Making Money with Commercial Property Made Easy (Part 2 of 2)

Mar 23,2017  Arrow Properties

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In the previous post, we discussed how commercial estates can offer a number of ways for making a few extra bucks. As the prices continue to soar, more and more money is required to meet everyday expenses and live a relaxed life.

We also learned about 2 types of commercial properties. Now, let’s have a look at the other types: -

  1. Retail

Retail is a popular type of commercial property. Retail sector includes everything from the neighborhood shops to the humongous malls, which come with numerous shops and entertainment facilities.

High-rise buildings are rarely used for retail purposes. Instead, only a portion of these properties is dedicated to retail use, usually the ground floor, in order to attract more customers.

International Council of Shopping Centers (ICSC) is the retail industry regulatory organization and it defines the following types of retail centers: -

  • MallsMalls have a number of tenants like restaurants, retail, etc. They also have many anchor tenants. An anchor tenant is the one who draws the attention of customers. For example, Walmart. The size of malls (or Regional Malls) varies from 400,000 to 800,000 sq. feet whereas super regional malls start from 800,000 sq. feet.
  • Community & Neighborhood Centers– These centers usually have a mixture of general merchandise and other convenience-oriented tenants. Many anchor tenants are found in these centers in the form of grocery and drug stores. The size of these centers ranges from 30,000 to 400,000 sq. feet.
  • Strip Centers– Strip centers are small estates which may or may not have anchor tenants. They often have many small convenience stores like dry cleaners, restaurants, salons, etc. The size of strip centers is also smaller than 30,000 sq. feet.
  • Power Centers– These centers are dominated by huge anchor tenants like Best Buy, Bed Bath & Beyond, and Dick’s Sporting Goods. These anchor tenants occupy large spaces, usually between 30,000-200,000 sq. feet. These centers have a limited number of small tenants.
  • Lifestyle Centers– The construction and maintenance of enclosed malls slowly became a demanding task. This gave birth to a newer generation of open Lifestyle Centers which feature many retailers along with entertainment and dining facilities. The size of these centers ranges from 150,000-200,000 sq. feet.

The price and rent of retail properties largely depend on the position of the economy, location, traffic flow in the region, etc.

  1. Multifamily

If a building has 5 or more units, then it is termed as a multifamily apartment. They range from high-rise buildings with many occupants to largeresort-style complexes with numerous facilities like swimming pool, fitness center, etc.

In terms of size, Apartment buildings can be classified into the following three categories: -

  • Lowrise or Garden Apartments –Garden Apartments came into existence somewhere around the 60’s when youngsters started movingfrom urban areas to the suburbs. These apartments usually have 3-4 stories, 50-100 units, surface parking, and no elevator.
  • Midrise Apartments –Midrise Apartments have 5-9 stories with 30-110 units as well as an elevator. They are more prevalent in urban locations.
  • Highrise Apartments–High rise Apartments have an upward of 9 stories and are found in large markets. They tend to have 100+ units, and the building itself is professionally managed.

The lease on this type of property is for the short-term (usually 1-2 years) and alters quickly according to the market conditions. Real estate consultant of California can assist you to get the lease on the estate you are interested in.

  1. Mobile Home Park/RV Park

Recreational Vehicles (RVs) have quickly become popular in the US and the reason behind this is the comfort they offer as you hit the roadon a long journey. The increased demand for these vehicles has also lead to a rise in the number of Mobile Home Parks.

This makes the idea of owning an RV Park quite a sensible one. The rents for using the spaces inside the park is also reasonable which keeps the occupancy rate on a higher side. The term of the loan on such properties could be 20 or 30-year with either fixed or variable interest rate.

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