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March 12, 2024 11:15AM

The Diversity of Commercial Real Estate: Beyond the Office Building

Staff Member Janel Webb
Article by
Project Manager

What comes to mind when you hear the term “commercial real estate?” If you are like most of us, you will be thinking of sleek glass and steel office buildings and bustling downtown business districts. And it is true that this perception can sometimes be accurate. 

However, the commercial real estate landscape is far more expansive, diverse, and ever-changing than this limited picture suggests. There is a tendency to associate commercial real estate solely with office spaces, and it often takes a deliberate effort to broaden our view of what this term encompasses. 

What Is Commercial Real Estate, and What Role Does It Play?

In short, commercial real estate is any property intended to generate a profit rather than be used for typical residential purposes. “Commercial” encompasses a vast array of property types, including industrial, warehousing, retail, and much more. Certain multifamily rental units may also be considered commercial real estate. 

Commercial real estate plays a vital role in the economies of towns and cities across the United States and the world. Industrial spaces, for example, play a pivotal part in supporting manufacturing, production, and distribution of the items we all rely on every day, while warehousing facilities are integral to the seamless flow of goods in our interconnected world.

What Types of Commercial Real Estate Are There? 

As we have identified, there are numerous types of commercial real estate, and they all play a key role in modern life. In this section, we will take a closer look at some of the most common types of commercial real estate properties you are likely to encounter. 

Industrial and Manufacturing Facilities

Manufacturing facilities, factories, and other industrial spaces are the backbone of local, national, and global supply chains. With the rise of e-commerce and online retail bringing an ever-increasing demand for the fast and efficient production and delivery of goods, industrial real estate has become one of the fastest-growing sectors in the commercial property market. 

To better meet demand, developers are increasingly investing in state-of-the-art industrial facilities.

Warehousing 

Just as manufacturing facilities create the goods we rely upon, warehouses are where they are stored until they are ready to be shipped to our homes and businesses.

Warehousing facilities are often strategically located close to transportation hubs such as airports, highways, and ports to facilitate faster and more efficient distribution. 

Retail Spaces

Our high streets and city centers would not be the same without retail spaces, with their vibrant storefronts and bustling interiors. From vast shopping malls to local boutiques, retail spaces are where businesses connect directly with their customers, playing a crucial role in shaping customer experiences and consumer trends. 

With more and more competition, coupled with the rise of e-commerce and the threat it presents to brick-and-mortar businesses, developers and retailers are continually exploring new ways to stay ahead of the curve. From tech-enhanced interactive displays to combining shopping with entertainment, there is no end to the ways that retail experiences can be enhanced with the creative use of space. 

Hospitality Facilities

The hospitality sector encompasses a wide range of commercial real estate properties catering to travelers and tourists, including hotels, resorts, and vacation rental accommodations. 

These properties are often far more than simply a place to sleep while traveling; they aim to offer guests a unique experience in their own right. Whether they provide themed accommodations, on-site activities and amenities, or highly personalized services, hospitality businesses will continue to grow, innovate, and diversify in the coming years. 

From luxury resorts to budget rentals in desirable locales, the hospitality arm of the commercial real estate sector caters to travelers with a wide range of needs, tastes, and budgets. 

Healthcare

Healthcare real estate consists of buildings that provide medical services such as hospitals, doctors’ offices, and clinics. With an aging population and increasing demand for these services, the healthcare sector has become an attractive development proposition for those looking to profit from commercial real estate. 

As essential components of the vital and complex system that is our healthcare infrastructure, providers are continually seeking new ways to provide coordinated care and an improved patient experience. Real estate developers have an exciting opportunity to provide facilities that meet these needs. 

Research Laboratories 

One of the most intriguing developments in the commercial real estate sector in recent years is the increasing prominence of life sciences research. As advancements in biotechnology and healthcare continue to accelerate, the demand for specialized facilities for research, development, and production in the life sciences sector has surged. 

Laboratories, research centers, and facilities dedicated to pharmaceutical manufacturing are now integral components of commercial real estate. Organizations are leveraging these spaces in innovative and transformative ways, driven by technological advancements and interdisciplinary collaboration.

With a growing emphasis on addressing global challenges, fostering collaboration, and prioritizing ethical considerations, the evolving nature of research facilities reflects a dynamic and forward-thinking approach that holds great promise for addressing some of the most pressing problems in health, the environment, and beyond.

Multifamily Residential Units

Buildings with five or more rental units—such as apartment blocks, condos, townhouses, and mixed-use developments—owned by one entity are considered commercial real estate.

These multifamily housing solutions play a vital role in meeting the diverse accommodation needs of our communities, particularly in urban and suburban areas. From small walk-ups to vast city center high-rises, these units offer the flexibility and convenience of renting rather than owning property. 

Today’s renters are renting for longer and demanding more from their accommodations. For this reason, commercial real estate developers are offering additional amenities and services, such as communal pools, gardens, and fitness facilities, as well as upkeep and maintenance services. 

Leveraging Technologies for Better Commercial Real Estate Management 

By recognizing the richness and diversity of the commercial real estate landscape, we can unlock new opportunities for investment, development, and collaboration, paving the way for a vibrant and resilient built environment that meets the needs of our diverse communities. 

The key to the successful management of commercial real estate properties is the appropriate use of the best technologies. Here at REdirect Consulting, we have extensive experience in supporting commercial real estate owners, developers, and managers to get the most from their property investments by leveraging cutting-edge property technology (PropTech). 

To learn more about how PropTech can help you and how REdirect can support you on that journey, contact us today to get started.

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About the Author

Janel Webb

Janel joins REdirect with extensive experience in project management, property management, business operations and budgeting. Janel has over 11 years of experience in the Property Management industry and held positions at Brandywine Realty Trust, Kimco Realty, Hankin Group and Berger Communities. She has managed a multitude of use types, …

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