Class A, B, or C Office Buildings: A Guide 

Class A, B, or C Office Buildings: A Guide

What does a Class A Building mean? What are the differences between Class A, B and C buildings? When looking for new office space, a tenant will quickly realize most buildings are classified as either Class A, B, or C. The factors that determine a Buildings Class varies by market so that a Class A Office Building in Chicago will be much different than a Class A Office Building in a small rural town of 30,000 people. There are no definitive formulas used to classify a building, but a general definition for each Class is given below.

• Class A Buildings:  The newest buildings with the most amenities in the best locations. They generally are the best looking buildings made with the highest quality materials and construction methods. Additionally, these buildings usually have a professional manager, good access, and are typically located in highly visible areas on high traffic streets. Due to their exceptional quality, Class A Buildings usually contain high quality tenants and the highest rental rates in the market.

• Class B Buildings:  These buildings are a grade below Class A. Generally, they are slightly older buildings that still posess good management and quality tenants. It is not uncommon for value-added investors to target these buildings with the intention on renovating them back into Class A Buildings. Class B Buildings are well maintained without any functional obsolescence. 

• Class C Buildings:  This is the lowest grade for useable office buildings. These older office buildings (typically 20+ years) are located on less desirable streets in older sections of the city. Many of these buildings have higher than average vacancy rates for their market. Older, less desirable architecture, limited infrastructure, and antiquated technology define these buildings. For these reasons, Class C Buildings offer lower rental rates and are more difficult to lease. Many times these buildings are targeted for re-development.

The above descriptions are general guidelines for building classifications although no formal standard exists. Probably the most important point to remember is that buildings are classified relative other buildings within their market. A typical Commercial Real Estate Practitioner will first determine the Class A Buildings in a market by their highly desirable locations and amenitites and then classify other buildings in the market relative to the Class A Buildings.

Other factors to consider:

1. HVAC Capacity
2. Ceiling heights
3. Access (freeway, public transportation)
4. Common Area Improvements
5. Location
6. Parking
7. Construction
8. Elevator quantity and speed
9. Security and life safety infrastructure
10. Floor load capacity
11. Backup Power
12. Nearby and/or on-site amenities (dry cleaning, restaurants, ATM, etc.)

 

Ryan Roark (CCIM) Keller Williams Realty Parishwide Partners, 1390 Hudson Monroe LA 71201, USA 812-SOLD. Direct Line: 318-348-5815. Each office independenlt owned & operated.  Licensed in Louisiana.