The term commercial property (also called commercial real estate, investment or income property) refers to buildings or land intended to generate a profit, either from capital gain or rental income. Commercial property includes office buildings, medical centers, hotels, malls, retail stores, farmland, multifamily housing buildings, warehouses, and garages. In many states, residential property containing more than a certain number of units qualifies as a commercial property for borrowing and tax purposes.
Types of commercial property
Commercial real estate is commonly divided into five categories:
- Office Buildings – This category includes single-tenant properties, small professional office buildings, downtown skyscrapers, and everything in between.
- Retail/Restaurant – This category includes pad sites on highway frontages, single-tenant retail buildings, small neighborhood shopping centers, larger centers with grocery store anchor tenants, "power centers" with large anchor stores such as Best Buy, PetSmart, OfficeMax, and so on even regional and outlet malls.
- Multifamily – This category includes apartment complexes or high-rise apartment buildings. Generally, anything larger than a fourplex is considered commercial real estate.
- Land – This category includes investment properties on undeveloped, raw, rural land in the path of future development. Or, infill land with an urban area, pad sites, and more.
- Miscellaneous – This catch-all category would include any other nonresidential properties such as hotel, hospitality, medical, and self-storage developments, as well as many more.