What is a distinction between residential and commercial real estate?

The distinction between residential and commercial real estate primarily revolves around the purpose and use of the properties. Residential real estate is focused on properties where people live, such as single-family homes, condos, and apartments. These properties are primarily used for personal living purposes, catering to the needs of individuals and families.

In contrast, commercial real estate is oriented toward properties that are utilized for business operations. This includes office buildings, retail spaces, warehouses, and similar properties designed to generate income through business activities. By acknowledging the fundamental difference in the function of the properties, this option accurately captures the essence of residential versus commercial real estate.

The other options do not accurately distinguish between the two types of real estate. For instance, stating that residential can only be rented while commercial can only be sold misrepresents the real estate market since both types can be either rented or sold. Additionally, the assertion regarding the lease duration is overly simplistic, as both residential and commercial properties can have varied lease lengths based on specific agreements. Finally, claiming that residential properties cannot be developed at all while commercial properties are always developed overlooks the fact that residential properties can indeed be developed or renovated, just as there are cases where commercial properties remain undeveloped.