Commercial properties are buildings, structures, and improvements on commercial real estate intended to generate a profit.
Commercial properties include a broad class of real estate assets that are leased with the goal of earning an investment return through income, price appreciation, or both. There are seven types of commercial properties—some with sub-categories, each with an operational risk/return profile.
Industrial
Buildings typically with considerable square footage along with loading docks, multiple HVAC units & points of electrical distribution, with an easily accessible low-slope roof. Often other installed features such as large, refrigerated spaces.
- Distribution: A distribution location receives goods, stores goods for a short time, then sends to supermarkets, retail stores or final customers. Typically located near major cities and close to highways, railway stations, harbors or airports. Location is critical for success.
- Flex: A multi-use building within a single facility such as office space combined with light manufacturing. However, there is always more office space in flex buildings than in other types of industrial properties.
- Warehouse: Used for storage & distribution of goods typically with an open space facility layout - ceilings open to roof’s interior to handle high freestanding or installed racking. Some warehouses are dedicated truck terminals with goods loaded from one truck to another and less storage square footage.
- R&D (Research & Development): Typically for high technology industries such as computers, electronics and biotechnology. Users often prefer locating in campus-like business parks featuring shared architecture, extensive landscaping, and considerable surface parking.
- Manufacturing: Used to produce goods or materials - categorized as heavy manufacturing or light assembly. A heavy manufacturing facility typically makes heavy-duty products using large machinery & equipment. Facilities are often renovated and customized for specific tenants. A light assembly facility is typically smaller with simpler manufacturing.
- Refrigerated/Cold Storage: Specialized industrial buildings offering large capacity cold storage rooms - cooler (34 deg F) and freezer (-10 to 0 deg F). Often used as a distribution center for food products such as meat, produce, prepared meals, and dairy.
Retail Property
Goods/services are sold to customers. Retail property can be one unit or an entire retail complex. Most have ample parking areas and bordering sidewalks. Some have escalators, elevators, and covered parking.
- Mall: An enclosed shopping center with many different outlets often including department stores, food courts, and movie theaters.
- Shopping Center: Also commonly known as a shopping plaza or strip mall which varies in size & tenant type. Open storefronts with several units under one roof or within one complex. Often home to big-box stores, along with other smaller shops, restaurants & convenience stores.
- Restaurant: Property will vary in size/complexity. Typically includes large kitchen with commercial appliances, a storage room or pantry, a refrigerated space, office, dining area, and public restrooms.
- Pad Site: A standalone building, typically located in front of or within a shopping center. Often fast-food chains, banks or restaurants.
Office
Property that is used by business professionals, medical & dental professionals, and more. Standard office space divided into separate rooms. Typically includes restrooms, and possibly a small kitchen.
- Office Building: Designed for higher occupancy and ranging from a single-story building to a high-rise. Typically contains several electrical & HVAC systems, and if multiple levels, at least one staircase, and often an elevator.
- Suite or Condominium: Built with the concept that exterior, roof, and common areas are maintained by the owner/property manager, while interior spaces are owned/leased and maintained by tenants. Could be a unit, a floor, or a wing of a building and could also be a unit within a shopping center or industrial complex.
- Medical or Dental Office Suite: Typically, a larger space divided into several smaller spaces, including offices & exam/treatment rooms. Usually includes waiting room, restroom(s), HVAC unit & controls, electrical system, and multiple plumbing installations. Very common to contain customized & permanently installed structures.
Multi-Dwelling Unit (MDU)
Residential properties such as condominiums, apartment buildings and townhomes. In addition to dwelling units, common areas are often a pool & spa, plus a parking structure.
Hospitality
Similar to a multi-dwelling unit, this property features several individual residential units, but is designed for temporary occupancy. Typically includes a large commercial kitchen or on-site restaurant. Some units may be suites that include multiple rooms, a kitchenette and/or a wet bar, an in-room Jacuzzi or spa. Most likely facility has elevators.
Land
While all commercial real estate properties come with land, sometimes land is vacant with no buildings. Land like this is an asset class with sub-categories investors should be aware of.
- Agricultural: Used for agricultural purposes such as farming or pasture. Often in rural areas and since relatively inexpensive, typically offers significant tax benefits.
- Farm & Ranch: A farm is for agriculture - producing crops, energy, fuel, raw materials, or agricultural goods. A ranch is for raising livestock, grazing livestock on pastureland or rangeland. Ranches may focus on a single animal like cattle, or raise a variety of animals like cows, horses, sheep, and pigs.
- Timberland: Primarily used for forestry and production of timber. Managed by a forestry commission or private timber company responsible for harvesting and replanting trees. Also can be for recreational activities such as hiking, camping, and wildlife viewing.
- Recreational/Hunting: Land used for personal enjoyment - privately owned or owned by a government entity. From city parks and open spaces to national parks and large tracts of hunting land. Also, for horse trails, camps, fishing, and ATV trails.
- Commercial: Land for commerce with intent to develop and operate income-producing business. Often included in city land use planning, land designated as commercial use is often appraised differently so values can vary drastically. A common type of real estate that tends to be leased to produce rental income.
- Industrial: Land intended for use of assembling, fabricating, manufacturing, processing, warehousing and distribution, repair activities, communications, utilities, transportation, storage, service trades, and construction uses.
- Residential: Zoned for primary housing, people often look for vacant residential land so they can design their own homes. It’s important to be aware of residential land use restrictions such as materials that can be used to build, minimum or maximum build size, and the type of animals allowed.
- Islands: Residential land values vary depending on location and other factors. Just like how a quarter-acre of beachfront land is significantly more expensive than the same size lot a few miles inland, islands tend to be very expensive land.
Special-Purpose Buildings
Some commercial properties do not fit the basic categories and are considered special-purpose.
Examples: Telecom/Data Center, Sports/Entertainment, Casinos, Marina, Golf-Course, School, Religious/Church, Garage/Parking, Carwash, Airport.
Understanding the multiple types and sub-categories of commercial properties, each with an operational risk/return profile, is a strength of Joseph & Camper. Our brokers are licensed and committed to serving local businesses and the community. Joseph & Camper Commercial Real Estate Brokerage helps clients explore commercial listings all over Central Illinois, including Peoria, Tazewell, McLean, Woodford, Marshall, Stark, Fulton, and Knox counties. Use our map to explore a wide variety of commercial properties in Central Illinois. Contact us today or call 309-691-5919.
