What Does Commercial Property Mean?

What Does Commercial Property Mean?

Commercial property is a type of real estate that is used for business. It typically refers to buildings that companies use for business, but it can also mean land that is used to generate property or large residential rental properties. When a property is deemed commercial property, that changes how it is taxed, financed, and seen in the eyes of law. Let’s break down commercial property and how it differs from residential property in an investment.

What is Commercial Property?

Commercial property comes in many shapes and sizes. Some examples include grocery stores, offices, malls, and more. To measure business activity in a particular area, the performance of commercial property is analyzed. The performance includes building rates, occupancy rates, and sales prices. In simple terms, if you can make money from leasing or reselling a property, it is a commercial property.

There are generally six different classifications for commercial property:

  • Office
  • Retail
  • Industrial
  • Land
  • Multi-Family
  • Miscellaneous

These classifications can be broken down further based on how many tenants are in a space and the size/structure of the property.

Investing in Commercial Property

Although investing in commercial property usually requires a larger upfront cost than a residential property, the potential return rate is often higher. It is typically seen as a good investment, and typical issues seen with residential investments aren’t as prevalent.

Investing in commercial property means you can utilize the triple net lease, which means that the company leasing takes on the expenses of real estate taxes, building insurance, and maintenance. This advantage is not available when investing in residential real estate.

Commercial property investments also benefit from more straightforward pricing. When investing in residential property, there are additional factors an investor must consider when presenting to potential tenants, such as emotional appeal. It is much simpler for a commercial property investor. With commercial property, you can rely on the income statement and compare it to the capitalization rate of other commercial property nearby.

Another upside to investing in commercial property is the relationship with tenants. Working with business owners rather than renters means that they will be more likely to stick to the terms of a lease and pay rent reliably.

Looking to invest in commercial property in Florida?

Commercial property in Central Florida presents an opportunity for investors to make a trustworthy decision that will maintain worth over a long period of time. If you’re ready to consider investing in commercial real estate, look no further than Bartow McDonald. For the best commercial real estate opportunities, contact Bartow McDonald today!

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