Office Building Classes: A, B, or C
In commercial real estate office buildings are generally classified in categories defined by a letter: A, B, or C. Each classification relates to a general set of components to a building that help define its position in that particular region. That being said there’s no regulated formula to the classifications.
The highest classification of office buildings and space class ‘A’ buildings are considered the nicest and most sought after. As a result of being the newest buildings they are undoubtedly in great condition with striking architecture and comfort functionality because of the latest security and HVAC technologies. The surrounding areas are highly regarded, including: desirable outdoor areas, excellent transit options and sought after amenities. Tenants can benefit from increased brand prestige and a definite market presence due to the limited availability.
The runner up class ‘B’ buildings generally still uphold good quality management and tenants, but the building itself has aged a little. Maybe older, these buildings can still be found in desirable central areas and could easily be renovated to bring back its former glory. Customarily these buildings can be found a block off the main strip. Class ‘B’ buildings are definitely included amongst the nicer buildings, but do not quite meet the same overall quality found on the main street.
Concluding the classification are class ‘C’ buildings which are considered the least desirable. Unlike class ‘B’ buildings still found within desirable areas, these buildings are in less than ideal locations. The exteriors are often outdated and in need of major architectural upgrades, and requiring further mechanical and technological servicing. Appropriately, these buildings command the lowest rents, remain vacant the longest and lack any type of amenities. Aside from these setbacks, these areas could be targeted as future redevelopment opportunities.
These building classification definitions are strictly a guideline, as a formal standard does not exist. Deciding what is the most important for your business goals will determine which property is best suited for your team at that time. As business needs change, the justifications for being in a high class building, specific area, or the need for certain amenities will also change to support a more robust decision to move.