Commercial real estate can be classified in various ways, according to its purpose, the quality of leased space, nature of multifamily structure or investment purpose.  CRE can also be defined by its current life-cycle phase (construction, acquisition, occupancy, operation, renovation, repurposing, disposal or demolition) and purpose of its financing (e.g., development or investment).

In term of its purpose, one of the ways in which CRE can be categorized is:

  • Office – Central business district (CBD) and suburban office buildings;
  • Industrial – Heavy manufacturing and light assembly structures, flex and bulk warehouses used for the manufacture and production of goods, including factories, mines and farms;
  • Retail – Strip center, community retail center, power center and regional mall;
  • Multifamily – Garden, midrise and high-rise apartments;
  • Hotels – Full-service, limited-service and extended-stay;
  • Land – Greenfield, infill and brownfield land; and
  • Special purpose – Self-storage facilities, marinas, theaters, community centers, nursing homes, hospitals, funeral homes and churches.
Lease Commissions in the US Real Estate Market 1Q 2015
New Leases Renewal Leases
Market Low High Average Low High Average
Power Center 3.00% 6.00% 5.20% 2.50% 5.00% 3.19%
Strip Shopping Center 2.00% 8.00% 5.41% 0.00% 5.00% 2.78%
CBD Office 3.00% 8.00% 5.90% 2.00% 6.00% 3.85%
Suburban Office 3.00% 8.00% 5.89% 1.50% 7.00% 3.54%
Net Lease 3.00% 7.00% 4.75% 2.00% 6.00% 3.67%
Source: PWC

For commercial real estate leasing, the issues requiring negotiation depend on the type of the commercial property (e.g., office building or warehouse) and its quality ranking (e.g., class A, class B or class C).

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