Get Specific! A Quick Guide to Commercial Real Estate Niches

Guest post

If you ask the average person about different ways to invest, they will probably mention two options that – if you are reading a finance blog – you are already familiar with. “Try stocks or real estate.”

Okay. In passing conversation, that sounds fine. But what happens when retail investors actually explore these ideas a bit further? Once they open Pandora’s investment box, they will realize how complicated, entangled, and elaborate the investment worlds are.

Worlds, not world.

The paradox of choice will quickly paralyze the average person, leaving them confused and overwhelmed. This post is going to help clarify a small piece of the investment world by looking at the different niches within commercial real estate investments.

You have to start somewhere.

Defining a Real Estate Niche

The real estate market is quite diverse. Imagine just about any type of business, and a real estate category exists for it. From farmland to city blocks, real estate niches behave differently, possess unique advantages and disadvantages, and have different levels of associated risk.

So, what are some common commercial real estate niches?

Retail Properties

This niche is defined as properties that contain any number of direct-to-consumer businesses. Think restaurants, retail stores, automobile showrooms, grocery stores. These are the strip malls and suburban town centers that draw the eye of many real estate investors. Retail properties have long-term leases and usually boast good locations with high foot traffic.

Though, there are other types of commercial properties that you may wish to invest in.

Office Properties

Office properties are – as they sound – the spaces the businesses rent to conduct their business. Aside from cubicles and board rooms, office properties can also consist of medical facilities and research centers. Like retail properties, office properties tend to have longer leases and, depending on location, can be an attractive option for investors.

Industrial Properties

Industrial properties are different from office properties in that they mostly consist of places where products are manufactured, stored, or distributed. These are the manufacturing plants, the energy or waste management plants, the warehouses, and logistical facilities. These are generally assumed to be safer investment opportunities because they are needed for our society to function.

Niches within Niches

You can see that the niches listed above are themselves relatively broad categories. You could take office properties and break that down into ten or more categories. As a general rule, you should consider your own interests when it comes to investing.

What industry do you want to support with your money? Do you want to invest in technology? Then, office or industrial properties are where you should invest. Medicine? Green energy? You should pick an industry you want to grow with when drawing up an investment plan.

Ready to Try Your Hand at Commercial Real Estate Investing?

If you are interested in investing in commercial real estate, there are a few ways to get in on the profits. With a large amount of capital, you can directly purchase and manage these types of properties. However, this route is a full-time job and is quite expensive. You are the owner – you market the property, court the tenants, draw up the leases, and essentially run things.

Most investors have other full-time jobs and are looking for a safe place to store and grow their wealth. You might consider investing with a private equity firm, or other investment company that pools partner resources and invests that capital into commercial real estate.