Commercial real estate can be a significant part of a well-rounded investment strategy. It can provide a current income stream while building wealth through asset appreciation over time. And it is seen by many financial advisers as a foundational block in a diversified portfolio.
 
Individual or family business owners, large companies, individual investors, institutional investors and others also can benefit from unique tax advantages to owning commercial real estate:

• Long-term capital gains taxes are much lower than ordinary income taxes.
• Commercial real estate enjoys a special tax-deferred exchange for selling and then buying a new, like-kind property.

Real estate also offers variety in investment strategies and preferences:

• Different properties have different levels of risk and rewards. Properties can be chosen to match the management capabilities of the owner.
• Commercial real estate can be a valuable estate planning tool because assets can be converted to types that match heirs' desires or skills in business management.
• In addition, investments can be made directly, through limited partnerships, through joint ventures and in equity-like real estate investment trusts commonly called REITs.

Investors should bear in mind that real estate is an active market affected by national economic trends and by both national and local market trends. In today's market, for instance, it is important to understand how online shopping is affecting brick-and-mortar stores. At the same time, it is important to know the local market down to the block-by-block level so that business locations can generate the appropriate levels and types of traffic. In addition, knowing the fundamentals of the retail tenants is critical.

Normally, investors rely upon buyer representatives to navigate the marketplace. Representatives can guide and advise investors on the complex legal, financial and tax implications of commercial real estate. This also can include evaluating options for leasing versus owning. Leasing, for instance, can preserve capital for future investing, setting up a business location, buying inventory and so on. 

Other services can include identifying build-to-suit partners for business expansion and other third-party vendors – such as legal representation, mortgage providers, escrow companies and others – that can enable real estate purchases and sales. Investors also need to go through an annual asset review, which is a process to identify opportunities to build business and asset values that can greatly improve return on investments.
 
In general, commercial real estate investing can be a complicated undertaking. But it also offers significant opportunities for rewards, portfolio diversification and unique tax advantages.