Commercial Property Types

If you find yourself in any moment in need of any commercial property business, we recommend learning few things about the types of sectors that make up the commercial property. These are the properties which have potential to generate profit through rental income or capital gain.

Office

OfficeIn the UK office space is classified by the quality of the construction into Grades A, B or C, depending on the quality and facilities of the office property. The location is generally categorized into two types : urban and suburban.

Grade A buildings, such as the skyscraper office spaces in the City of London, are considered highly desirable; these are the most prestigious buildings with exceptional accessibility, state of the art systems and higher rents than older buildings or those with fewer facilities.

Grade B office buildings have finishes are fair to good; facilities and systems that are adequate and are usually rented out at lower rate than Grade A office space in the same location.

And finally, Grade C commercial office properties are considered less desirable because of their lack of facilities or age. These spaces are required by tenants that are in need of functional space with rents that are below average for the area. These properties often have longer-term leases that can decrease current market lease rates.

Retail

This is a complicated sector dictated by many metrics, including concept, size, type of trading area and whether or not the property can secure big name anchor tenants. Retail spaces can be multi-tenanted (often with an anchor) or single-use standalone buildings. There is no limitations on what type of business can rent a retail space. They are available to any company that finds them suitable, from insurance offices, medical offices, dance or fitness studios, restaurants, bars and so on. Multi-purpose space always presents a great investment opportunity. Retail leases may contain a base rent plus a percentage rent based on a tenant’s sales figures and they often have long terms.

Industrial

Industrial parks and warehousing properties are usually located outside of urban areas. These locations may include anything from various types of large manufacturing plants to small warehouses located beside major transportation routes. They are very multi-functional as they include a large amount of storage and usually have small offices. Leases tend to have long terms so after a while lease rates may fall behind the market.

Multifamily and apartment buildings

Multifamily and apartment buildingsAs most common property type because they offer a wide range of options. It covers all types of residential property types outside of single-family. They have classified also into class A, B and C depending on the structure, size, and location. Leases are usually typically short-term and are quickly adjustable by market conditions. These are considered as one of the more defensive investment types.

Evaluation of these various types of commercial properties should be significantly different. Depending on what type is in the discussion, influences of market supplying, lease terms, tenant credits and economic considerations is significantly different. So to reduce overall investment risk, a prudent investor must consider spreading across several of the major property types.