The Difference Between Industrial And Commercial Real Estate


Commercial and industrial properties are both types of real estate assets, but they play different roles in the market and an investor’s portfolio. Understanding the difference between the two is important for investors. Both types of property offer their own unique benefits, which can factor into an investment decision and may benefit any investor looking to expand their portfolio.

Industrial vs. Commercial Properties

Before going into the differences, it is crucial to note that both retail and industrial are considered commercial real estate as opposed to residential. Commercial real estate refers to any buildings or land intended to generate profit, making industrial and retail sub-assets of the commercial class. However, it is also important to note that zoning laws do not necessarily use this definition, as commercial and industrial zoning require different sets of regulations.

Commercial Properties


When most people refer to commercial buildings, they are usually referring to businesses that have some interaction with the public. Generally speaking, these spaces are often smaller in size compared to industrial units, which are often more open and feature taller ceilings. Commercial properties can include offices, retail stores, restaurants, or bars, but they can also include apartments or hotels. Tenants are generally businesses looking for a retail space, too, and they lease the space from the owner or investor.


Industrial Real Estate


Industrial real estate specifically refers to buildings used to develop, manufacture, or produce goods and products. This definition includes any property that helps with storage and distribution, such as storage facilities for e-commerce websites.

Corporations are largely the main tenants, and their spaces are often closed to the public, though there are exceptions, such as warehouse-showrooms. Depending on the market, industrial properties are also often zoned for light, medium, or heavy industry. Though these buildings can be used for areas involving businesses, the land is meant more for manufacturing or packaging. Heavy industrial properties are also typically located further away from residential areas compared to other commercial properties. Examples include warehouses, plants, distribution centers, and flex industrial spaces.

Similarities: Despite these distinctions, both types of assets often use the same types of commercial real estate leases, each requiring different levels of responsibility from the landlord and tenant. Single net leases place the burden of paying rent and property taxes on the tenant. Double net leases include all of the above with the addition of insurance. Finally, triple net leases include all of the above and maintenance.

While only a brief overview of the types of leases available, it would benefit investors to learn more before deciding what kind of property to add to their portfolios.

Which Is Better?

The answer to which is better is highly subjective for every investor. It depends on an investor’s financial goals, what they are looking for in potential returns and the market. No two markets are alike, and one property that may perform well in one area may perform poorly elsewhere. This is why it can be vital for investors to research before choosing which property to invest in.

Invest In Flex Industrial Properties


As a real estate investment firm, Avistone specializes in acquiring and operating multi-tenant industrial properties. Since its founding in 2013, we have managed more than 4 million square feet of multi-tenant flex industrial properties across several states.

Our executive management team has over 100 years of combined experience in acquisitions, operations, structured finance, and more. With our knowledge, we have the unique ability to integrate extensive capital market knowledge with a more boots-on-the-ground approach. Our goal is to offer investors attractive potential yields and potential total returns for relatively low risks.

If you would like to join one of our funds or learn more about our other opportunities, contact us!

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