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What Is Commercial Real Estate?


Commercial real estate, or CRE, is a broad term that includes many types of

buildings and land for business use. It can be categorized into four main subsets:

retail, office, industrial and warehouse. The real estate is leased to individual

businesses, which use the space for operations like manufacturing or stores, and

generate income through rent payments.

Commercial property is typically larger than residential rental properties, and can be

more expensive to maintain. It is also often a more stable investment than

residential real estate, since the leases are longer than on rental properties.

While some homeowners can manage their own commercial property, it’s usually

best to work with a professional. This ensures the process is run smoothly and

avoids any legal complications that could arise from an inexperienced transaction. A

broker can help find a suitable property for a client, and negotiate the terms of a

contract that benefits both parties.


The commercial real estate industry touches virtually every business in the United

States and most of the world. A restaurant can’t open without a location, a company

can’t grow without an office, and patients can’t visit a hospital unless it’s built. As a

result, there are several ways to invest in the sector:

Real estate investors who buy for the long term can benefit from escalation clauses

that allow them to increase rents on a regular basis based on a specified index. This

makes it easier for them to manage their investment during volatile markets, as the

amount of rent paid will remain relatively stable. For more info


Commercial real estate can be owned by individuals, or by corporations such as Real

Estate Investment Trusts (REITs). REITs are companies that specialize in buying and

leasing commercial property for business tenants, and then collecting rent payments

from those tenants. The company can then distribute 90% of its profits to investors

as dividends. REIT investments are a popular way for investors to diversify their

portfolios with exposure to commercial property, and they are less reliant on market

fluctuations than direct ownership of property.


Whether you are investing in the industry, or simply seeking out an office space for

your small business, knowing what’s involved can make it much easier to navigate

the complexities. There are a number of important factors to consider, including how

the property is priced, how it’s financed, and what kind of legal paperwork is

required to convey ownership. Paul Bubny is a Senior Content Director for Connect

Commercial Real Estate, with 13 years of experience covering the industry and 30

plus years in business-to-business journalism. He writes 15-20 news stories per day

and develops longer-form content, ranging from Q&As to thought-leadership pieces.

His work focuses on broader industry trends as well as individual transactions across

all asset types. He is a frequent contributor to the Connect Blog. He lives in Austin,