Commercial real estate (CRE) is a broad category that includes any building or land

that is used for income-generating activities on a large scale. This can include

everything from small stores to huge restaurants, shopping malls and resorts. It is

more difficult and expensive to finance than residential real estate, and its

properties have a wide range of operational quirks and risk profiles that make them

distinct from other types of investments.

CRE investors have a number of different options for investing in this asset class.

They can purchase and manage property themselves, invest in a passive manner by

purchasing shares of real estate investment trusts (REITs) or other private equity

firms that specialize in the sector, or work with an experienced broker to find a

suitable deal.

The most well-known type of commercial real estate is retail, which consists of

buildings that host the restaurants, stores and other businesses we frequent on a

regular basis. These properties can be multi-tenant, like a shopping center with a

number of different retailers, or single-tenant buildings within the same complex,

such as a bank branch or drug store. The retail sector is a popular choice for

investors, because it provides reliable rent income and offers a diversification of

tenant risk that protects against a slowdown in the economy.


Industrial is another important sector of CRE, which consists of spaces that support

manufacturing and other industrial activities. These types of properties are usually

highly regulated by local zoning laws and must be located in areas that can

accommodate them, such as near shipping ports. These properties can range from

heavy manufacturing to light assembly, and can also include bulk warehouse

structures and storage facilities. The industrial space is an essential part of the local

economy, and its demand is a strong driver of job creation in urban areas.


Office buildings are an important type of commercial real estate, primarily because

they contain workspaces for business tenants. These spaces can be leased by

individual businesses, or by corporations that need to locate all their employees in

one place. They are a desirable investment for their long-term leases, high quality

business tenants and the scale that comes with having all business operations under

one roof. For more


Lastly, the multifamily sector consists of apartment buildings and other types of

residential real estate that are used to house multiple families, such as condos and

co-ops. These buildings can be high-rise or walkup, and are typically zoned to allow

them to cluster in specific neighborhoods of a municipality. Affordable housing is a

subset of this category, as are manufactured homes and senior living facilities.

Special purpose property, which includes a wide range of items from churches and

movie theaters to bowling alleys and self-storage facilities, is also an important

segment of this industry. Many of these properties operate on a seasonal or

temporary basis, but provide a steady flow of rental income that can help offset the

costs of owning and managing such property.