4 Different Types of Office Space You Can Invest In
There are a lot of options when it comes to investing in commercial real estate. Residential properties and office spaces are particularly attractive because you can purchase one building and have multiple income streams. The turnover rate in office buildings tends to be lower than in residential properties because of the build-outs that businesses require when they move into a new space.
If you are contemplating investing in office space, then the first step is to understand the different types of buildings that businesses call home. Each comes with its own benefits and challenges.
Central Business District
The central business district, or CBD, is the main center of business in a city. These properties attract large companies with household names. Business districts have high or mid-rise buildings in urban areas. Commercial real estate in the city will be a more costly investment. However, the return on investment is proportional, meaning you will be able to charge a much higher rent. Special considerations for CBD investments include access to parking, elevator maintenance and proximity to amenities, like restaurants.
Commercially Zoned Homes
Old homes were often built on the main road through rural areas. As time went on and towns developed, these homes were either replaced by more modern retail spaces or zoned for commercial use. Commercially zoned homes are attractive to local businesses that want to distance themselves from the corporate feeling of sterile office spaces. You will see a lot of law firms, real estate offices and tax professionals in these converted homes. The number of tenants a home like this will hold depends largely on the individual property. Consider that outdoor patios and yards will require extra maintenance.
Medical Office
Many commercial real estate experts consider medical office space to be the most stable type of investment. This is due to the extensive build-outs that these businesses require. Medical tenants may spend up to $200 per square foot to outfit their office according to strict industry requirements. Once that money is spent, tenants are motivated to stay in that space for as long as it is feasible. Keep in mind that some of the specific renovations may fall on you. These could include larger elevators, extra plumbing and special access for those with disabilities.
Suburban Office Buildings
Suburban office properties are low to mid-rise buildings in suburban areas. They tend to be in campus-like settings with green space and shared parking. These smaller buildings are attractive to businesses looking for a lower rent than what is available in the city. From an investment perspective, suburban office buildings are less expensive to purchase and maintain.
