Understanding Commercial Real Estate: Types and Categories

The commercial real estate industry encompasses a handful of different types of commercial real estate, ranging from office to retail and so much more. If you’re curious about what is considered commercial property, keep reading to find out the most common categories within the commercial realm.

From Multifamily to Retail: A Closer Look at Commercial Properties

You may be familiar with the basic types of commercial real estate, like office, retail, and industrial. But in reality, these are just a portion of what falls under commercial real estate spaces. Let’s take a look at the most common categories of commercial real estate.

Office

Office buildings can range from single story to high-rise buildings and can have one tenant or multiple tenants. These include business tenants, medical office tenants, or dental professionals.

Executive suites and coworking spaces also fall into this category. Office buildings are further broken down into commercial property grades. These include Class A, Class B, or Class C properties.

• Class A buildings are the newest and highest quality. They offer the best amenities, are in the most desirable locations, and have the highest rents. Within Class A, office space can even be separated into A+, A, and A-.
• Class B buildings are a little older. These may be due for some renovations, may be in a nice location, and typically have little to no amenities.
• Class C office properties are the oldest, the least maintained, are in the least desirable locations, and will have the cheapest rents in the market.

Industrial

Industrial properties have several categories that are broken down based on their specific use.

• Flex: Flex industrial buildings include a mix of office and warehouse space. They typically have a dock high or drive-in door.
• Heavy Manufacturing: This term refers to a special use property that is customized with heavy-duty machinery for a specific end user.
• Light Assembly: These types of industrial facilities are customized with machinery (that is smaller than a heavy manufacturer) for a specific end user.
• Warehouse: Warehouses are very large industrial spaces often used for storage or as distribution centers. The layout tends to be open space with high ceilings. They’re typically located near freeways/highways.
• IOS: Industrial outdoor storage (IOS) properties have a small building with a large outdoor area. These are typically used for companies that can store equipment, supplies, or vehicles outdoors.

Retail

Retail properties come in many forms and are broken down into subcategories of retail space. Although they can be broken down further, these are the most common types of retail properties:

• Mall: An enclosed shopping center with tenants that include department stores, clothing retailers, a food court, full-service restaurants, and maybe a movie theater. Malls can be broken down into regional malls—which are typically large, enclosed shopping areas with multiple stores—or strip malls—which are a row of stores that share a parking lot and each have their own outdoor entrances.
• Neighborhood or Community Center: These can also be called a plaza or strip mall and can vary in size. These retail centers are most often clustered around anchor tenants, such as a pharmacy or grocery store. Small retail stores and restaurants fill out the rest of the space.
• Power Center: These outdoor shopping centers are home to multiple big box stores or grocery stores like Walmart, Target, Best Buy, or Home Depot. They usually include smaller retailers and restaurants surrounded by a shared parking lot.

Multifamily

Multi-family residential buildings include apartment buildings, condos, and townhomes.

Generally, any residential properties that are larger than a fourplex are considered a commercial property. This is because large apartment complexes or other residential real estate properties with more than five units are used for generating a profit, as opposed to small residential property buildings which are mainly used only for housing.

Mixed Use

Mixed-use properties can be a combination of any of the types of properties mentioned above. The most common form is retail/restaurant on the first floor with office and/or residential in the space above. But really, it could be a combo of just about anything.

Other examples within this commercial property type might include:

• Live-work spaces. An example of a live-work space could be a small business, such as an art studio, that has living quarters attached.
• Multi-use commercial buildings. This could be a large commercial building that combines restaurants, retail spaces, and apartments.
• Converted spaces. ​An example might be a converted warehouse that holds a restaurant on the ground floor and apartment lofts on the upper floor.
• Parking structures. This could be a parking structure with retail on the ground floor and a multi-floor garage above it.

Special Use

There are some properties that just don’t fit into any of the above property types. This catch-all category—also referred to as special purpose properties—includes self-storage, hotels, amusement parks, golf courses, hospitals, and anything else not defined in any of the above categories.

These commercial property types generally have one main intended use and are difficult to convert into different commercial real estate classifications for other uses.

Land

This is undeveloped and raw land to be used for future development. It could include agricultural land or simply vacant land.

City zoning codes will determine the type of commercial property that can be built on undeveloped land.

Charlotte’s Thriving Commercial Real Estate Market

The metro Charlotte area brimming with opportunities for commercial spaces within all commercial real estate types. From the prime office, retail, and restaurant opportunities in the central business district to spacious flex commercial spaces next to the highway, and even to IOS developments with large parking lots, Charlotte has something for everyone.

At Regent CRE, we understand the benefits and risks of each Charlotte neighborhood and use top-notch market research tools to assess the best areas for each of the commercial building types as well as specific business needs.

Find Your Next Charlotte Property With Regent CRE

We hope this helps shed some light on the vast range of commercial property definitions. Every tenant is unique and has specific needs—a local tenant rep broker can help you determine the best space that will meet your needs.

Brian Smith, SIOR, CCIM, and lead broker at Regent Commercial Real Estate, has over 10 years of experience in the Charlotte metro area.

Ready to start your property search? Contact us today.