Property Types

Municipalities categorize property into different types for a number of reasons, the main one is for city planning to delineate the property’s use.  Obviously the real estate community tries to use similar language to distinguish one type of property from another when working with the public.  Let’s take a look at the various property types out there.

The type of real estate that nearly all people have dealt with is residential.  Residential properties are typically single family homes and apartments.  These are places where people live.

My company’s focus is commercial real estate so let’s take a look at what a commercial property is as a broad category and the types of properties under the commercial umbrella.  Commercial property refers to property that is used for business or income-generating purposes.  There are four main subtypes, Industrial, Retail, Office, and Multifamily.  

Industrial

Industrial properties are used mainly for manufacturing and / or storage of goods.  These properties tend to have a large warehouse area for research, development, producing, assembling, or storing items and materials with a small office area to conduct business.  The office area is normally around 10% of the total size of the space or building.  A subcategory of Industrial known as Flex, denotes that the office area is larger than 50% of the total space and sometimes indicates that there is air conditioning, or lab space in the warehouse.

Retail

Retail properties are used mainly for selling goods and services to the public.  These spaces and buildings are your malls, strip centers, or free standing buildings that contain stores, restaurants, and sometimes recreational establishments like movie theaters.

Office

Office space has two major categories, professional and medical.  Professional office space is the typical home of a lawyer, architect, or insurance agent, while medical office space is home to doctors, dentists, medical labs, and clinics.  The main thing distinguishing these two categories is the amount of water use allocation required by medical tenants compared to professional tenants.

Multifamily

Multifamily describes a property type that contains many residential dwelling units and can be further specified as senior housing, assisted living, or student housing.

Land

Finally we can talk about land.  Land as a product type comes with as many opportunities as it does restrictions.  Land use is determined by municipalities and zoning.  Nearly all pieces of vacant land have a land use / zoning overlay which determines what the land can be used for and what can be built on it.  Sales and leases of land are typically much more involved and require a lot more time to close if the buyer wants to buy the property subject to any sort of building or zoning approval for their future use.

If you have any questions about this article or commercial real estate email [email protected] or let me know in the comments below.  Don’t forget to subscribe to our email blasts!

Next week we’ll talk about Title and Types of Property Ownership