Asset Classes

  1. Home
  2. Asset Class
  3. Real Estate
  4. Commercial Real Estate

Commercial Real Estate

Acronym
CRE
Parent Asset Class
Real Estate

Commercial Real Estate (CRE) is property used exclusively for business purposes or to provide a workspace rather than a living space. Commercial properties used for business activities are referred to as house businesses, lands that generate profit, as well as residential rental properties. Ranging from a single gas station to a huge shopping center, Commercial real estate includes retailers of all kinds, office space, hotels, strip malls, restaurants, and convenience stores.

  • commercial properties are valued on their long-term predictable income streams
  • Valuation is based on a "Cap Rate" (Capitalization Rate)
    • Cap Rate of 10 used to be a good deal (rare as of 2018)
    • Falling interest rates (and higher property prices) have reduced cap rates significantly

Warnings and Disclaimers

The information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. It is not designed to meet your personal financial situation - we are not investment advisors nor do we give personalized investment advice. The opinions expressed herein are those of the publisher and are subject to change without notice. It may become outdated an there is no obligation to update any such information.

Copyright Finnotes.org © 2018 - 2020