A combination of factors come together to determine office building classes and what buildings meet the criteria for Class A, Class B, or Class C. Sometimes referred to as “Metropolitan Base Definitions,” building class definitions are used as a tool for standardized comparison to determine the types of tenants or building buyers who may be attracted to a particular office building.
In addition to the functional asset classes of office, industrial, multifamily, and retail, particular commercial spaces like office space can be categorized as class A, class B or class C.
Class A office buildings are the creme de la creme of office space and often trade for above average market rates or rental rates. Typically, these are the newest and most modern buildings. These buildings include high-quality finishes, the most up to date internal systems, ideal accessibility and a known market presence. Because of the high standards the building portrays, prestigious tenants are often attracted to these properties and they are very ideally located in city centers.
At a step down in market price, class B buildings draw a variety of tenants because they are the, so to speak, middle ground in office buildings. Rental rates for B Class buildings will be in line with area averages. The internal finishes of the building will be fair to good and the same can be said for their operating systems like HVAC. Class B buildings are typically older than Class A buildings and are showing signs of wear and tear – if you were to roll the clock back 10 years a Class B building may have been a Class A.
Class C Buildings are not necessarily sub-par opportunities, more often than not, tenants who require a functional office space at below market rates for the area will be attracted to this type of building. Buildings aged 20 or more years old often fall into the C category because they are old and may require major renovations. Early stage business owners with limited budgets or even non profit entities may be drawn to C Class buildings for the budget saving opportunities.
A few main characteristics combine to determine a building class including property age, amenities, technological capacity, HVAC quality, and the overall quality of the building and grounds.
Similar to an apartment complex that may include a gym and onsite laundry, office buildings can include a variety of value added amenities such as a gym, copy and print services, mail collection, and onsite restaurant or coffee shop, and even childcare services.
Commercial real estate buildings can be classed in various ways above and beyond the office building classes of Class A, Class B and Class C, including as multi-tenanted or single-tenanted, and build-to-suit. Working closely with your commercial real estate agent to clearly identify the priorities for your building search such as a central location, office space size, certain types of building amenities, accessibility, rent expectations and the building’s quality is an important aspect of the commercial real estate site selection process.
To learn more about the asset class most suited to your commercial real estate requirements in Colorado, we invite you to speak with a commercial agent today.
Rachael Holstein is the Marketing Manager for Transworld Commercial Real Estate, a full service commercial real estate firm in Denver, Colorado. Her work experience has been largely focused on business development and marketing in business brokerage, finance, architecture, property management, and information technology. A long time resident of Cleveland, Ohio, she attained her undergrad from John Carroll University and her Master’s Degree from Cleveland State University. In 2013, she relocated to Denver with her husband, Joe, and her furry companions to explore the mile high lifestyle! Visit transworldcre.com for more information.