CRE Terms : Subsectors and Specializations

CRE Terms : Subsectors and Specializations

In the realm of commercial real estate, non-traditional property types are capturing investors’ attention like never before. Specialized offerings such as medical offices and data centers have emerged as stars in the industry, and their allure is expected to drive investment activity even further in 2024.

In this edition of “Terms,” let’s delve into some key definitions for specialized deals this year:

Exploring Medical Office Buildings (MOBs): According to NAIOP’s “Industry Terms and Definitions,” MOBs are structures where at least 75 percent of the interior is designed to accommodate healthcare providers or technicians using specialized equipment. These buildings require robust mechanical, electrical, and plumbing systems, often necessitating reinforced floors for heavy equipment.

Beyond traditional MOBs, there’s a rising demand for behavioral healthcare facilities, offering mental health and addiction treatment services. These facilities require ample floor space, parking, and proper zoning to meet regulatory standards.

Navigating Data Centers: In the digital age, assets like data centers and telecommunication towers are becoming increasingly important. Defined as facilities housing servers for data and web applications, data centers rely on precisely controlled HVAC systems to maintain optimal conditions and prevent downtime. With AI advancements driving demand, these facilities, often accommodating multiple tenants through co-location, are poised for robust growth.

Self-Storage Solutions: Self-storage properties, a sector that demonstrated resilience throughout 2023, offer multiple storage units to individual tenants or businesses. These units may feature climate control systems to manage temperature and humidity. Similar to other CRE assets, self-storage facilities are categorized into Class A, B, and C based on location and maintenance levels.

Understanding the intricacies of each sub-sector is essential for navigating specialized deals effectively. Whether it’s the nuances of data center terminology or the classifications within self-storage, staying informed enhances client service and investment success.