Commercial Real Estate Las Vegas is where businesses set up camp — think offices, warehouses and shopping malls. Residential property, on the other hand, involves people residing in homes and apartments.
Investments in commercial properties usually offer higher returns than residential ones. However, they also come with more complicated metrics that require a greater level of expertise to analyze.
Commercial office space encompasses any location used for business-related activities, including coworking spaces, traditional offices, and virtual offices. It can be leased and includes amenities such as meeting rooms, reception areas, private offices, and break areas.
Office buildings are classified as Class A, Class B, or Class C, based on their quality and features. Newer properties with upscale features typically belong to Class A, while older buildings in less desirable locations might be classified as Class C.
Purchasing office space may be a good idea for businesses that have the capital to invest in it and plan to stay in a given area long-term, especially if they anticipate growth or have consistent space requirements over time. However, leasing is often preferable for businesses with limited resources that don’t want to take on the expense and liability of property ownership. A good CRE broker can help identify potential space options that fit your company’s budget and needs.
Retail Space
Retail space is commercial real estate that hosts businesses that sell products to consumers, like shops and restaurants. Retail space can be multi-tenant, such as regional malls and strip shopping centers, or single-use, standalone buildings.
The most recognizable type of retail space is the mall. These large-scale commercial real estate properties are typically “anchored” by big-name department stores like Macy’s, Younkers, and Dick’s Sporting Goods to drive traffic to the other retailers in the center. Apparel merchandisers, food vendors, and convenience stores occupy the rest of the mall, creating a diverse mix of shopping options for consumers.
Other types of retail spaces include power centers and factory outlets (often called outlet malls). These are smaller, often single-use, properties that feature a variety of service-based retailers and convenience-type tenants like grocers, banks, and drugstores. They may also include a small amount of entertainment, like cinemas and bowling alleys. These types of retail spaces tend to perform well in high-traffic areas with a lot of tourists.
Industrial Space
Industrial real estate includes the types of spaces where businesses make, store and ship products. These spaces often feature ample floor space, heavy-duty infrastructure and zoning flexibility.
While some companies own their own industrial property, most lease it from investors or a real estate investment trust (REIT). These owners earn income by charging rent to tenants who use the space to conduct business operations.
Unlike commercial real estate, which typically prioritizes aesthetics, industrial properties focus on function. Most are simple and open, giving businesses a blank canvas to customize for their needs.
These properties also offer a range of specialized amenities like loading docks and overhead doors, three phase power and cold storage facilities. In addition, some locations include trailer parking, which can boost a property’s value in the eyes of potential buyers. Moreover, these spaces are usually built to handle large volumes of inventory. This makes them an ideal choice for e-commerce and other fast-moving industries.
Mixed-Use Space
A growing trend in commercial construction is the creation of mixed-use spaces. These spaces are designed to serve multiple applications within a single building, often providing retail with offices or a hotel with apartments. For instance, Crown Sydney in Barangaroo, Australia houses a coffee shop and a hotel in addition to its office and apartment space.
These dynamic spaces create community by allowing residents and visitors to work, shop, and play without needing to commute long distances. They also reduce traffic congestion and dependencies on cars, fostering sustainable communities focused on social networks.
For property owners, mixed-use space helps create consistent cash flow by attracting a wider range of occupants. The diversity also decreases risk, as the loss of one tenant doesn’t significantly impact the overall property value. Moreover, the demand for these properties is high, making them a smart investment option. However, zoning restrictions and financing challenges can make it difficult to implement these designs.
Multifamily Space
While many think that only large commercial real estate properties are considered “commercial,” any property that generates income for its owner is classified as commercial. This includes multifamily properties, such as apartment buildings, rowhouses, or manufactured housing communities.
The distinction between residential and commercial real estate isn’t always clear, even for those who are familiar with the industry. While the number of units is a major factor, local zoning laws and intended use also play pivotal roles in classification.
Investing in multifamily space provides investors with several benefits. Unlike single-family homes, these types of properties typically have longer lease terms, which lowers the risk for tenants and creates a steady source of income. Moreover, because these buildings are more likely to be located in live-work-play communities, they can attract younger renters who value having their work and home lives within one location. The higher demand for these spaces can also result in more stable rental rates and greater appreciation over time.
Infill Land
Many urban areas experience waves of industrial, retail and residential development that leave vacant lots or buildings that need redevelopment or renovation. This is known as infill development.
Vacant land and buildings in urban areas can be converted into office complexes, warehouses, apartment buildings or hotels, with commercial real estate investors earning income by charging companies to rent space in their properties. Industrial real estate is a growing sector in the US as e-commerce has made it more important for companies to have centralized warehouses to manage inventory.
Office buildings are leased to businesses that use their spaces for offices and operations. These may be general offices like accounting firms or investment advisors, or specialized uses like dental clinics or research labs. The longer lease terms compared to residential property can provide stable cash flow for investors. Commercial real estate is more resilient to economic downturns because it often includes government agencies and healthcare facilities that are more likely to stay in business.
Brownfields
The term “brownfield” may conjure up images of dirty, blighted, abandoned industrial properties. But the federal government defines brownfields more broadly as any underused or unused commercial and industrial property where expansion or redevelopment is complicated by real or perceived environmental contamination.
Such sites can range from former gas stations and industrial plants to vacant warehouses and railroad depots. Many contain potentially dangerous contaminants like solvents and volatile organic compounds. Historically, fear of liability has discouraged prospective purchasers from taking on the costs of cleaning up and adapting these properties for new uses.
However, repurposing brownfields can bring jobs and revitalize neighborhoods. In addition, the reuse of contaminated land helps mitigate threats to human health and the environment and reduces blight. This makes brownfields a desirable development opportunity for companies that prioritize sustainability. In addition to commercial investors and developers, a variety of organizations can play a role in the cleanup and redevelopment of brownfields. These include state environmental and economic development agencies, community groups, citizen stakeholders, technical consultants, legal counsel and commercial lenders.
Retail Parks
Retail parks are a category of CRE that includes strip malls and shopping centers. They’re often anchored by big-name department store chains and have smaller retail spaces leased out to fast-food restaurants and other shops. Some have outdoor layouts that make them more like traditional malls. Outlet centers also fall into this group.
As consumers return to stores, some investors are looking back to out-of-town retail parks. British Land, for example, has a retail park-focused investment trust and is reinvesting in its park assets. Others are taking a more measured approach. They’re focusing on parks near motorway junctions as last-mile logistics companies look to take space there.
Other special-purpose retail properties can be found in these locations, as well as in airports and hospitals. These spaces are rented out by businesses that require more space and amenities than a typical office or retail space can offer. They may require specialized design or construction, and their rental revenue streams are typically less predictable than other commercial real estate categories.
Multifamily Properties
There are many different types of multifamily properties. Multifamily property classes can be broken down by quality, location and tenant-specific factors. For example, a class A property will offer more amenities and be situated in better locations while a class C property will be older and less well-maintained. Investors are interested in acquiring multifamily properties for steady income, portfolio diversification, tax benefits and protection against inflation.
While 1-4 unit rentals are considered residential, buildings with five or more units are categorized as commercial. This is due to the fact that they are typically listed on a single deed, unlike single family homes or condos, which are usually listed on separate deeds. This classification can also affect financing options, with 2-4 unit properties often qualifying for residential loans, while 5 or more unit buildings are often financed using commercial loans with stricter lending guidelines.
Commercial real estate is a diverse asset class that offers numerous opportunities for investors to make money through rents, asset appreciation and resale. The type of investment that’s right for you depends on your goals, risk profile and experience level.