What Are The 4 Main Types of Commercial Real Estate?

Commercial real estate has a reputation, and its current status as a wealth-building staple in any investor’s portfolio is definitely well-earned. But there’s one little logistical piece that stops many new investors in their tracks before they even get started. 

The first step in adding a lucrative commercial property to your portfolio is figuring out what exactly counts as commercial real estate in the first place! And more importantly, pinpointing which type offers the strongest return on investment.

To help keep things simple, we’ve laid out the four main categories of commercial real estate that you need to have on your radar before diving into investing in your first properties. Each of these real estate types offer unique benefits, risk levels, and earning potential, so there’s a lot to unpack here.

Let’s dive in!
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Type 1: Office

When most people hear “commercial real estate”, they’re picturing downtown skyscrapers and suburban business complexes. In actuality, these offices comprise only one type of commercial investment. There’s more to investing in office real estate than you might think.

What Makes Office Investments Appealing?

• Long-term leases: These leases are often for 5-10+ years.
  
• High-quality tenants: They often attract stable tenants like corporations and medical providers.
  
• Stable, predictable income: Income tends to stay stable even during market fluctuations.
  

What Are The Different Types of Office Spaces?

• Central Business District (offices in urban city cores)
  
• Suburban offices (found outside of city centers)
  
• Medical office buildings (one of today’s highest-demand categories)
• Co-working and flexible spaces (optimized for hybrid work trends)
  
  

If you’re an investor who is seeking strong stability and professional tenants, this could be the best direction for you to go in.
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Type 2: Retail

Retail properties include everything from your local grocery store to shopping centers. Strong “anchor tenants” like these can help drive steady customer traffic to the entire property, making these a win-win for investors seeking retail investments that can house multiple tenants. 

Why Retail Can Be a Top Performer

• Anchor tenants- These bring reliable customer traffic.
• Triple-Net (NNN) leases- These shift property taxes, insurance & maintenance to tenants.
• Strong income potential- The combination of multiple tenants & high rents can be a huge win for investors.
  

Retail Subcategories

• Strip malls
• Power centers (open-air shopping centers with big box retailers)
• Lifestyle centers (shopping centers that combine retail, dining and entertainment) 
• Standalone properties (think banks, restaurants, pharmacies)
  
  

These are ideal for investors who are in the market for an investment with high cash flow, without the high operational responsibility.

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Type 3: Industrial

The industrial sector has become the fastest-growing and most profitable commercial real estate asset classes, and it’s not difficult to see why! These are driven by e-commerce, logistics, and supply chain demands.

Why Industrial is Dominating Today’s Market

• Low vacancy rates- These tend to have high tenant demand.
  
• Minimal maintenance- These properties don’t typically require as much maintenance as the others.
  
• Long leases-  Leases for industrial properties are often 7-15 years!
  
• Ideal for passive, stable income- A combination of long leases and lower upkeep costs make these a great option for investors who prioritize having a stable income.

Top Industrial Property Types

• Warehouses & distribution centers
  
• Manufacturing facilities
  
• Cold storage
  
• Logistics hubs near major ports & highways
  
  

Who should be keeping an eye out for industrial properties to invest in? We think that investors seeking reliable, long-term cash flow with lower risk are a great fit for this commercial property type.
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Type 4: Multifamily 

Multifamily real estate technically toes the line between residential and commercial, and the difference is in the quantity. Once a property has 5+ units, it graduates from being a residential investment to a commercial one. 

Why Multifamily is a Popular Investment Option

• Consistent, recession-resistant demand
  
• Multiple revenue streams (parking, storage, pet rent, amenities)
  
• Lower vacancy impact (one empty unit doesn’t kill your cash flow)
  

Types of Multifamily Properties

• Mid and high-rise apartments
  
• Garden-style complexes
  
• Mixed-use buildings ground-floor retail spaces

Are you an investor looking for steady occupancy and scalable portfolio growth? Multifamily properties could be a winner.
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Which Asset Class Is Best?

Commercial real estate isn’t one-size-fits-all, but the right asset can yield higher income, stronger appreciation, and less day-to-day involvement for the right investor.

As with many things in the investment world, the answer to the “which commercial asset type is the best?” will completely depend on your goals. There are some very heavy-hitting and unique strengths for each option, and you’re going to need someone who understands the ins and outs of each investment type along with the local market to help you decide.

Get in touch with our team at NREMG to help pinpoint which commercial real estate opportunity fits your investment profile best! Let’s talk strategy and start building your portfolio with confidence.

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