COMMERCIAL REAL ESTATE
Commercial real estate refers to the property that is used for conducting business transactions and for office work. The range of commercial properties is expansive including everything from gas stations to industrial hubs, shopping centers to departmental stores.
What sets commercial real estate apart from residential properties is the method of rent payment. The lease amount is paid annually based on the amount of space occupied (calculated in square feet) instead of monthly payments. Generally, an investor buys a whole plot of land or a building and leases it out to different commercial operations.
There are basically four types of leases which differ on the basis of the agreement between the landlord and tenant regarding responsibilities.
– Single net lease- The tenant pays the property tax.
– Double net lease- Tenant pays property tax and insurance.
– Triple net lease- Tenant pays property tax, insurance and maintenance.
– Gross lease- Tenant pays rent and the landlord pays the tax, maintenance and insurance.
Categories of commercial properties
There are mainly three different classes of commercial properties:
Class A– This is the top category in which those constructions are included which are relatively new, well-maintained, strategically located and have a solid structure.
Class B– Buildings in this category are older. Investors generally look for these buildings to restore them and make them usable once again. They make a greater profit because investment is not so high and after renovation, it can become as good as new.
Class C– The location of these buildings is not very attractive and the structure itself is more than 20 years old. It requires a lot of maintenance.
Investing in Commercial Real Estate
Commercial investments are high-risk because of the uncertainty of getting returns in terms of regular rent. It is always a good idea to find a location where the demand is high and vacancy is low. Such an investment guarantees continuous occupation of property and inflow of rent.
The property should be located in an area where the local economy is strong and there are chances of development. This ensures greater appreciation in the value of the property with the passage of time.
Commercial real estate agents should be consulted to get a clear idea as to the current property prices, market scenario, legal procedures, correct time to buy a commercial property and the best properties for available for sale.
It has been predicted that this year the retail market will continue its momentum in terms of e-commerce sales and office spaces will become more flexible and smart.
In Connecticut, Buyer’s Trust Real Estate & Investment is the best choice for commercial real estate brokerage services.