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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Tags: BOMA, Building Classifications, Class A, Class B, Class C, Leasing Tips, Office Space
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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!
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.
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.
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?
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