Commercial property (also known as commercial real estate, investment property, or income property) is real estate (buildings or land) that is intended to benefit from capital gains or rental income. Office buildings, medical facilities, hotels, malls, grocery stores, multifamily housing buildings, farmland, warehouses, and garages are examples of commercial property. For borrowing and tax purposes, a residential property with more than a certain number of units counts as commercial property in many states.
Commercial buildings include office buildings, factories, and retail buildings (such as convenience stores, "big box" stores, and shopping malls) that are used for commercial purposes. A commercial building in a city may have a mix of functions, such as offices on floors 2-10 and retail on floor 1. Multi-use buildings are those that have a large amount of space dedicated to various uses. Local governments also enforce strict commercial zoning laws and have the power to classify any zoned area as such; a company must be situated in a commercial area or an area zoned at least partially for commerce. Commercial real estate can be divided into five categories that include office buildings, retail/restaurant, multifamily, land, and miscellaneous. Typically, a broker will find a property that meets the acquisitions, capital spending, or private equity firm's requirements. The company will conduct an informal evaluation of the property's position and future profitability, and if they are interested, they will sign a letter of intent (LOI) indicating their intent to proceed.
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