What is commercial real estate?

What is commercial real estate?

Real estate can be tricky, especially if you’re thinking of getting a property for your business. The cost and requirements of getting commercial real estate are very different from getting a residential house.


What is commercial real estate?


A commercial real estate or CRE is exclusively reserved for business-related purposes. 


In most cases, commercial real estate is leased instead of sold. Its price is often higher than residential properties, and its market value appreciates faster because of the income generation related to it.


Aside from these, essential utilities such as electric and water companies charge higher for commercial real estate than residential ones. 


What can you build in your commercial property?


When you have a commercial property for lease, your tenants can build anything related to business as long as it adheres to your agreement. This includes retail stores, office spaces, restaurants, industrial warehouses, or healthcare facilities.


Aside from this, commercial real estate can be a residential area as a form of rental space. If you have a commercial property, you can turn it into a multi-room apartment, condominium, or inn.


How much does an average commercial real estate cost?


Like any real estate property, the cost of commercial real estate depends on the location and the quality of the property. However, what is fixed is that commercial property is always at least 5x more expensive than residential spaces at the exact location.


As of this writing, the average commercial real estate in New York costs around $74.14 per square foot and $74.22 per square foot in San Francisco. On the other hand, commercial properties in less crowded locations like Ohio cost $18.40 per square.


How much does it increase in value?


The value appreciation of commercial real estate depends on the success of businesses in it. The market value of a successful commercial space can go up to 8.5% per year.


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