Commercial real estate defined

On Behalf of | Jun 23, 2022 | Real Estate Law |

As business reopens, the economic environment for office buildings, stores, warehouses, and other commercial real estate property is changing. Investors, landlords and renters should understand the basics of this commercial real estate.

New Jersey real estate law governs commercial real estate transactions. This real estate is property that is issued to generate money from leases or as an investment. Except apartments, commercial real estate does not include property used only for lodging.


Office, multifamily, retail, and industrial are the four major types of commercial real estate. It also includes mixed-use property which does not fall exactly into any of these categories.

Multi-use property includes these uses:

  • Special purpose used for places of worship, aquariums, theaters, and other properties that are not easily convertible for other purposes.
  • Hospitality including hotels and resorts.
  • Medical offices or clinics used for outpatient medical purposes.
  • Cold storage including large and refrigerated industrial properties used to store perishable food and medicine.
  • Affordable housing used by individuals or families earning less than the median income.
  • Manufactured homes which are prefabricated and factory-built homes, commonly referred to as mobile homes.
  • Assisted living residential properties for older adults and having care providers.


A real estate investment trust is a popular investment option for commercial real estate. REITs own, finance, manage and operate real estate and earn rental income from the properties they manage.

REITs own an estimated 500,000 commercial real estate properties in this country that are worth $3.5 trillion. Most of them are publicly traded companies. Buying REIT shares is a common investment.

REITs may also be privately owned. These companies collect individual investments from their investors instead of investors buying shares of their company. However, the SEC does not regulate privately-owned REITs.

Most private REITs require a minimum investment from $1,000 to $25,000. Others involve high net worth investors and require higher minimum investors.

Investors may also directly invest by purchasing a commercial property and leasing it to a commercial tenant. This generally requires a larger personal investment than a REIT.


Brokers may provide more accurate valuations which are based on location and business trends. Individual properties are classified by quality amenities, age, parking ratios, and security systems.

These property designations are typically used:

  • Class A: Usually newer and well-located properties with modern amenities and may have architectural significance.
  • Class B: Usually offering standard amenities and a favorable location and may have been a Class A property.
  • Class C: Older buildings in less favorable locations with fewer amenities, poorer maintenance, and less visual appeal.

Attorneys can provide invaluable assistance with these transactions. They may also protect interests when disputes arise.