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What is commercial real estate?

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Commercial real estate (CRE) is any land or building used for commercial purposes, generally encompassing any real property other than a residential lot or multi-dwelling units no larger than a fourplex.  CRE comprises income producing build-to-rent and build-to-sale property as well as owner-occupied property.

Income producing real estate (IPRE) is commercial real estate that serves as an investment for the purpose of generating a profit (income) from either rental income or capital gain for its owners.  The prospects for repayment on its debt financing or the return on investment depend primarily on the cash flows generated by the asset and whose primary source of these cash flows are rental payments or the sale of the asset.

Distinguished from income producing real estate, owner-occupied commercial real estate (OOCRE) is commercial property that is occupied by its owner with the purpose of conducting business operations.  The cash flow generated by the underlying business are typically used to service the debt financing of the property.

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