When people talk about commercial real estate, most picture familiar buildings, office towers, apartment complexes, or shopping malls. But there’s another category that doesn’t get as much attention: specialty real estate.

These properties are built for one main purpose and are not easily used for anything else. So, when someone says a building is a “specialty” or “special-purpose” property, they mean it was custom-designed for a specific kind of business. It could be a bowling alley, a church, a theater, or even a gas station.

Let’s take a closer look at what specialty properties are, what makes them unique, and why they matter, especially if you’re thinking of buying, leasing, or investing.

What Is a Specialty Property?

A specialty (or special-purpose) property is a commercial building that’s been created for one particular use, and that use only. These buildings are often so specific in their layout or design that it’s tough to convert them into anything else without major renovations.

Example: Imagine trying to turn an amusement park or a car wash into a clothing store — not exactly easy, right?

These properties tend to serve very specific industries, and they often come with unique challenges — but also some big opportunities.

What Kinds of Properties Are Considered “Specialty”?

There’s no single rulebook, but generally speaking, properties in this category include:

• Bowling alleys

• Movie theaters

• Cold storage facilities

• Churches and places of worship

• Funeral homes and crematoriums

• Gas stations and car washes

• Daycare centers and schools

• Hospitals and clinics

• Amusement parks

• Wineries or breweries

• Railways, mines, or quarries

Each of these buildings is built with a clear purpose in mind. The structure, equipment, and layout all support one type of business.

What Makes a Specialty Property Different?

Here’s what sets these types of buildings apart from typical commercial real estate:

1. Unique Design – The layout and features are tailored to one job.

2. Limited Use – It’s tough to convert them to other businesses.

3. Smaller Market – Fewer buyers or tenants are interested.

4. Tightly Connected to Business – The building is part of how the business runs.

5. Valuation Challenges – Appraising them is harder because you don’t have many “comps” (similar properties to compare).

How Do You Value a Specialty Property?

Most commercial buildings are valued using either the income approach (how much money it can make) or the sales comparison method (what similar buildings sold for).

But with specialty properties, those methods don’t always work — especially if there aren’t many other similar properties nearby. So, appraisers often use what’s called the cost approach.

This method looks at how much it would cost to rebuild the same building from scratch today, then subtracts value based on age and wear.

Example: A 20-year-old church might cost $2 million to build today. But because of its age, the appraised value might be closer to $900,000.

Can You Get Financing for a Specialty Property?

Yes, but it can be a bit more complex than financing a standard office building or apartment complex.

Lenders usually see specialty properties as higher-risk because they aren’t easy to resell or lease. So, you might need:

• A larger down payment

• A strong business plan

• Experience in that industry

• Or a lender who specializes in these property types

For small business owners, loans backed by the Small Business Administration (SBA) are often a great option, especially for buying properties like gas stations, schools, or medical offices.

Are Specialty Properties a Good Investment?

They can be, but it depends on your goals. Some investors like these properties because there’s less competition and they can produce steady income, especially if they’re leased long-term to reliable tenants.

However, they can be risky if you don’t understand the specific industry the building was designed for.

Here’s what to consider:

Pros:

• Less buyer or tenant competition

• Often support essential services

• Unique opportunities in niche markets

Cons:

• Hard to repurpose

• Can sit empty longer if not in demand

• Expensive to renovate or convert

What Are Class A, B, and C Specialty Properties?

Like other commercial properties, speciality real estate is often grouped into Class A, B, or C to describe the building’s quality and location.

• Class A: Top-of-the-line, newer buildings in prime areas (e.g., a modern surgical center in a major city).

• Class B: Good condition, a little older, and maybe not in the best location. Still usable and often seen as a “value-add” opportunity.

• Class C: Older buildings in less ideal locations, possibly needing repairs. Often cheaper but riskier.

Understanding the class helps you decide if it’s worth the investment, or if it needs upgrades.

Final Thoughts

So, what does “specialty” really mean in commercial real estate? In simple terms, it refers to a property that was built for one specific use and probably can’t be used for anything else without major changes.

These buildings are often essential to the businesses that use them, whether it’s a hospital, gas station, or funeral home, and they usually come with unique opportunities and challenges.

If you’re thinking about investing in or buying a specialty property, take your time to understand the business it supports. The more you know, the better your chances of turning it into a smart, profitable investment.