Commercial property that is used
solely for business purposes and some examples of commercial real estate
include malls, office parks, restaurants, gas stations, convenience stores and
office towers. Commercial real estate is one of the three primary types of real
estate. The other types are residential real estate, which is used for living
purposes and industrial real estate, which is used for manufacturing and
production. The businesses that occupy commercial real estate usually rent the
space. An investor usually owns the building and collects rent from each trade
that operates there.
Although
serious supply-demand imbalances have continued to plague real estate markets
into the 2000s in many areas, the mobility of capital in current complicated
financial markets is encouraging to real estate developers. The loss of
tax-shelter markets drained a significant amount of capital from real estate
and, in the short run, had a shocking effect on segments of the industry.
However, most experts agree that many of those driven from real estate
development and the real estate finance business were unprepared and ill-suited
as investors. In the long run, a return to real estate development that is stranded
in the basics of economics, real demand, and real profits will benefit the commerce.
A final
review of the factors that led to the problems of the 2000s is necessary to
understanding the opportunities that will arise in the 2000s. Real estate
cycles are basic forces in the industry. The oversupply that exists in most
product types tends to confine development of new products, but it creates
opportunities for the commercial banker.
Responding to an increasingly well-informed consumer and keeping in mind
the globalization of the business outlook, real estate developers have also
shifted gears and accepted fresh challenges.
The most
marked change has been the shift from family owned businesses to professionally
managed ones. Developers, in meeting the growing need for managing multiple
projects across cities, are investing in centralized processes to source
material and organize manpower and hiring qualified professional in areas like
project organization, architecture and engineering.
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