Corporate and commercial real estate are two distinct areas that are often confused. Understanding the key differences between them is crucial for real estate professionals. Longwood University’s online Master of Business Administration (MBA) with track in Real Estate program prepares students to be industry leaders in evolving areas like these. The program provides a solid grasp of corporate real estate, commercial real estate, development, investment management and finance.

The industry is seeing a surge in demand, evidenced by a 60% increase in new real estate licenses issued between 2020 and 2021 amid the “Great Resignation.” As a result, professionals need greater expertise to take advantage of emerging opportunities. This article discusses the differences between corporate and commercial real estate and the impact of each on the industry.

What Is an MBA in Real Estate?

Building a successful career as a real estate agent requires understanding the realities of an industry centered on sales of homes, land, business spaces and other properties. Earning an MBA in real estate prepares individuals for career opportunities by equipping them with foundational knowledge and fundamental leadership skills necessary for success. The curriculum typically includes coursework examining topics such as:

  • Housing markets
  • Urban real estate economics
  • Real estate law governing areas like leasing and development
  • Real estate investment covering project evaluation, financing strategies and investment decisions

What Is Corporate Real Estate?

Corporate real estate investments refer to properties owned or leased by businesses to support their operations. As a type of commercial real estate, corporate real estate (CRE) meets the specific needs and goals of the corporate tenants or investors. A corporation may evaluate a standalone retail property based on factors like visibility that matches its marketing plans and flexibility to expand or relocate. Corporate real estate investments focus on facilitating business operations rather than solely generating returns.

CRE encompasses the real property assets a company owns or holds to house its operations, including offices, warehouses, data centers and retail spaces. The management of these assets falls under corporate real estate, with a focus on providing workspaces that meet the company’s operational needs and strategic objectives. Corporations may need to relocate or expand their real estate footprint for various reasons, like workforce growth or entering new markets.

An effective CRE strategy balances employee satisfaction, workplace design and overall corporate goals. It involves gathering insights from stakeholders to understand image projection, space requirements and technical needs. Market factors like rental rates, building amenities and employee commuting patterns must also be considered to determine ideal locations and property types. By collaborating across departments and working with qualified CRE professionals, companies can develop plans to support long-term success.

What Is Commercial Real Estate?

In commercial real estate investing, capital is invested by property owners, investors or developers to generate profits. The focus is on how much stable, high-quality income a property can generate when considering the associated risk and investment required. For example, investing in a standalone retail property may involve securing a long-term lease with a creditworthy tenant to provide reliable income over many years.

While residential real estate deals with people’s homes, requiring extensive regulation to protect buyers and borrowers, commercial real estate operates under the assumption that all parties are knowledgeable investors. However, this is not always the case. Commercial real estate encompasses a broad range of property types leased to tenants for income-generating activities. This includes office buildings, retail storefronts, shopping centers, restaurants, hotels and healthcare facilities. Individuals, companies and corporations can profit from commercial real estate by leasing it or holding and reselling properties.

Corporate Real Estate Vs. Commercial Real Estate

While both corporate and commercial real estate involve properties for business use, their underlying objectives differ significantly. Commercial real estate investing prioritizes generating maximum profits through quality, stable rental income relative to the risks and capital invested. Providers may offer services like landlord representation to help commercial investors secure long-term, creditworthy tenants.

Conversely, corporate real estate aims to secure properties that support a company’s operations and strategic goals. For corporate clients, providers assist with services like site selection to identify locations that match their space needs, customer demographics and brand imaging.

The ideal approach depends on an investor’s unique circumstances and objectives. For those planning to own numerous properties, commercial real estate’s potential legal protections and tax benefits may outweigh the added complexities. However, investors with more modest portfolios may find corporate real estate a simpler path but should still consult experts with extensive education in the field.

Working with experienced real estate professionals to evaluate factors like long-term plans, investment purposes, target areas, financing, tax implications, exit strategies and management is crucial to crafting a profitable investment program. In the online MBA – Real Estate track program from Longwood University, students gain practical knowledge of these and other topics essential to careers in real estate.

Learn more about Longwood University’s online Master of Business Administration with track in Real Estate program.