A residential address is where someone lives, whereas a commercial address is where someone works. In cases where an address serves both functions, its category depends on the circumstances of the person using it.
Shipping companies, such as UPS, define addresses as either residential or commercial. Shipping to commercial addresses generally costs less, and companies may pass these savings onto customers. Shipping to commercial addresses is cheaper because businesses tend to cluster in specific areas, whereas residential homes are spread out over wide areas. For this reason, even if a business is run out of a person's home, UPS still considers it a residential address.
On the other hand, real estate agents use a slightly different definition. For them, a property is commercial if its main purpose is to earn money for the property owner. This includes investment properties that are rented out, retail properties containing stores and buildings containing offices.
Municipal governments define property types through zoning regulations. Land is categorized into industrial, commercial, residential or mixed zones, with many specific regulations for each area. This allows municipalities to efficiently organise and manage areas, tailoring building types, heights and taxes to meet the demands of residents, businesses and government entities.