What Are the Different Types of Commercial Properties? Joseph Rizzuto’s Comprehensive Guide
Commercial properties cover far more than just shopping centers or other retail locations. They essentially encompass every building (or non-building) that isn’t a small residential dwelling, be it a hotel, church, baseball stadium, or even a parking lot. Staten Island, New York-based commercial property developer Joseph Rizzuto says there are a lot of different classifications and buzzwords in the commercial property space which new investors can find daunting.
He shares a helpful breakdown of the most common types of commercial properties and property grades within those categories.
Townhouses, condos, and apartments are the prime examples of these types of residential buildings or complexes, which by definition contain more than four units.
Four classes, from A to D, are used in multifamily units to describe the amenities and desirability of the property. Joseph Rizzuto explains that A-class properties are considered top-of-the-line structures, with on-site amenities like swimming pools and gyms, and are generally no more than ten years old. The classes trend down in quality from there, with class D properties often being decades-old, not in great shape, and not located in particularly desirable areas.
Apartments buildings are further broken down into several categorizations of their own, including high-rise, mid-rise, walk-up, and garden-style.
As with multifamily properties, office buildings are also categorized into unique classes, from A to C. A-class again represents the most desirable properties in terms of construction, amenities, and location, while C-class properties are older and outdated.
Joseph Rizzuto notes that medical offices constitute a special sub-sector within this category and are considered one of the hottest commercial investments given the growing demand expected for years to come for their stable tenants.
Retail spaces are another multi-faceted commercial category which includes standalone, single-tenant, and multi-tenant properties. The different classifications for retail shopping centers, such as malls, factory outlets, and convenience centers, are determined based on factors such as their size, the number of tenants, and the types of tenants.
Joseph Rizzuto also points out that the term “strip malls” do not exist in commercial real estate parlance; community centers and convenience centers are the real estate terms which best represent the common classification of strip malls among the general populace.
The commercial hotel sector includes any property which provides accommodations to travelers, including hotels, motels, resorts, casinos, and extended-stay lodgings. “Boutique” hotels are those who are independent of the major hotel chains and are generally smaller, but with a high standard of service.
Lastly are industrial properties, located on the edges of urban areas and close to major thoroughfares. Heavy manufacturing properties can be a risky investment given that they could require extensive modifications to satisfy another client should the original/current tenant leave.
There are also light assembly and warehousing properties, which are far easier to repurpose. Flex industrial properties contain a combination of office space and industrial activity within industrial parks, which contain several industrial operations within close proximity.
Find out more on Joseph Rizzuto here.
Joseph Rizzuto website: www.josephrizzuto.com