The Different Types of Commercial Real Estate: Part II

Last Updated on January 13, 2023

In a previous blog, I discussed four of the eight types of commercial real estate: office, industrial, flex, and retail. Today we’ll go into the other four basic groups: mixed use, hotel, multifamily, and land.

Multifamily

All residential properties excluding single family homes fall into this category. It can be further broken down into subgroups. The most common are:

  • Duplexes and triplexes are two-and three-unit homes. Many times, individual investors will live in one of the units and rent out the others.
  • Garden apartments are low rise apartment buildings typically found in the suburbs.
  • Mid-rise apartments are usually found in urban areas and are five to ten stories high.
  • High-rise apartments are at least ten stories high, have elevators, and typically have more than 100 units.
  • Walk-ups are in buildings with three to six floors and, as the name implies, don’t have an elevator.
  • Student housing are rental buildings that are specifically for college students, built close to colleges.
  • Senior and assisted living facilities are rental units that are solely for people of a minimum age, usually at least 55.

Hotels and Hospitality

This category consists of buildings for long- and short-term travelers for both business and leisure purposes.

The most common in this asset class are:

  • Resorts are usually near a beach or amusement center.
  • Extended stay properties are usually for longer term rentals. The unit typically will contain a kitchen.
  • Full service is a type of hotel with room service as well as a restaurant.
  • Limited service is a type of hotel that does not offer room service, restaurants, or other amenities.

Mixed Use

These types of buildings have more than one specific use. They could have retail on the first floor and office space or apartments on the upper floors.

Land

Commercial land, or land where the building on it has no commercial value, can be most easily broken down into four main categories:

  • Undeveloped property is essentially raw land. It may or may not have services like gas or electricity. Usually, it has limitations on the type of use for the property depending on the various town building codes.
  • Redevelopment sites often have an obsolete building on the property and the purchaser would be buying it to erect a new building on the land.
  • Agricultural land includes land with farms and ranches.
  • Brownfields is a generic term for land, sometimes with buildings, that have environmental issues.

One category which doesn’t fit into any of the others is special use. Schools, churches, sports fields, and the like would be in this category.

This is a very broad overview of the different types of commercial real estate available for investment. At McBride, we would welcome the opportunity to discuss any of the different classifications with you and assist you in gaining knowledge in this industry.

Should you have any questions, please feel free to call me directly at 201-848-6107.

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