Commercial Real Estate

Market Valuation

$20.7 trillion (Estimated total value of the global commercial real estate asset class)

Investment Vehicles

Direct ownership, Publicly traded REITs, and ETFs

Lease Characteristics

Generally longer terms compared to residential leases, offering stable cash flows

Primary Economic Stressor

Persistently high interest rates

Primary Property Categories

Office space, Industrial use, Multifamily rentals, and Retail

Commercial real estate (CRE) encompasses properties used for business activities rather than residential purposes. It includes a diverse range of properties, from single retail stores to expansive industrial complexes, often leased to tenants for income through rent or business operations. Leasing terms in CRE can significantly differ from residential agreements, offering unique investment opportunities and challenges. [...] Commercial real estate offers investors the chance for steady rental income and capital appreciation. This type of investment typically demands more capital than residential properties but can yield significant returns. For those without the means or expertise for direct investments, publicly traded REITs present an accessible alternative. The commercial real estate sector, encompassing everything from industrial sites to office spaces, provides opportunities for profit through rentals and [...] - Commercial real estate (CRE) is used for business functions, generating income through capital appreciation and rental income. The four primary categories of CRE are office space, industrial use, multifamily rentals, and retail. CRE leases generally have longer terms compared to residential leases, offering more stable cash flows. Investing in CRE can be done directly, by owning property, or indirectly, through REITs and ETFs.

As an asset class, commercial real estate encompasses any property that’s specifically intended for business activities, with the goal of appreciation and generating rental income. The real estate asset class includes numerous property types, offering investors with unique strategies various options when it comes to target risk and return. Specializing in one (or several) property types enables investors to develop operational advantages, competitive intelligence and market expertise. [...] The term multifamily real estate comprises all residential real estate, with the exception of single-family homes. This type of commercial real estate includes high-priority investments like apartments, co-ops, townhomes, and more. Multifamily properties are often further subdivided into Class A, Class B, and Class C properties depending on their location, condition, and more. [...] Read the case study to learn how Dermody Properties grew AUM by 400% through operational efficiencies on Dealpath. ### 4. Retail In commercial real estate, the label retail applies to any buildings occupied by businesses offering products and services to customers, including stores, restaurants and more. The eCommerce boom has caused retail foot traffic to decline, but this type of commercial real estate still plays an important role in new ways within the retail business model.

Commercial real estate—or CRE—means just that: real estate intended for a commercial purpose. An easy way to think of CRE is in comparison to a single family home, whether it's owner-occupied or rented out, which would be classified as residential real estate. Almost everything else would be considered commercial real estate. [...] ## Why do people invest in commercial real estate? Real estate is not only the world's largest asset class, It's also the oldest^2^. Commercial real estate is estimated to be worth $20.7 trillion^1^. Some of the world's biggest institutions invest in real estate, including the Harvard Management Company, which manages Harvard University's $50.93 billion endowment. [...] Commercial real estate investments can potential pay out in two ways: with ongoing cash distributions, and/or a share of the final sale price. Properties that are fully leased to quality, long-term tenants with steady monthly rents are more likely to distribute regular cash flow back to investors, while assets that require more work may mean less cash flow now, but could lead to a payout after renovation and sale. By choosing individual commercial real estate investments strategically, you have

The simplest way to define commercial real estate is a property that has the potential to generate profit through either capital gain or rental income. Examples of commercial property spaces include office buildings, residential duplexes, restaurants, or even a warehouse. If you can make money from leasing it out or holding it and reselling it, it can be classified as a commercial property. ## How is commercial real estate different from residential property? [...] Commercial real estate is different from residential property in four significant ways: [...] A successful commercial property career starts with a solid understanding of commercial real estate — specifically, knowing the definition of commercial real estate, why it might be a good investment alternative to residential real estate and the different types of commercial properties. ## What is commercial real estate?