CRE is the abbreviation for commercial real estate.
Another word for commercial real estate is commercial property.
While members of the same family, commercial real estate (or commercial property) is not the same as residential property. (Residential property is sometimes referred to as “resi”)
Commercial real estate comprises the following primary property categories:
- Shopping centres or retail (with sub-categories including malls, high street shops, factory outlets, quick service restaurants etc.)
- Industrial (with sub-categories including warehouses / logistics, factories, distribution centers, mini warehouses etc. Data centers are likely included in this property category)
- Offices (aka commercial – with sub-categories such as high rise and low rise office, office parks etc.),
- Multifamily (investor-friendly aka multi-dwelling units or MDUs), and
- Other – covering
- Lodging, hospitality or leisure (hotels)
- Special-purpose: education facilities, healthcare (encompassing hospitals and clinics), service stations, stadia, airports and harbours, public assets such as police and fire stations, and power-generation facilities.
Note – complexity around “Other”
With the “Other” category above, there is a grey area – particularly around public use assets (like schools, waste water treatment plants, fire/police stations, stadia, municipal depots, public transport structures).
Clear definition requires you to move beyond the physical characteristics, to
- Ownership: is the property controlled (freehold or leasehold) on an arm’s-length, transferable agreement at market-rate terms
- Easy when owned by a private sector entity
- More complicated when controlled via a leasehold relationship
- Investment market relevance: zoning or land use / (rates and) tax / use license – e.g. is the property legally demarcated under resi or public asset status
So the simple decision tree:
1.
Does the property satisfy the standard physical definitions.
Yes –> CRE.
No (i.e. it is non-investment residential or special purpose).
2.
If non-investment residential –> Not CRE.
If special purpose, go deeper.
3.
If special purpose, what is the control over the property? How is the property handled legally.
If controlled by a private sector entity (either as owner or tenant) and/or zoned for commercial use –> CRE
If not –> Not CRE (likely a public institutional asset)
The easy question, but a) almost impossible to discern, and b) subject to change: if the property is leased out by owner (in a non-arms length way) or rented by any entity – state or private sector (this is almost impossible to discern), then classify as CRE.
CRE forms the prefix for terms such as CRETech or CREdata. In turn, as with CRE, CRETech lives inside of the larger PropTech family.
