What Is Commercial Real Estate?


commercial construction

What is commercial real estate?

Commercial real estate is separated from residential real estate because the properties are used solely for business purposes. This includes shopping centers, hotels, manufacturing plants, apartments, agricultural sites, other office or retail spaces, and even land slated for business development. As a general rule, if the building isn’t a private dwelling, it’s a commercial property. There are some key differences between these segments of real estate and should be considered before entering into any transactions in either case.    

Land Development

A commercial builder must be well versed in how to navigate the world of land development, especially pertaining to municipal approvals, site evaluation, land acquisition, and master planning.

Disclosure Laws

As with most of the laws associated with commercial real estate, disclosure laws and requirements vary from state to state. Under federal law, for the safety of the general public, commercial property owners must disclose any knowledge of asbestos, lead paint, or other environmental hazards that may be associated with the property. One other common law is that it’s the obligation of the seller also to disclose any major defects that affect the value of the property. The definition of the defects, however, does vary from state to state. It’s important to refer to the specific laws of the state in which your commercial property is being developed.


Unlike with residential cases, commercial foreclosure proceedings require an additional step because of the loan terms. Commercial properties generate income in the form of rent, which is then assigned to the lender when there is a default. In this case, a judge will then appoint an independent receiver to manage the rent collection of the property, pending its sale.  

Zoning Laws

Local government entities use zoning laws to regulate the type of development that is allowed on a particular piece of land, in a particular zone of the municipality. Zoning laws are in place essentially to maintain the balance and safety of the community for residents’ well-being. In general, the laws divide areas of land for use as residential, industrial, historic, agricultural, or commercial.

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This entry was posted on Tuesday, January 23rd, 2018 at 12:39 pm. Both comments and pings are currently closed.

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