The Difference Between Industrial, Retail and Commercial Real Estate

Retail and industrial are both considered 'commercial real estate' (as opposed to 'residential real estate'). Commercial real estate refers to buildings or land intended to generate profit; industrial and retail are simply sub-categories of commercial real estate.

Firstly an industrial property is defined as a property used for the actual manufacturing of something, and can be considered either a factory or plant. This is usually zoned for light, medium or heavy industry. This includes things such as warehouses, garages and distribution centers etc.

Retail property is a commercially zoned property used solely for business purposes, the actual selling of the product, rather than its manufacture - retail stores, malls, shopping centers and shops all huddling nicely under the retail umbrella.

Generally, businesses that occupy commercial real estate often lease the space. An investor usually owns the building and collects rent from each business that operates there.

There are four primary types of commercial real estate leases, each requiring different levels of responsibility from the landlord and the tenant.

Single net lease - tenant is responsible for paying rent and property taxes.

Double net lease - tenant is responsible for paying rent, property taxes and insurance.

Triple net lease - tenant is responsible for paying rent, property taxes, insurance and maintenance.

Gross lease - tenant is responsible only for rent; the Landlord pays property taxes, insurance and maintenance.

If you find yourself considering Commercial property ownership, there are a few things that you would do well to keep in mind:

1) Attractive appearance - the last thing you need is a vacant commercial property in Sydney for any length of time. Think how prospective tenants think: what will their customers want to see?

2) Aesthetic entrance - first impressions count, simple, simple stuff. This is a great tool for putting your prospective clients in a great frame of mind... and their clients.

3) Natural Light - in especially high demand nowadays

4) Location - close to other offices, public amenities, transportation etc.

Since 1980, retail property has returned an average of 9%, though is currently returning around 6%. Industrial real estate tends to be the most volatile, and is currently returning around 7% (as opposed to its peak of around 12% during the 1990's recession).

And obviously, no matter which form of commercial property you're considering, read the lease carefully. Sounds like a silly thing to say, but you'd be very surprised at the issues that can become issues simply because things weren't read properly!

Property Franchise Trends

In today's economy, the property industry seems to have taken a beating. However, is this true for those businesses that sell property in Britain? Most people would probably assume they were hurting. However, you really have to research the trends of the industry to know for sure. Here are some of the trends observed over the last few years in the industry:
 
·   The property market in the UK seems to have stabilized. A lot of young couples today are having trouble finding and getting approved on their loans. Although this is frustrating for them, it is good news for the Letting industry. In May 2008, Rentright UK reports showed that the average rent was up nearly 8.5 percent. Many owners are now going back to renting properties that did not sell. If you aren't in the Letting industry, now is a good time.

·   Nothing is ever as bad as it seems - usually. In the end of 2008, one of the leading property agencies in Britain reported an increase in sales over 2007. And, in January 2008, the Building Societies Association said that they had an increase in mortgage approvals.

·   Currently, the exchange rate is favourable - especially with the US dollar. This means that international property sales are higher than they have been in a long time. There was actually a 50 percent increase in UK properties that were sold to US customers last year. 

·   Properties overseas are also doing well, especially in the Middle East, Saudi Arabia, and Jordan. These areas have also had an increase in the number of income from tourism. Because of this, people are investing in properties there and hoping to rent them to tourists.

 
A couple of things can be observed from this information. First, things are not always as bad as they appear. So, if you are working in the real estate industry, do not be so quick to rush for another job. Second, if you do not live in the UK, it may be time to move to the UK! Or, at least consider buying a property to let out to tourists or even locals. And, finally, for those of us who live in London. If you can get approved for a mortgage, now is the time to buy. Don't waste your money on increased rent prices if you do not have to. Start looking today for the perfect property for your needs!