Fully understanding the ins and outs of the many different types of commercial real estate is no easy task. Luckily, our experienced team at Frontline Real Estate is fully prepared to help you with any uncertainties you may have. When it comes to investing in Chicago commercial real estate for lease, there are eight main classifications of properties: multifamily, office, industrial, retail, hotels, mixed-use, land, and special purpose. Here’s a quick breakdown of these different types.
1. Multifamily Properties
This classification of property is a sort of go-between for residential and commercial real estate. These types of properties often serve a general purpose as a commercial real estate investment, but can primarily serve as a residency as well. Multifamily properties can be anything from duplexes to garden apartments, to high-rise apartments with 100+ units.
Office buildings are designated as low, mid, or high rise based on their size, similar to multifamily properties. They tend to be loosely grouped into Class A, Class B, or Class C categories based on factors such as construction quality, health of the surrounding market, and more. Class A office buildings have the highest scores in terms of quality, Class B office buildings may have some positive attributes, and some less-desirable attributes, and Class C, as you can guess, might have a combination of less-desirable characteristics.
Beyond the class of the office building based on quality and location, there is also the classification of office buildings between Central Business District (CBD) or Suburban Office Buildings. This is based on a number of factors, but primarily it depends whether they are considered in a busy business district or outside of the city center.
Industrial commercial real estate properties have a high number of different usage possibilities. These types of properties can include anything from heavy manufacturing to bulk warehouses. Due to the vast amount of projects that occur in industrial properties, they vary quite a bit in size. There are four classifications of this type of commercial real estate which are based on their usage: heavy manufacturing, light assembly, flex warehouse, and bulk warehouse.
Much of the Chicago commercial real estate for lease on our website is retail. These types of properties involve the buying and selling of goods and can be classified into five categories: strip/shopping centers, community retail centers, power centers, regional malls, and out parcels. These different categories tend to be based on the property layout, neighboring tenants, size, and more.
There are three hotel types when it comes to commercial real estate properties, full-service hotels, limited-service hotels, and extended stay hotels. Hotels located in central business districts or high-traffic tourist areas such as the Ritz Carlton or Marriott are classified as full-service hotels. Those that are smaller in size and lack amenities like room service, on-site restaurants, and convention space are considered to be limited-service. Finally, extended stay hotels are designed for people looking to stay a week or more and include larger rooms, or kitchens.
Many of us are familiar with mixed-use properties, as they have become very present in many communities throughout the past few decades. This type of Chicago commercial real estate for lease can be a combination of any of the above types of commercial real estate. A very commonly-found form of mixed-use properties is retail or restaurant on the bottom level, with offices or residential space on the upper levels.
This category of commercial real estate can be broken down into greenfield land, infill land, and brownfield land. Greenfield land, also referred to as agricultural land, typically refers to undeveloped land, such as pastures, orchards, animal farms, ranches, and more. Infill land is located in a developed or developing area but remains vacant. Finally, Brownfield land has had previous commercial uses and is often therefore environmentally impaired.
Finally, the “Special Purpose” category of commercial real estate essentially covers all types of commercial property that would fall into a “Miscellaneous” category. There are many properties that do not fall directly under the umbrella of the 7 major categories described above. Some examples of Special-Purpose properties include zoos, theaters, parking lots, and museums.
Contact Frontline Real Estate Partners
While it’s not necessary for all investors to fully understand the many ins and outs of each classification of Chicago commercial real estate for lease, having a general knowledge of the different types is a great place to start. At Frontline Real Estate Partners, we are well-versed and experienced in the many different facets of real estate investing. Schedule a consultation to get started today!