What is Commercial Real Estate?

December 29, 2022

Locations used for business purposes make up commercial real estate. Property can be leased to commercial tenants, like a multi-tenant shopping mall, or owned and occupied, like a corner fast food joint or bank branch.

Several popular categories of commercial real estate include Office, Retail, Multifamily (more than 4 units), Industrial, Warehouse, Hospitality, etc.

Contact us to learn more about commercial real estate development.

Pros of Commercial Real Estate

Commercial real estate, according to some investors, delivers more financial value. Here are some benefits of commercial real estate:

Larger Rental Incomes

A business building may produce substantially higher gross rental income than a residential one.

Net Leases

Net, double net, and triple net structures are used in commercial real estate leases. For instance, in a triple net (NNN) lease, the tenant is responsible for paying base rent and their portion of the property’s upkeep, taxes, and insurance. Commercial real estate investors employ net leases to transfer ownership costs to the tenant, potentially lowering the financial risk of owning a business property.

Limited Operating Hours

Because business renters are only on the premises during business hours, commercial real estate owners and property managers don’t have to worry about receiving a repair request at two in the morning. Although there may be emergency calls in the event of a break-in or fire, commercial buildings typically have monitoring systems that immediately notify the police or fire department if an issue arises.

Business Tenants

Corporations, businesses, or individuals purchasing or offering services or goods are known as tenants of commercial real estate. Business tenants may be willing to provide personal assurances from their owners or officers, financial records proving their ability to pay rent, or even a license against their assets to secure rent payment.

Easier to Increase Value

With the right tenants and upgrades, a commercial real estate investor may find it simpler to raise the property’s value and cash flow.

Longer Leases

Commercial real estate space leases frequently last for five years or longer, which helps investors better forecast their possible future rental income stream. Additionally, some fewer laws or standards apply to commercial landlords and tenants, such as security deposit cap limits or commercial lease termination clauses.

Vella Group, LLC is a leading commercial real estate developer and investor based in Los Angeles, Miami, and New York City. Vella Group has the unmatched global experience that has given it market-driven knowledge and skills that allows it to take on even the most complex commercial real estate development projects.

The Vella Group, LLC works from inception to completion and follows an approach that increases the predictability and effectiveness of commercial real estate development projects.