Commercial real estate refers to properties used for business purposes, such as office buildings, industrial buildings, multifamily properties, retail buildings and hospitality properties, to name a few. These properties can be owned, leased or rented and serve various functions, ranging from storage to manufacturing, sales, and customer service. The Edmonton commercial real estate market can be divided into different types based on the function of the property, the tenant, and the location. Understanding the different types of commercial real estate can help investors, tenants, and REALTORS® make informed decisions and confidently navigate the market. In this article, we will explore some of the common types of commercial real estate and their key features.
Investing in an office building can be a profitable venture. An office building is a type of commercial property used for conducting business and administrative activities. Investors can lease the building to tenants, who use it as a workspace; this provides a steady stream of rental income for the investor. However, investing in an office building requires careful consideration, as things like location, occupancy rates, and tenant quality can impact the property’s value and potential return on investment. Also, maintenance and operational costs should be factored in when calculating the property’s profitability. Despite these challenges, investing in an office building can provide a stable and lucrative investment opportunity for those willing to put in the effort and resources required for successful management.
Industrial buildings are used for manufacturing, storage, and distribution of goods and can be located in industrial parks or standalone facilities. Investing in an industrial building can offer steady rental income, as tenants often sign long-term leases due to the cost of relocating their operations. Additionally, the value of an industrial building can appreciate over time, primarily if it is located in a desirable location with strong demand for industrial space. This type of investment often has unique zoning and regulatory requirements, which is something to keep in mind. Overall, investing in an industrial building can be worthwhile for those with the resources and expertise to manage it effectively.
Multifamily properties, such as apartment buildings or condominiums, offer the opportunity for regular rental income and long-term appreciation. Unlike other types of Edmonton commercial real estate, multifamily properties provide a more predictable income stream, as tenants typically sign leases for one year or more. Additionally, the demand for multifamily properties can be high, especially in urban areas with a high cost of homeownership or a robust rental market. However, like any investment, multifamily properties come with risks. Maintenance, management costs and the property’s condition should be considered before you purchase. Despite these challenges, investing in a multifamily commercial property can provide a stable and lucrative investment opportunity for those willing to put in the effort and resources required for successful management.
Retail buildings, such as stores, restaurants, and other businesses, are typically used for commercial purposes. Investing in such facilities involves purchasing them and leasing the space to tenants who will pay rent to the investor. The investor can then earn a steady stream of income from the rent payments. Additionally, the value of a property can appreciate over time, providing the investor with the potential for capital gains when they sell the property. Changes in the local economy or the retail industry will always be risky. Still, like any investment, with careful consideration and research, you can determine if the asset is worth the risk.
Investing in hospitality properties for commercial real estate can be an attractive option for investors looking to diversify their portfolios. The hospitality industry includes motels, hotels, resorts, and other lodging establishments, and investing in these properties can provide a steady stream of income from room rentals and other amenities. With that said, the hospitality industry can be cyclical and subject to fluctuations in tourism and travel, impacting occupancy rates and profitability. Researching the market and factoring in things like brand recognition and location is paramount before investing in a hospitality property.
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Realty Unleashed serves buyers and sellers in both Edmonton and Calgary, helping our clients find suitable Edmonton commercial real estate investments for their portfolios. If you are looking for an Edmonton REALTOR® or Calgary REALTOR® to assist you in navigating the commercial market, we’d love to hear from you. Fill out the form below, and one of our team members will get back to you soon.