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Commercial Real Estate

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commercial real estate

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Definition: Commercial real estate is any property owned to produce income. It usually refers to shopping centers, office buildings, and hotels. This includes medical and educational buildings. It includes vacant land that will eventually be leased, or built upon for buildings to be leased.

A second category, apartment complexes, can also be included. Sometimes that's lumped into reports on residential real estate. A third category is industrial real estate. This property is  used to manufacture a product. 

Data about commercial real estate trends is usually a lagging indicator. That's because commercial real estate development is built after residential. Shopping centers, offices and schools are usually built after an area has the homes and shoppers to support it. It can also take several years to construct commercial real estate. During a recession, commercial real estate hits its low after residential real estate.

Commercial real estate is a component of Gross Domestic Product (GDP). In 2012, commercial real estate contributed $463.4 billion, which was just three percent of GDP. This was added to the $6 trillion worth of commercial real estate last counted in 2010. (Source: Wall Street Journal, Signs of Recovery, October 5, 2010) Article updated November 4, 2013

 

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