What Is Considered A Commercial Property?

When business owners decide to start a new company or expand the business operations of an existing one, they will have to look for premises to house their companies, and such kinds of property are typically commercial buildings. A commercial building is any property that is primarily utilized for business purposes.

For property to be considered as commercial property, it has to meet the following requirements:

1. 50 Percent rule

A building that qualifies as a commercial building should have a minimum of 50% floor space being solely used for commercial reasons such as service provision, retail, and others. As such, a 20-story building with 9 floors being used commercially and the rest dedicated to other uses that don’t generate income does not qualify to be a commercial building.

2. Income generator

A second requirement for property to be considered as commercial is income generation. If a building or piece of land is being used to make money, then it can be regarded as commercial property.

3. Lease technique


Another additional and quite important factor that can be used to determine whether a property is commercial is the method being used to lease. For commercial property the occupant pays differently since they typically pay a specified fee per square foot.

So, what are some of the categories that can be considered to be commercial property?

As you already know by now, commercial property has to be used mainly for commercial purposes, and in some cases, owners even consider hiring LCI Realty property management and other property management services since some of these are massive projects that might need external management. Here are some of the properties considered to be commercial:

1. Industrial

This is one of the most apparent commercial property that is commonly used for manufacturing, assembly of products, and warehousing. They are typically large spaces which have been customized to house big machinery, and they are typically situated where there is easy highway access.

2. Hotels

Hotels are considered commercial properties without considering the type or size. They include limited service hotels, extended stay hotels, and full-service hotels.

3. Land

Land that is meant for commercial use is typically divided into three major types that include brownfield land, greenfield land, and infill land. Brownfield land is land that had set aside for industrial use and may now be impaired. Infill land is land that is vacant even though it has already been developed. Greenfield land, on the other hand, is the land that has not been developed.

4. Multifamily

Apartment buildings are in most cases seen as residential property, but this is not the case – they are commercial. That is the case for high-rise, mid-rise, and garden apartments.

5. Office


Office properties in urban and suburban areas also have the qualifications to be commercial properties, whether they are mid-rise buildings, office campuses, or office parks.

6. Retail

Retail property such as shopping malls, community centers, and others are also commercial properties which can be home to several stores and businesses.

7. Special purpose

Several other properties fall under the special commercial property category and may include theme parks, self-storage buildings, and even churches.

In a nutshell, the basic way to determine whether a property is commercial or not is whether it is utilized for commercial reasons. Most, if not all property being used for income generation are considered to be commercial property.