
Mixed-use property is defined as a property that contains more than one type of commercial real estate.
For example, a mixed-use property can have retail on the main level and multifamily above or special use on the main level and offices above.
The types of real estate used in a mixed-use property are often complementary and are strategically selected to not interfere with one another.
The “What is Commercial Real Estate?” Summary
Commercial real estate (CRE) is property used for the purpose of commerce or revenue generation.
There are seven types of commercial real estate, and each type serves a unique purpose.
When you combine different types of commercial properties into one, you create a mixed-use property.
Learn more by reading real estate investing for beginners.
