Types of Commercial Real Estate Properties for Investment

Commercial real estate spans a wide range of property types — from office towers and retail centers to warehouses, medical facilities, and hotels.

There are nearly 5.9 million commercial buildings in the US covering about 97 billion square feet — and these assets serve different tenants, operate under distinct market conditions, and produce very different returns.

Some of these properties are held by investors looking to generate income while others are owned or leased by businesses to support day-to-day operations (what’s known as corporate real estate).

You need to understand what sets each commercial property type apart to invest wisely if you are interested in  CRE investing.

Knowing the strengths, risks, and revenue models of different types of real estate helps you:

• Choose property types that match your target returns, timeline, and risk appetite
• Gauge performance in context—not just by location, but by sector
• Secure the right financing terms based on property type and market dynamics

Why does this matter right now? Because commercial real estate activity is picking up.

Total transactions across major CRE sectors hit nearly $60 billion in Q2 2024 — a 31% jump from the previous quarter, indicating that investor confidence is returning in specific asset classes that are outperforming others.

In this guide, we’re breaking down the major types of commercial properties, explaining what drives their performance, and sharing examples and context to help you identify the right asset class for your investment goals and risk profile.

Office properties

Office buildings provide workspace for organizations of all sizes, and they are used for everything from headquarters and admin hubs to client meetings and day-to-day operations.

These types of commercial real estate support a mix of uses — private offices, shared work areas, meeting rooms, and reception space — designed to keep teams productive and connected.

Types of office properties

Central business district (CBD) offices –

CBD offices are usually high-rises located in the urban core, near financial institutions, public transit, restaurants, and other major amenities. One good example is Salesforce Tower in San Francisco.

Tenants often include global corporations that value prestige and convenience. Because these locations are in demand, rent tends to track closely with the city’s economic health.

Suburban offices –

These buildings are located outside city centers, often in campus-style business parks or along major roads. They feature larger floor plates and ample parking.

 Because they are located near major roads, they are easier for employees to reach by car.

Suburban offices appeal to companies looking for more space and lower rents, as well as those who want to be in a less congested environment.

You’ll find a lot of regional offices, tech firms, and call centers in these types of commercial buildings.

The 7000-acre Research Triangle Park in North Carolina is a good example of a suburban office. It is home to hundreds of companies, many of them government agencies, science and technology firms, and academic institutions.

Medical office buildings (MOBs) –

MOBs are purpose-built for healthcare tenants. They often include features like ADA-compliant layouts and upgraded plumbing, along with space for specialized equipment.

These buildings may stand alone or form part of a larger hospital or clinic complex, and tenants range from general practitioners and specialists to diagnostic labs and outpatient surgical centers.

Demand for MOBs tends to stay steady, even during economic downturns. Independence Family Health Center in Cleveland, Ohio is a good example.

Classes of office properties

Class A –

These are either new or recently-updated top-tier properties with high-end finishes, along with energy-efficient systems, fast internet, and luxury amenities like gyms or concierge desks.

They are located in strong markets and tend to attract large, creditworthy tenants willing to pay premium rent for quality and convenience.

Class B –

Class B buildings are older but well-maintained, so while may lack some high-end features, they still provide solid, functional space.

These properties are priced lower than Class A and appeal to mid-sized businesses and nonprofits, as well as professional firms. Some Class B buildings can be upgraded and repositioned to attract stronger tenants.

Class C –

Class C buildings often need serious work — from mechanical upgrades to cosmetic improvements — and sit in less central locations.

These properties attract small businesses with tight budgets. It’s possible to reposition a Class C property, but only if you know what upgrades can directly boost the property’s appeal and income potential.

Key considerations

1. Longer could leases mean stable income but less flexibility. Office leases usually run three to ten years and sometimes even longer for large tenants. This can give you as a landlord consistent cash flow. But on the flip side, you can’t raise the tenant’s rent until the lease expires even if market rents go up. And if you plan to redevelop or sell the building, existing long-term leases can complicate and/or delay those plans.
2. This sector moves with the economy and with work trends. Office demand rises during economic booms (when companies grow and hire) and drops in slowdowns. Right now, many companies are downsizing or reconfiguring their space to accommodate remote and hybrid work trends. Buildings that do well tend to offer flexible floor plans and shared breakout areas, as well as wellness features like natural light, air filtration, or on-site fitness.

Retail properties

These types of commercial space house businesses that sell goods or services directly to the public. They’re essentially storefronts where customers can browse, buy, and interact directly with products and staff.

Read About: 5 Winning Retail CRE Leasing Strategies for Thriving in a Competitive Market

Location is extremely important because foot traffic, visibility, and easy access drive performance in this segment.

