What are the types of commercial buildings?

There are many different types of commercial buildings, each offering its own features and benefits. And when looking for a commercial property or commercial real estate for sale in Iowa, it’s important to understand the different sectors that make up the commercial real estate market. This will help you narrow down the search and find a space that suits the individual needs of your business or client.

First, there’s the basics. Most commercial real estate or commercial property for sale falls into one of five categories: retail, industrial, office, hotels, or special purpose. But it’s not as straightforward as it may seem. Within these basic categories are subsets of building types, and choosing the right one can have a major impact on your success.

Now, let’s take a look at the five basic categories of commercial buildings and take a deeper dive into each one. In no particular order…

#1: Retail Buildings

Retail is a fairly broad category, encompassing a range of businesses that includes everything from department and big box stores (like Walmart and Target) to mom-and-pop shops, groceries, food stores, banks, restaurants, drug stores and more. Retail centers can be multi-tenant spaces—usually featuring a lead tenant, which draws large crowds that may shop at the surrounding businesses—or single-use buildings, which only serve one business. When looking for a retail commercial building, you should consider the obvious factors, like the location and the business climate of the surrounding community, but determining whether you want a single- or multi-use building should be one of the first items on your list.

#2: Industrial Spaces

Industrial buildings serve a wide variety of businesses and are usually located close to highways, rail stations, waterways, airports and mixed transportation infrastructures. These buildings tend to be in lower-density areas, outside urban zones, and are often grouped into industrial parks.

Industrial spaces are typically designed for the following categories: heavy manufacturing (these buildings typically house heavy machinery), light assembly, bulk warehouse (large distribution centers) and flex or flexible industrial (buildings with a mixed use of office and industrial space, such as a corporate headquarters with a distribution center).

#3: Office Buildings

Much like retail buildings, there are a wide variety of office spaces designed for many different types of tenants. Traditionally, office buildings have been divided into two categories: urban properties, which are typically skyscrapers and high-rise properties; and suburban properties, which tend to be smaller and are often grouped into corporate parks. But recently this dynamic has shifted, with suburban offices adopting many of the trends that have, in the past, been signatures of the urban office market. Today, many suburban offices are incorporating amenities like on-site high-end restaurants, open collaboration spaces, coffee bars and even large outdoor parks that are open to the community.

The most important factor in selecting an office space is choosing a location that will appeal to your employees and your clients. Consider the office’s proximity to where your employees live, as well as nearby or on-site amenities. As the talent market becomes increasingly competitive, it pays to look for office buildings with attractive features.

There’s one last thing to consider when shopping for a commercial office property. Office buildings are usually classified by one of three tiers: Class A (the most prestigious buildings, which tend to offer exceptional amenities and beautiful interior design), Class B (which offer lower rates and moderate features), and Class C (which focus on offering functional spaces for below-average prices).

#4: Hotels

This may seem like a fairly self-explanatory category, but hotels are actually a highly diverse sector.

Within the hotel sector, there are independent and flagged hotels (chains, like Hilton or Marriott). These two major categories can be split into a number of sub-categories, including: boutique (a hotel that isn’t part of a large chain and typically has fewer rooms), full-service (these hotels offer room service and usually an on-site restaurant), limited service (no room service or restaurant), resort (a full-service hotel that typically occupies a large area of land with attached entertainment facilities), extended-stay (rooms typically include kitchens and guest rooms), and, finally, casino.

#5: Special Purpose Buildings

While the vast majority of commercial real estate buildings fall into one of the four categories previously listed, there are some that don’t neatly fit into a sector. This includes operations like churches, amusement parks, minigolf courses, storage facilities, and any other business or institution that wouldn’t belong in an office building, hotel, industrial space or retail complex.

Clearly, businesses in this sector must account for an entirely different set of priorities when looking for a building, but the same basic principles of real estate apply: Look for a business-friendly community, choose a place that’s near your workforce and your customers, and find a space that has all the features and amenities you need—at the right price, of course.

Thanks for reading! If you’re in the market for commercial real estate in Iowa, take a look at Altoona. Located just fifteen minutes east of Des Moines, Altoona is a growing community with thriving retail, entertainment, logistics, transportation and manufacturing businesses. Learn more here.