Commercial building

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For places named "Commercial Building", see Commercial Building (disambiguation).
A commercial office/retail building.

A commercial building is a building that is used for commercial use. Types can include office buildings, warehouses, or retail (i.e. convenience stores, 'big box' stores, shopping malls, etc.). In urban locations, a commercial building often combines functions, such as an office on levels 2-10, with retail on floor 1. Local authorities commonly maintain strict regulations on commercial zoning, and have the authority to designate any zoned area as such. A business must be located in a commercial area or area zoned at least partially for commerce.

Not any structure can call itself a commercial building. In order to qualify, the structure must dedicate a minimum of 50 percent of its floor space for commercial use, purposes or activities, and produce income . The property can be bought or leased by companies interested in operating within that space. The structure may not be used for civic or residential functions. However, an exception to this rule is represented by apartment buildings that are owned by a company. Even though they are residential structures, the company makes a profit from the residents who lease apartments in the building. If an individual rents a house or an apartment, however, it does not fall under the definition of commercial building.

Other kinds of commercial buildings[edit]

Schools, hospitals and other kinds of non-profit buildings, companies and organizations are still considered to be commercial, as well as industrial real estate, as long as the space is put towards manufacturing, distributing or storing a product in a warehouse.

Ownership[edit]

Group entities, as well as individuals can own or build commercial buildings in order to turn profit. They are sometimes constructed by certain organizations, in order to host company operations, but usually, commercial buildings are built with the purpose of either being leased for income or sold for profit.[1]

Contribution to the economy[edit]

The construction of commercial buildings greatly contributes to the economy and the Gross Domestic Product (GDP) of the country. According to The Wall Street Journal, a 2010 count indicated commercial buildings and real estate worth $6 trillion , but that money does not all go to the state. It is estimated that in 2008, it brought in 4.1% of GDP, which amounted to $586.3 billion, while in 2013, it only represented 2.7% of GDP, or $436.4 billion. Construction and value of commercial buildings were able to continue to grow even after the housing market collapse in 2006 because they hit their low after residential real estate does.[2]

Commercial loans were at $991.2 billion in 2013, with a significant percent of them due in the next period (2015-2017); most of these loans are for apartment buildings. Because the loans were made a decade ago, during a period of high property values, this may trigger a second economic recession, seeing as values today are significantly lower.

Investing in commercial buildings[edit]

Any individual is free to invest in a commercial building, if they so choose. The method that is known to be safest, easiest and most reliable is via Real Estate Investment Trusts (REITs). REITs work by buying and selling commercial buildings and other commercial real estate on the stock market and investors receive certain earnings, like dividends, which are taxable. This means that the investor is protected to a certain extent, not having to buy the building, take out a mortgage, etc. Moreover, the investor does not have to be the one to manage the buildings, as they are already taken care of by trained professionals.

See also[edit]

References[edit]