Types of retail properties

• Strip centers – These small open-air retail rows usually front a parking lot and cater to quick errands. They are popular with dry cleaners and nail salons as well as takeout spots and local boutiques. Strip centers depend on convenience and neighborhood traffic—they rarely attract anchor tenants, but steady local demand keeps them relevant.
• Neighborhood centers – These centers are larger than strip centers and usually anchored by a grocery store or major drugstore. They serve surrounding residential communities and focus on everyday needs — think bakeries, casual restaurants, banks, and service businesses.
• Power centers – Power centers revolve around national big-box anchors — retailers like Target, Best Buy, or Home Depot. These spaces stretch across large sites and pull in shoppers from a wider radius. Smaller shops fill in the gaps, but the anchors drive most of the traffic.
• Regional malls – Malls combine retail with entertainment. They are anchored by department stores and surrounded by dozens (or even hundreds) of smaller specialty retailers. Attractions such as food courts and movie theaters help draw visitors and turn regional malls into all-day destinations. But many of these assets have seen foot traffic decline as more shoppers turn to e-commerce.

CRE investors in this segment need to rethink how to stay relevant. Some have found success in adding new uses like offices or even housing.

For example, the Landmark Mall in Alexandria, Virginia is being redeveloped into a mixed-use complex with medical offices, residential units, retail, and a new hospital campus anchored by Inova Health System.

• Standalone stores (also called single-tenant retail) – These are freestanding buildings that are leased to one tenant such as a fast-food chain, pharmacy, bank, or auto service center.

Brands like McDonald’s and Walgreens often use these locations to control their layout as well as their signage and customer access. These stores are usually placed along busy roads or intersections to maximize visibility and capture high volumes of drive-by traffic.

What to keep in mind

1. Retail moves with consumer confidence. Occupancy and rents tend to rise when people spend more, but when consumers cut back, sales drop — and so does demand for space.

Vacancies can spike during downturns especially in properties focused on discretionary goods. Commercial real estate investors in this space need to watch economic indicators closely.

2. E-commerce has changed retail CRE. Online shopping has pushed brick-and-mortar retailers to reassess how much space they need and how they use it.

Some have responded by adding in-store pickup for online orders, shrinking their floorplans, or creating more experience-driven spaces to attract foot traffic.

Hospitality properties

Hospitality properties are built to accommodate short-term guests such as tourists, business travelers, and anyone in need of a place to stay. These assets provide lodging along with specific amenities — like on-site dining, meeting rooms, gyms, or concierge services — that cater to the needs of different types of travelers.

Types of hospitality properties

Full-service hotels –

These commercial properties go beyond a bed and bathroom — they also offer multiple dining options, meeting rooms, spas, pools, gyms, and concierge services.

You’ll usually find them under major brands like Marriott or Hilton. Their rates and revenue tend to rise with location quality and service depth.

Limited-service hotels –

These hotels focus on the essentials: clean and functional rooms, Wi-Fi, and basic services like free breakfast or a small fitness room. What they lack in luxury, they make up for in affordability and efficiency. Limited-service brands like Hampton Inn or Holiday Inn Express are good examples.

Extended stay hotels –

These are designed for longer visits (often a week or more), so rooms might have kitchenettes, laundry access, and living areas to give guests more autonomy and comfort.

Corporate travelers on long assignments and guests who need temporary housing gravitate toward this format. Brands like Residence Inn or Extended Stay America specialize in this model.

What to keep in mind

1. The hospitality sector reacts quickly to economic shifts. Hotels fill up when business trips and vacations rise, but when the economy slows (or when global events disrupt travel), occupancy drops.

This makes hospitality one of the more volatile commercial property types. Events like pandemics, natural disasters, or geopolitical tension can lead to immediate revenue loss, but economic expansions create strong growth opportunities.

2. Watch RevPAR, not just occupancy. Revenue per available room (RevPAR) is the metric that matters most in hospitality. It captures both how many rooms are filled and how much they earn. You can calculate it in two ways:

• • RevPAR = Average Daily Rate (ADR) × Occupancy Rate
  • RevPAR = Total Room Revenue ÷ Number of Available Rooms

A higher RevPAR usually means that the hotel is filling more rooms at better rates. Investors and operators rely on this metric to gauge profitability and assess how the property is performing in the current market. It also plays a key role in determining the hotel’s overall value.

Special-purpose properties

Special purpose properties are built for one specific use — and that’s usually all they’re good for. Their layout, structure, and systems are customized so tightly to a particular function that converting them to something else takes major time and money.

