Handbook of Finance: Financial Markets and Instruments

Chapter 49. Types of Commercial Real Estate

G. TIMOTHY HAIGHT, DBA

President, Menlo College and Chair of the Board, Board of Commonwealth Business Bank (Los Angeles)

DANIEL D. SINGER, PhD

Professor of Finance, Towson University

Abstract: A wide array of opportunities is available to the potential commercial real estate investor. Such opportunities may be developed by the investor or acquired as existing facilities with a history of costs and revenues. Investment in this area is favored by the presence of tax shields from depreciation, interest rate offsets, and financial leverage. The value of existing commercial properties can be determined by capitalizing the anticipated cash flows associated with that property. The dynamic nature of the commercial real estate market generates a flow of opportunities as apartments, condos, shopping centers, restaurant sites, recreation facilities, motels, self-storage facilities, warehouses, office buildings, and manufacturing sites are continually brought to the market.

Keywords: apartments, condominiums, shopping centers, restaurant, recreation facilities, motels, self-storage facilities, parking facilities, office buildings

Commercial real estate runs the gamut from apartments, condos, shopping centers, restaurant sites, recreation centers, motels, and self-storage facilities to warehouses, office buildings, and manufacturing sites. Such investments tend to be characterized by predictable cash flows and reap the benefits of a tax shield from depreciation ...