What Class is Your Office Building?

by CoyDavidson on September 6, 2009

empty hall in the modern office building.

Building Classifications are Subjective, but there are Guidelines

I often have clients tell me they want a “Class A Building” or they are looking for more economical “Class B space”. What does that really mean? Building Classifications are subjective opinions but there are guidelines for what constitutes a properties classification. There are always buildings that are straddling the fence between classifications, and a Landlord may certainly have a more generous opinion of his building than tenants or real estate professionals. However, here is a general guideline:

Class A Buildings

Characterized by: Prime central location; First class tenant improvements; on site parking; state of the art elevators and HVAC systems; concrete and steel construction; contemporary design and architecture; high quality of upkeep and maintenance; ability to command a premium rent within the relevant market. Implicit in the Class A building definition is that the size of the building is “significant” in accordance with its market. For example, Houston Downtown Class A office buildings would include buildings 250,000 square feet or greater, where as in suburbs, Class A buildings can vary in size and be as small as 50,000 square feet or greater.

Class B Buildings

Characterized by: New buildings in non-prime locations and older buildings (including rehabilitated structures in prime locations); good quality tenant improvements; may have on site parking; elevators and HVAC served; built utilizing a variety of construction methods; upkeep and maintenance is generally good. Generally, all space has been previously occupied.

Class C Buildings

Characterized by: Older structures, may or may not have been renovated; poor to average quality of tenant improvements; may not have elevators and air conditioning systems; generally no parking facilities; lower quality of upkeep and maintenance. All spaces have been previously occupied.

Smaller Buildings

In many cases smaller suburban properties 5,000-25,000 square feet can have some characteristics of a Class A office building but lack some of the amenities typical of Class A projects, such as: covered parking structure, on site property management and other tenant services. For reporting purposes they are often classified as either Class B or Class C properties.

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  • Tom

    In the Sacramento market the class of a building is a relative term. For example there are a number of suburban properties constructed to B standards, but because the building is high quality relative to other properties in that particular submarket, it will be called class A. In the same context, a 25 year old CBD office building receives the same classification as a brand new office building. Maybe we should call the older class A building a “cougar A class.”.

  • Subjective all over the place. Ratings by brokers not the actual tenants or sometimes as instructed by owner. Check out TenEight. This system could have legs.

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