Commercial Building and the Uses of Commercial Property

Commercial building

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Commercial Building Property and the Uses of Commercial Premises

A business premises can be used to sell, store or manufacture goods, as well as to provide services. A commercial building is an enclosed structure designed to be occupied by businesses or organizations. Building codes tend to be stricter for commercial buildings than residential ones, as on matters of accessibility and in the United States are usually limited to commercial only zoning districts. Examples of commercial buildings includes:

  • Stores
  • Restaurants
  • Professional office buildings
  • Doctors offices including dental, optometry, etc.
  • hotels ( with the possible exception of extended stay hotels)
  • Schools (especially private schools)
  • Land – This category includes investment properties on undeveloped, raw, rural land in the path of future development. Or, infill land with an urban area, pad sites, and more.
  • Industrial – This category includes warehouses, large R&D facilities, cold storage, and distribution centers.

Categories of Commercial Real Estate

Categories of Commercial Real Estate
Hospitalityhotels, public houses, restaurants, cafes, stadiums, sports venues, nightclubs, amusement parks, movie theaters
Retailretail stores, convenience stores, shopping malls, shops, showrooms
Officeoffice buildings, serviced offices
Healthcaremedical centers, hospitals, nursing homes, dispensaries
Multifamily (apartments)multifamily housing buildings
Educationalschools, colleges, universities
Industrialfactories, warehouses, workshops, automobile repair shops.

Of these, only the first five are classified as being commercial buildings. Residential income property may also signify multifamily apartments.

Tax aspects

When it comes to real estate valuation, there are differences between residential real estate and commercial real estate. While owner-occupied residential properties are generally valued using the real value method, commercial and rental properties are usually valued using the discounted earnings method.

Commercial real estate is to be distinguished from residential real estate and special real estate in terms of treatment in tax law (sales tax, depreciation), in the area of ​​financing and in building law. However, due to its nature, a property can serve both residential and commercial purposes (e.g. holiday home, office, loft, studio, farm) and then belongs to the mixed-use properties.

Photo credit: Foundry via Pixabay

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