Commercial real estate, also known as CRE, is a term used to describe the various

forms of property that are leased or sold for business purposes. It is a different

concept from residential real estate, which typically refers to single-family homes,

condos and townhouses.

Businesses need space to store inventory, direct consumers and create products,

which means that CRE is a large part of the economy. There are a wide variety of

types of commercial properties, including malls, office buildings, warehouses and

even open land for fairs and amusement parks. The commercial real estate market

has its own specialized rules and regulations, which are based on local zoning laws

and the needs of specific industries. For more

The primary goal of CRE is to generate income from rental payments or capital

appreciation. This can be done through a sale or lease, and the industry is divided

into several sub-sectors that each have their own set of rules and regulations.

In general, CRE is a lucrative investment option because it tends to appreciate at a

much faster rate than other asset classes, like stocks and bonds. However, this

doesn’t mean that it is without risk. CRE is subject to market fluctuations and a

downturn can have devastating effects on the industry.


To mitigate these risks, it is important for investors to understand the basics of

commercial real estate, how it is financed and the legal documents that are

necessary to convey ownership. Whether you’re a buyer, seller or investor, a solid

understanding of commercial real estate is essential to your success in the field.

As a first step, you should familiarize yourself with the eight major types of

commercial property. Each has its own unique operational quirks and risk profile.

These include hotels, retail, industrial, office, mixed-use, special purpose and vacant


When an owner decides to sell their property, they will often hire a commercial real

estate broker to handle the transaction. This professional will help them to

determine their property’s value by analyzing current market trends and conducting

an in-depth cost/benefit analysis. Once they’ve determined an appropriate listing

price, they will work with prospective buyers to negotiate a sales contract.


A commercial real estate broker may also be hired to represent a tenant in a leasing

transaction. This involves evaluating the client’s business plan and finding them a

suitable property to meet their needs. For example, a grocery company may require

a property with a high-speed digital network, ample storage space and room to



Indirect investments in commercial real estate are also common. These investments

can be made through REITs, crowdfunding and exchange traded funds (ETFs). REITs

and ETFs operate like a mutual fund but with the added benefit of owning physical

real estate assets. This makes them a viable option for investors who don’t have the

liquidity to purchase and manage their own commercial property. In these cases, the

investor is a limited partner in the REIT or crowdfunding platform and only receives a

percentage of the return on investment.