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What is Commercial Property?

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  • Written By: Michael Pollick
  • Edited By: Lindsay D.
  • Last Modified Date: 01 September 2016
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Commercial property is real estate intended for use by for-profit businesses, such as office complexes, shopping malls, service stations and restaurants. It may be purchased outright by a developer for future projects or leased through a real estate broker. This type of property falls somewhere between residential and industrial property.

Practically every incorporated city uses a zoning system to regulate the use of property within its jurisdiction. In order to grant permission to build a new office complex or other profit-making business, the city government must determine that the chosen area is indeed commercial property. The zones which separate commercial, industrial, and residential property are clearly marked on city maps. If the proposed business is clearly in an area zoned for commercial use, then the city will allow the sale to proceed for the stated use. If any part of the property extends into a residential or industrial zone, however, then the buyer must seek a 'variance', special permission to cross over a zone boundary.

Commercial property can be held by real estate agents who treat it the same as residential property. Signs advertising the availability and size of the real estate can be erected, and arrangements can be made to buy or lease smaller lots. Sellers may also agree to make improvements to the land, such as grading off uneven spots or clearing out unwanted trees. A professional developer may purchase huge swatches of this type of property simply to guarantee its availability for later projects.

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Cities often use zoning laws to prevent conflicts between residential homeowners and businesses. Land designated as commercial property is rarely located in the middle of residential zones. City planners encourage businesses to congregate along busier streets and central downtown areas. This helps to keep traffic to these sites manageable. Some areas of the city may be designated for 'mixed usage', which means some commercial property may be used for residential purposes. A quaint downtown shopping area with apartments would be an example of mixed usage.

Commercial property definitions may include industrial usage as well, although zoning laws still regulate the level of industry permitted. Heavier industries often purchase property on the fringes of cities or in unincorporated areas. Some commercial zones in the city do allow for light industrial usage, usually smaller factories with minimal emissions and transportation needs.

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Discuss this Article

letshearit
Post 2

For those who have a non-profit organization that still sells products would they be considered a place that can only set up on areas zoned for commercial properties? Or would they be able to function in a strictly residential area?

I am thinking along the line of church consignment shops and thrift stores run by organizations like the Salvation Army and Goodwill. These kind of non-profit organizations are getting a lot of their donations from the communities they are in, and also help those in their neighborhoods with affordable clothing and items.

MrSmirnov
Post 1

I think that mixed zoning provides the best opportunities for businesses that wish to purchase a commercial property. While I agree that those who are dealing with industrial goods and services should be locked into their own areas, those selling non-industrial services and goods should be allowed to more freely open in residential areas.

For those that want an instant consumer base, where better to put your business then near residential housing?

If they want to put in restrictions, perhaps limit residential areas to sole-ownership businesses and those that specialize in local development. This would help to keep big box companies from setting up next to playgrounds while still providing additional resources to residential communities.

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