• Nicole Happel

Commercial Real Estate in Colorado

Commercial real estate refers to real estate properties that are not built for residential purposes. Commercial real estate properties are built for profit-making, and some examples include malls, industrial parks, medical centers, hotels, office spaces, and much more. In simple terms, commercial real estate are properties that are developed exclusively for business and official activities in contrast to a residential building which seeks to provide living space to individuals.

When it comes to Colorado, commercial real estate provides an avenue for organizations to properly attend and cater to their customers and clients more conveniently and appropriately. Lots of organizations lease commercial real estate properties, as it is a more efficient way of being cost-effective. Although some organizations indeed own the buildings they operate from, it is also important to note that many organizations are operating from leased office spaces. Another major difference between residential real estate and commercial real estate apart from usage is ownership. In residential real estate, it is very common to see many individuals owning residential properties. However, it is the other way round in commercial real estate as ownership is mostly by investors under the Real Estate Investment Trustees (REIT).

The profit margin in commercial real estate is much higher when compared to residential real estate. It is important to note that commercial real estate in Colorado is not easy when compared to other parts of the country. For example, Colorado has a controlled development policy in various cities, especially Ski cities, despite having the highest ski and tourist boom-towns in the country. This high level of restriction has greatly affected the commercial real estate industry in Colorado. Other factors that have a significant influence in Colorado’s commercial real estate include, Contract Law, Landlord/Tenant Laws, Zoning and Land Use Laws, Insurance Laws, and disclosure Laws.

There are two ways you can invest in Colorado’s commercial real estate; direct and indirect investment.

• Direct Investment: Direct investment involves an individual having direct ownership of the commercial real estate property; in other words, an individual becomes the landlord of the property. Making a direct investment in commercial real estate is a high risk, high reward investment and would mostly need the services of a real estate expert such as Top Tier Real Estate. Direct investment requires a lot of money hence the reason why high net worth individuals invest in it.

• Indirect Investment: An indirect investment in the commercial real estate sector involves individuals investing in properties indirectly through the purchase of stocks in Real Estate Investment Trusts.

Commercial real estate is divided into various groups consisting of, office, industrial, retail, apartment building, hotels, resorts, and special purpose.

• Office: A group of commercial real estate that includes office buildings; official spaces where individuals carry out their daily business activities. Office buildings are further divided into three categories;

  • Class A: The luxurious and expensive offices

  • Class B: Average building and moderate price

  • Class C: Classy and affordable

• Industrial: The industrial sector of commercial real estate provides properties that can handle industrial activities, they are mostly located outside the urban areas and along transportation routes to create an easy movement of heavy-duty items and includes:

  • Manufacturing plants

  • Warehouses

  • Research and development facilities

• Retail: Retail mostly involves properties that host restaurant, malls, and other retailers. These set of commercial properties are very common as a lot of individuals continue to flock them. For example, we all go to the mall to pick up certain items or go to the restaurant on dates.

• Multi-Family: The multifamily property covers apartments, condos, hostels, and much more. It can be divided into high-rise apartments, garden-style, special purpose housing, and much more.

• Hotels and Resorts: Hotels and resorts also fall under commercial real estate properties in Colorado. Hotels are buildings that provide a temporary residence to travelers, tourists, or individuals on a business trip.

• Special Purpose: Special purpose commercial real estate refers to properties that do not fall under any of the above-listed categories but are equally important. Examples include mosques, churches, self-storage, amusement parks, and much more.

Before investing in commercial real estate in Colorado, it is imperative to check the Colorado zoning policy and find out if such an investment would be permitted within the location you plan to invest in. Also, it is important to find which category of real estate investment is more realistic in your preferred location. For instance, Colorado Springs favors the Multifamily commercial investment, while Retail, commercial real estate tends to thrive more, down to the southern part of the state. Industrial real estate investment excels more in southwest Weld County and Boulder County. The Ski towns in Colorado are better locations for hotels and resorts commercial real estate investments.

For proper guidance on commercial real estate investment, contact Top Tier Real Estate at (719) 330-5556.

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