Raavstar commercial offers a specialized suite of services across diversified classes of assets. Our local
expertise in the Illinois market allows us to leverage our market-specific and asset-specific knowledge to
benefit our clients. We have broad transactional experience across multiple asset types.
- SPECIAL PURPOSE
- INDUSTRIAL
- OFFICE
- RETAIL
- MULTI-FAMILY
- VACANT LAND
As a commercial real estate firm, Raavstar advises on how to best negotiate lease agreements that will
attract and keep tenants — property owners need to strike a balance between maximizing rents and
minimizing vacancies and tenant turnover. Turnover can be costly for owners because a space must be
adapted to meet the specific needs of different tenants — say, if a restaurant is moving into a property
once occupied by a yoga studio.
We help source commercial real estate, appraise value, broker purchases and sales, manage upkeep, find
and retain tenants, negotiate leases, and navigate financing options.
Commercial Real Estate Guide
What is 'Commercial Real Estate?'
Commercial real estate is property that is used solely for business purposes and that are leased out to
provide a workspace rather than a living space. Ranging from a single gas station to a huge shopping
center, commercial real estate includes retailers of all kinds, office space, hotels, strip malls, restaurants
and convenience stores.
BREAKING DOWN 'Commercial Real Estate'
Commercial real estate is one of the three main types of real estate, along with residential and industrial.
As its name implies, commercial real estate is used in commerce (residential real estate is used for living
purposes, while industrial real estate is used for the manufacture and production of goods). While some
businesses own the buildings they occupy, the more typical scenario is that an investor owns the building
and collects rent from each business that operates there. While residential real estate lease rates may be
quoted in an annual sum or a monthly rent, commercial real estate is customarily quoted in annual rental
dollars per square foot.
Lease Lowdown
Leases can run from one year to 10 years or more, with office and retail space typically averaging from
five to 10 years. "Larger tenants tend to have longer leases," "Shorter-term leases provide more flexibility
to adjust lease rents while longer leases provide more security, especially with credit tenants."
single net lease makes the tenant responsible for paying property taxes.
A double-net (NN) lease makes the tenant responsible for paying property taxes and insurance.
A triple-net (NNN) lease makes the tenant responsible for paying property taxes, insurance and
maintenance.
Under a gross lease, the tenant pays only rent, and the landlord pays for the building's property taxes,
insurance and maintenance.
Types of commercial property
Commercial real estate is commonly divided into six categories:
Office Buildings
– This category includes single-tenant properties, small professional office buildings,
downtown skyscrapers, and everything in between.
Industrial
– This category ranges from smaller properties, often called "Flex" or "R&D" properties, to
larger office service or office warehouse properties to the very large "big box" industrial properties. An
important, defining characteristic of industrial space is Clear Height. Clear height is the actual height, to
the bottom of the steel girders in the interior of the building. This might be 14–16 feet for smaller
properties, and 40+ feet for larger properties. We also consider the type and number of docks that the
property has. These can be Grade Level, where the parking lot and the warehouse floor are on the same
level, to semi-dock height at 24 inches, which is the height of a pickup truck or delivery truck, or a full-
dock at 48 inches which is semi-truck height. Some buildings may even have a rail spur for train cars to
load and unload.
Retail/Restaurant
– This category includes pad sites on highway frontages, single tenant retail buildings,
small neighborhood shopping centers, larger centers with grocery store anchor tenants, "power centers"
with large anchor stores such as Best Buy, PetSmart, OfficeMax, and so on even regional and outlet
malls.
Multifamily
– This category includes apartment complexes or high-rise apartment buildings. Generally,
anything larger than a fourplex is considered commercial real estate.
Land
– This category includes investment properties on undeveloped, raw, rural land in the path of future
development. Or, infill land with an urban area, pad sites, and more.
Miscellaneous – This catch all category would include any other nonresidential properties such as hotel,
hospitality, medical, and self-storage developments, as well as many more.
Categories of Commercial Real Estate
| Category |
Examples |
| Leisure |
hotels, public houses, restaurants, cafes, sports facilities |
| Retail |
retail stores, shopping malls, shops |
| Office |
office buildings, serviced offices |
| Industrial |
industrial property, office/warehouses, garages, distribution centers |
| Healthcare |
medical centres, hospitals, nursing homes |
| Multifamily (apartments) |
multifamily housing buildings |
Of these, only the first five are classified as being commercial buildings. Residential income property
may also signify multifamily apartments.
