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What’s the Difference Between a Residential and Commercial Property?

What’s the Difference Between a Residential and Commercial Property?

From the site selection, necessary equipment, funding, and the construction process, a residential and commercial property are completely different from one another in almost every aspect. Of course, the initial and most telling difference between the two types of properties falls in how they are used or the purposes they serve.

In general, residential property is designed to support everyday life; these properties are meant to be lived in. On the opposite side of the fence, commercial properties are meant for business-related operations or activities. These properties can be highly diverse in both form and function.

Types of Residential Properties vs. Types of Commercial Properties

Most onlookers can easily differentiate what a residential property looks like compared to what a commercial property looks like. There are more than 139 million residential housing units in the U.S. Some of the most common types of residential properties include:

  • Single-family dwellings
  • Townhomes
  • Condominiums
  • Duplexes, triplexes, fourplexes, etc.
  • Cooperative properties

Many people anticipate that apartment buildings would make the residential-property list, however, these properties are unique. Technically, a large apartment complex is a business; the owner rents units to tenants as part of a business model. Therefore, larger apartment complexes can be designated as commercial properties.

By 2050, commercial buildings are expected to cover an astounding 126.1 billion square feet in the United States. Some of the more typical types of commercial properties include:

  • Retail structures
  • Office buildings
  • Industrial buildings and warehouses
  • Special-use buildings, such as schools, hospitals, etc.
  • Storage facilities
  • Commercial-use land or acreage

Beyond the obvious formation differences between a residential and commercial property, many factors can make a commercial and residential construction project highly different from one another. Knowing these key differences can help you better anticipate what to expect as you move forward with a project.

Building Materials Differences with a Residential and Commercial Property

You can always expect the materials to be somewhat different when dealing with a residential and commercial property construction project. The majority of homes are built using wood because it is cost-effective and perfectly fine for smaller structures. On the contrary, many commercial buildings have steel frames. Steel is known for its longevity and its ability to support greater amounts of weight. Further, steel tends to more expensive, which is not so cost-effective for most residential property builders. It is also worth noting that commercial construction can involve stricter regulations where building materials are concerned, right down to what type of foundation is created or what kind of roofing materials are placed on the building when it is near completion.

Cost Differences Between a Residential and Commercial Property

You may look at two buildings that are a similar size and assume the costs would be similar. However, the costs between a residential and commercial property can be drastically different. Cost differences can vary vastly for commercial properties because:

  • Compliance standards are different between the properties
  • Material costs can be different
  • Labor requirements can be vastly different
  • Equipment required can be different

Not only is the cost of building a residential and commercial property different due to the aforementioned things, but the way a property’s project is funded can also vary as well. Most residential owners will rely on either private funds of their own or a loan from a bank or mortgage company. Commercial projects can be funded by the owners of a corporation directing the build, various agencies, a property developer, or even private investors.

Differences Between Construction Equipment and Time Required

Even though it is not always a given, the majority of commercial projects are going to require larger pieces of construction equipment to complete. Some commercial properties are exceptionally large, which means heavy equipment pieces like cranes and earthmovers may be necessary. Even though a lot goes into building a residential property, it is rare for heavy equipment to be a necessity unless a home is more upscale or extravagant.

In any construction project for a residential and commercial property, both the company tasked with the build and the owners of the property want the project to finish quickly. In construction, time is almost always equivalent to money. However, commercial build projects generally tend to go faster than residential ones. Commercial builds involve more systematic processes, more employees, and more tools to get jobs done. Therefore, more of a structure can be completed in a shorter time frame.

Regulation Differences Between a Residential and Commercial Property

Whether building a residential or commercial property, contractors and property developers face a wealth of codes, regulations, and permits to contend with throughout the construction process. However, many of the regulations surrounding a commercial build are far more stringent, and codes and permits can be far more intricate to navigate. Commercial properties can come along with specific rules and regulations regarding things like what building materials can be used, how the electrical system is designed, and even the design or size of the building.

Commercial buildings are also more likely to have features and implements that are not involved in a residential project. For example, it is common for commercial buildings to have parking lots and elevators. To ensure the structure meets all mandated guidelines set forth by the state and federal governing agencies, any construction manager must be knowledgeable about all these nuances.

Work with an Experienced Company for Every Construction Project 

Regardless of the type of project, having a company that has the tools, know-how, and insight to help you is ever-important. However, it is obvious that commercial projects, large and small, can be more complex and challenging. Reach out to us at Strategic Properties Group to find out how we can help with commercial property management, residential property management, and more.