The Difference Between Commercial and Industrial Real Estate

Here in Singapore, there are two types of real estate namely commercial and industrial real estate. Sometimes, people tend to think that commercial and industrial real estate falls into the same category.

However, it is not so as they are two different types of real estate. At Corporate Vision, we desire to help you make the right choices of the best commercial and business spaces for sale or rent here in Singapore.

For a better understanding of the differences between commercial and industrial real estate, it is essential to define both terms.

Commercial real estate is retail and industrial real estate while residential real estate is different. 

Commercial real estate is designed in the form of buildings and land to generate profit. On the other hand, both industrial and retail real estate is regarded as the “sub-categories” of commercial real estate.

The ultimate purpose of industrial property is designed for the definite manufacturing of any product, which is usually considered either as a plant or factory. This industrial property in the form of a factory or plant must be located where there is sufficient light for production.

It can be either a medium or a heavy industry. Such examples of this type of industry include; distribution centers, warehouses, garages, and so on.

On the other hand, retail property is designed solely for commercial business or purpose. Unlike the Industrial property that manufactures something, the retail property is used for the sales of the product. Examples of such places include; shopping centers, malls, shops all nicely huddling under retail properties, and retail stores.

Most times, commercial real estate often occupies a rented building space to operate. To rent these buildings owned by investors who collect rents annually for each business operating on their properties. 

Notably, commercial real estate is made up of four types of leases. Each of these leases are different and requires complete responsibility from both the owner of the building (landlord) as well as the tenant. Here are the four types of commercial real estate as earlier mentioned:

  •       The single net lease: the single requires the responsibility of the tenant. He or she handles the responsibility of paying for rent and tasks.
  •       the double net lease: here, the tenant’s responsibility involves the payment of rent, property taxes, and also insurance.
  •       The triple net lease; in the triple net lease type of commercial real estate, the tenant is responsible for the payment of rent, property taxes, insurance, and lastly maintenance.
  •       The gross lease: for the gross lease, the tenant is responsible for just the payment of rent. Other things like payment of taxes, insurance, and maintenance are handled by the owner of the lease.

For business owners who hope to own a commercial property at some point, it is essential that he or she considers some factors before owning one, two, or even more commercial properties. Below are things to consider:

  1. Attractive Appearance: do not ever consider owning a commercial property that does not have a good appearance or is located in a bad environment for any length of time. This is because your prospective tenants will never want to lease this type of property. I mean, what will their customers think of them?
  2. Aesthetic Entrance: never forget that first impression counts at all times. With such an entrance, you have been able to put both your potential clients and their clients in a great frame of mind.
  3. Natural Light: nowadays, natural light is in high demand. As a commercial property owner, your property must be located in environments that have a good source of natural light.
  4. Location: proximity is one major factor you have to consider as a commercial property owner before you decide on building a commercial property. Ensure that your property has good road access for easy transportation, is close to public amenities, and close to other offices.

According to our findings from the 1980s, a return average of about 9% was gotten from the retail property.

However, it has recently been on the decline as it has returned to around 6%. The industrial estate keeps changing as it has returned around 7% which opposes its initial peak of around 12% during the recession period in the 1990s.

We recommend that you carefully go through our lease and think before you decide on your choice of commercial property. It may sound silly but you would be surprised at the small issues that may arise because you didn’t carefully think through before choosing your commercial property.

Knowing the Different Types of Commercial and Industrial Properties and How it Functions.

When you clearly understand the various types of commercial and industrial properties available in Singapore, you can find a business space with ease. These business spaces come in two forms, either for sale or rent, depending on what you want.

We hope that you now have a grasp as to what commercial and industrial properties are and how they are categorized.