Investing in Commercial Real Estate


Commercial real estate is property that generates income by being used for business and non-residential purposes. Examples include office buildings leased to white-collar employees, retail structures like grocery stores and big box shops, industrial buildings that house manufacturing facilities, and medical spaces such as hospitals and surgical centers. Commercial real estate can also include multifamily residential complexes, which are structures built for housing more than one family.

Investors who buy and operate commercial properties can earn returns through rental income and price appreciation. The risk profile of commercial property investments is higher than that of residential real estate, however. This is due to the prevalence of net leases, which shift a significant portion of property expenses to tenants, and the increased exposure to economic cycles since businesses are more likely to cut real estate costs during tough times. Also read

Indirect investment in commercial real estate is possible through REITs, crowdfunding and exchange-traded funds (ETFs). REITs are publicly-traded companies that own, operate or finance commercial properties. They can be a good choice for investors who don’t have enough cash or CRE expertise to purchase and manage commercial property themselves.

Investing directly in commercial property requires substantial assets and the assistance of an experienced broker or attorney to evaluate properties, perform due diligence and negotiate terms. It’s possible to work with multiple brokers, and a broker who specializes in a specific commercial property type may have better knowledge of the market than a generalist.

A commercial agent or broker can also serve as liaison between landlords and tenants. For example, a dentist looking to move his or her practice to a new space would work with a commercial agent specializing in dental real estate. In this role, the commercial agent can provide in-depth demographic and location data as well as financial analyses to help their clients make an informed decision.

Commercial real estate can be a lucrative career for those who are skilled at networking and connecting people, are highly analytical and have a strong understanding of real estate markets and the buyers and sellers in them. To succeed, a commercial real estate professional must be able to understand the unique needs of each client and match them with an appropriate property.

NerdWallet’s writers are subject matter experts who use primary, trustworthy sources, including government websites, academic research and interviews with industry experts to inform their writing. All of our content is fact-checked and edited for clarity and accuracy. Learn more about our editorial standards.


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