Examples of special purpose properties

• Self-storage facilities – These properties are made up of rows of individual units rented out to people or businesses for extra storage. Because they’re built for one job—storing things—they’re not easily converted to anything else.
• Data centers – Data centers house servers and networking equipment in temperature-controlled environments. They’re power-hungry and wired for nonstop connectivity. They also require advanced fire suppression, backup power, and strict security systems. Demand for this type of real estate is rising because of the growth in cloud computing and AI technology.
• Car washes – Aside from tunnel washes and self-serve bays, plumbing, drainage, water recycling systems, and equipment are all baked into the infrastructure. Converting a car wash to retail or restaurant use would often require stripping the building to its bones. Their performance relies heavily on visibility and traffic flow.
• Cinemas (movie theaters) – Movie theaters feature sloped floors and fixed seating, large screens, soundproofed auditoriums, and projection rooms. Add in the lobby and concession areas and you’ve got a layout that doesn’t work well for much else. You will need to gut the interior to transform a theater into another type of commercial space.
• Religious facilities – These expansive gathering spaces (churches, mosques, synagogues, and temples) often have custom architecture and detailed features like pulpits or altars. These spaces are deeply tied to their intended purpose, so investors need to contend with design, zoning, and cultural hurdles to reposition them.

What to keep in mind

1. The value of special purpose properties depends entirely on the industry or user group they serve. If demand drops in that niche, the property’s income potential could take a direct hit. Investors should take a close look at the long-term outlook for the specific use case.
2. Special management is often required. In fact, managing these properties well is often what separates success from underperformance.

For example, data centers need people who understand server infrastructure and uptime requirements, while self-storage sites require a strategy around marketing, security, and customer service.

That specialization can limit the number of potential buyers or operators and make turnover riskier.

Read our blog on smart ways to buy commercial real estate for more tips.

Mixed-use properties

These commercial properties combine different types of real estate — residential, retail, office, and sometimes hospitality — within a single development.

These projects aim to create self-contained environments where people can live, work, shop, and relax without needing to leave the area.

You’ll often see apartments above ground-floor retail, office towers next to hotels, or entertainment spaces woven into residential neighborhoods.

 What to keep in mind

1. Mixed-use properties work especially well in urban infill locations — vacant or underused lots within cities that already have infrastructure in place. These areas tend to have high foot traffic, good public transit access, and strong demand for walkable neighborhoods.
2. These CRE assets can generate income from multiple sources: residential rent, retail leases, office space, and even hotel bookings. This reduces your reliance on any one sector. If the office market dips, strong apartment demand or retail sales can help balance things out.
3. Mixed-use projects are NOT simple to build or run. Financing can be tricky because each use type carries a different risk profile — and that may mean working with multiple lenders or structuring layered financing.

Developers also need to make sure that spaces function well together. After all, residents don’t want delivery trucks blocking their entrance and office tenants need different infrastructure than a coffee shop downstairs.

Zoning and permitting typically require approvals from multiple agencies because each use type follows different regulations. This makes the approval process longer and more complex than for single-use developments.

Once the building is up, day-to-day operations also require specialized management. Residential tenants have different expectations than retailers or office users.

You’ll need teams that understand each sector and can coordinate things like security, maintenance, parking, and shared amenities across the entire property.

Conclusion

To build a sound commercial real estate strategy, you need to understand how different commercial property types perform and why.

Each comes with its own income profile, lease dynamics, and exposure to market cycles. Some sectors respond quickly to economic shifts while others move slowly but hold their value over time.

These distinctions matter because misreading them can cause you to overpay for an asset, lock into financing that strains your cash flow, or invest in a property type that can’t attract or retain tenants — ultimately putting your returns and exit strategy at risk.

So before you commit capital, clarify what you’re targeting — steady income, appreciation, diversification — and weigh how each property type could help you achieve that goal. The closer your asset selection matches your strategy, the stronger your long-term outlook.

Whether you’re eyeing an office building, a retail center, or a mixed-use development, we can help you secure financing that fits your plan. Contact the Private Capital Investors expert team of private commercial real estate lenders to explore flexible loan options.

Sources

• https://www.rer.org/wp-content/uploads/CRE-By-The-Numbers-10-2-2024.pdf
• https://www.nar.realtor/sites/default/files/documents/2024-07-commercial-real-estate-market-insights-08-07-2024_0.pdf
• https://www.oldrepublictitle.com/blog/commercial-snapshot-q3-2024
• https://www.dealpath.com/blog/types-of-commercial-real-estate-buildings-asset-classes/
• https://www.vts.com/blog/the-6-types-of-commercial-real-estate-properties