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The Most Common Types of Commercial Real Estate

Published on September 30th, 2018

Given the exciting market for commercial real estate in Chicago, it’s interesting to learn about the industry’s basic components. First and foremost, commercial real estate is the type of real estate that involves properties used for commercial objectives. Diving deeper, commercial property is any piece of land or building that is used with the intention of making a profit. This can be through rental income or capital gained from a business using the specified property. There are numerous property types, and we elaborate on a few of them below.

Office

Office buildings, perhaps the most common type of commercial real estate property, are broadly categorized into three classes: Class A, Class, B, and Class C. As you might have guessed, Class A buildings represent the newest and highest quality buildings in their market. This distinction is based on location, building facilities, construction quality, and infrastructure. As a result of such qualities, these buildings command the highest rents. Class B buildings are still good quality but are generally slightly older and in need of some renovation to return to their Class A glory. The lowest office building classification, Class C, includes older, outdated buildings in less desirable locations. They often need extensive renovation, sometimes at the infrastructure level.

Retail

Retail buildings house businesses that are based on the buying and selling of material goods and services. There are a few types of retail buildings, including strip centers, community retail centers, regional malls, and out parcel. Out parcels are slightly different, as they are pieces of undeveloped land near retail stores. They’re intended to be used for the construction of properties like banks or fast food restaurants

Multifamily

A multifamily building is one that is built to act as a place of residence for more than one family. Multifamily commercial real estate buildings include apartments, condominiums, and townhomes. Just as with office buildings, they are broken apart into the same three classes. Subsequently, commercial apartments are then subdivided into four main categories. These include high-rise apartments, mid-rise apartments, garden apartments, and walk-up apartments.

Commercial Real Estate Chicago

As with all big cities, commercial real estate in Chicago has opportunities within all of these property types, and more. If you need help navigating the market, or more information on a certain investment you have your eye on, contact Frontline Real Estate Partners today. We can be your guide to commercial real estate in Chicago.

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