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A Guide to Office Building Classifications; Class A, Class B, Class C

July 6, 2008

When considering office space, tenants will find that office buildings are generally classified as being either a Class A, Class B, or a Class C building. The difference between each of these classifications varies by market and class B and C buildings are generally classified relative to Class A buildings. Building classifications are used to differentiate buildings and help the reporting of market data in a manner that differentiates between building types. That said, there is no definitive formula for classifying a building, but in the general characteristics of each are as follows:

  • Class A. These buildings represent the highest quality buildings in their market. They are generally the best looking buildings with the best construction, and possess high quality building infrastructure. Class A buildings also are well-located, have good access, and are professionally managed. As a result of this, they attract the highest quality tenants and also command the highest rents.
  • Class B. This is the next notch down. Class B buildings are generally a little older, but still have good quality management and tenants. Often times, value-added investors target these buildings as investments since well-located Class B buildings can be returned to their Class A glory through renovation such as facade and common area improvements. Class B buildings should generally not be functionally obsolete and should be well maintained.
  • Class C. The lowest classification of office building and space is Class C. These are older buildings (usually more than 20), and are located in less desirable areas and are in need of extensive renovation. Architecturally, these buildings are the least desirable and building infrastructure and technology is out-dated. As a result, Class C buildings have the lowest rental rates, take the longest time to lease, and are often targeted as re-development opportunities.

The above is just a general guideline of building classifications. No formal international standard exists for classifying a building, but one of the most important things to consider about building classifications is that buildings should be viewed in context and relative to other buildings within the sub-market; a Class A building in one market may not be a Class A building in another.

There is no international standard for classifying office buildings. In fact, BOMA is generally against the publication of a classification rating for individual properties. Were there a more scientific method for classifying buildings though, some of the building characteristics which could be used to compare and rank buildings would be as follows:

  • HVAC Capacity
  • Elevator quantity and speed
  • Backup Power
  • Security and life safety infrastructure
  • Ceiling heights
  • Floor load capacity
  • Location
  • Access (freeway, public transportation)
  • Parking
  • Construction, Common Area Improvements
  • Nearby and/or on-site amenities (dry cleaning, restaurants, ATM, etc.)

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Comments
KEV. July 29, 2008


Bohkon Bohkon!

this is a great posting but you forgot (3) important diffrentiators 1.) Siesmic issues 2.) Electrical / data capacity 3.) ADA complience. These alone are huge factors between A,B,& C product!

Matt Barber March 22, 2009


I prefer income potential as the most important criteria for defining office class. I can’t put my finger on the definition, but it’s something to the effect of: Class A space commands the highest rent in any given sub-market, even when compared to new construction.

Most of the other critieria mentioned above deals with construction quality, which usually corresponds to rent levels, but let’s not confuse a Class A (structural steel columns, etc.), B (reinforced concrete), C (masonry bearing walls), or D (wood/steel framing) CONSTRUCTION TYPE with office type.

Philippine Real Estate October 6, 2009


The office building classification really has its relevant standards. Thanks for providing a list of what are the bases on ranking and classifying office buildings. This is a very helpful article especially for real estate investors.

patrick October 29, 2009


if I have a treatment which I can perform on existing airsided HVAC installation, which reduces Amp draw (energyconsumption) and extend the life of the coil by 4 times, what place would be best to start..New York, London? (I have very good sales people) suggestions or other advice?

las vegas offices December 24, 2009


this was actually a cool article cus i just started working at an office broker in las vegas and now this whole Class A, Class B, C stuff makes sense

Prabhmeet Singh August 16, 2010


Resourceful and informative article
As all the above points are essential to classify the development in A, B, or C class, it is important to note the brand value attached through the Developer. A reputed commercial real estate developer would make it possible to attract all the mentioned points, to make it an “A Class” development.

Jennifer Yu February 1, 2011


Can class B office Building lease to a doctor office?
Thanks.

Jim Meredith April 9, 2011


My concern is that “Class A office space” is defined by the characteristics of investment property and not by the experiences of the people and organizations who work in these buildings. My commentary here http://archizoo.com/2011/04/09/the-room-is-what-its-all-about/ and here http://archizoo.com/2011/04/03/the-big-shift-%E2%80%93-why-class-a-office-space-is-now-irrelevant/ as well as other places.

Burt Parker October 16, 2011


Thank you for providing this simple yet effective definition. As I am new to the commercial industry and have always wondered what the differences are?

Chris Palmer October 24, 2011


In your opinion, is construction quality or location more important to the classification?

David January 20, 2012


While construction quality is a major factor, it is subjective to the purpose of the building/facility. Qualification for class is primarily the suitability and quality of the overall facility to the application and local market comps. For instance, if this is typed as Class A office; is it newly-built flex space with adaquate parking and highway access but not convenient to the local amenities that employees need such as restaurants, etc.? Would it be a hardship to lease there if all your employees had to be out of the office longer than an older space with less modern qualities but closer to stores and services? Apples and oranges?

shahriar March 10, 2012


hey guys
i need at least one example{photo} for each classification…
if you have plese send a photo to my E-mail….
thanks….

REIT Joan April 26, 2012


General or not, you office classification guidelines were very helpful. I appreciate you reiterating that B, C, and D classifications office properties relate directly to the Class A standard for a particular market.

Skinner Development May 15, 2012


Great list, I know classifications and be tricky depending on what state you’re in.

LeaseMatrix July 13, 2012


Great post. Check out LeaseMatrix when you have a moment. It is a new, web-based Lease Analysis tool which might be useful for you. It creates elegant lease analysis and comparison reports in under 5 minutes and includes the ability to classify the grade of each property.

Gerard October 1, 2013


what about new retail space from the ground up how does that classify?

Thanks

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