If you’re new to the world of real estate, you may not be familiar with the different types of property that you can purchase and invest in. One form of real estate is known as commercial property.
There are plenty of options and business opportunities available to any individuals interested in purchasing owner-financed lots from Santa Cruz Properties. Let our helpful team provide you with a short guide into the world of commercial property.
A Brief Intro Into Commercial Property
Commercial property is defined as an area of land, subdivided or not, that can be used to develop businesses that turn a profit for the owner. These lands are normally located within a county’s area designated specifically for businesses. Examples of commercial properties include stores, malls, hotels, apartment complexes, and warehouses; in other words, any land on which a business is built on.
It is also important to recognize that commercial property is appraised differently than residential properties. Appraisers give a value depending on a number of variables like the surroundings, if there are other commerces near the property, if the property is properly zoned, if the property is close to a busy street, and how likely the business is to succeed.
What Can You Do with Commercial Property
So you bought some commercial property and now you are wondering what you can do with it. It’s not as simple as just starting to build or tearing down any structures. There are variables and regulations to take into account when working with commercial land including:
- Make sure to confirm that your property is commercially zoned. Counties and cities divide land into zones dedicated for certain uses: commercial, industrial, and neighborhood are some examples.
- Next, it is recommended to investigate the physical characteristics and restrictions of the property. A few things to consider include things such as flooding risks, characteristics that might make building complicated, and your ability to obtain utilities.
- You will also want to perform some market research to verify that your property will indeed be able to be utilized effectively and used to make a profit. Be sure to take into account the total price you will be paying for the property and construction costs.
Once you have done your research, make sure to follow the specific regulations related to developing your property.
The following are four ways that you can develop your commercial property:
An office building can be either urban or suburban. An urban office building can be found within a city and tends to be taller than their suburban counterpart. Suburban office buildings are shorter and can sometimes be found in office parks.
Depending on their quality, facilities, rent and market presence, offices can be categorized into three distinct classes:
- Class A. These offices compete to get high profile users or companies, the rent is above the area’s average while offering great accessibility as well as a definite market presence.
- Class B. These office buildings offer their space to a wide range of users, their rent is average within the area they are located, building finishes, system and facilities are good, but they cannot compete against class A.
- Class C. These buildings compete for users looking for practical space with rent under average.
Medical offices fall into their special subcategory and are not ranked along with general office buildings.
Retail refers to the properties accommodating retail stores or restaurants. These can be divided buildings and therefore multi-tenanted, or have a single-tenant in a stand-alone building.
Examples of multi-tenanted retail properties are small outdoor plazas with several stores occupying the space. Chain stores, like Walmart, Target or Best Buy, are clear examples of single-tenant retail properties.
Multifamily property is a special type of residential land that falls within commercial property. Apartment buildings, condos, duplexes, and townhouses are some examples.
These can be classified by their quality, rent, and location the same way office buildings are (class A, B or C). In some cases, apartment building can also be divided into multiple categories depending on their amenities.
Hotels can be independent (boutique) or flagged, meaning they are part of a large-scale hotel chain like Marriott, Holiday Inn, or Sheraton.
According to the comforts they offer, hotels can be divided into six different types:
- Limited service. Does not offer room-service, on-site restaurant, or concierge.
- Full-service. Does offer room-service and an on-site restaurant.
- Boutique. Commonly found in an urban area or resort, these are full-service but are not part of a major hotel chain and have fewer rooms.
- Casino. Has a gaming and bidding section.
- Extended-stay. Limited service hotels, but rooms are larger with added kitchen in them.
- Resort. Full-service, includes some kind of amusement facility (water park, golf course, etc.), has a large amount of land and is located in a resort locale.