Knowing the Commercial Building Classes

Our commercial real estate specialists classify office buildings/spaces into three distinct classes, Class A, Class B, and Class C.     Included, but not limited to, some of the factors that determine a building or space’s  class are its rent price, building finishes, system standards and efficiency, building amenities, location and accessibility, tenants, as well as market perception.

Amenities are services that a building may offer including shared reception center, food service area, as well as hardware and finishes, architectural design, even elevator system performance. Services that are available to all buildings or spaces in a market, say the downtown or western area, like access to parking, or nearby dining options, usually affect all buildings in a market area, regardless of their class.   Whether or not that service affects the class of a building may only be relative to whether or not that building is situated so that the tenants benefit uniquely from such a service.

In general, Class A buildings/spaces have high quality standard finishes, state of the art well maintained systems, exceptional accessibility and are a definite positive market presence in their location.   These are “prestige” properties ordinarily with premium rents and well established, international or local, tenants.

Class B buildings compete for a wider range of tenants with their rents ordinarily in the average range.   The building will have finishes that are fair to good for their location and all systems are maintained and adequate. An onsite building manager or a management team may support the systems of this building.   The building will have a diverse range of tenants. Usually buildings in this class, if purchased for return on investment, could realize higher rents if improvements that positively impact the tenants are implemented.

Class C buildings could include retail spaces, like plazas, malls, or standalone buildings. Tenants of these properties are often looking for proximity to a large population base/high traffic area.   Functionality rather than aesthetics is often of high importance.    Rents are average to nominal on these properties.

This is merely a snapshot for those who may have heard these terms and are unfamiliar with them.   Always rely on a trained, educated commercial real estate professional when leasing, selling, or considering property management for your building or space.    We have a CCIM specialist in our office.  Make an appointment with us and learn how that makes all the difference in commercial real estate.

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