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The “ABC” of Office Building Classifications

Ever wonder why office, commercial, and industrial buildings are classified as either Class A, Class B, or Class C?

The difference between each of those classifications varies by market. Class B and C buildings are generally classified relative to Class A buildings.

The classifications of buildings are to differentiate them and help the reporting of market data in a manner that distinguishes between building types.

There's no definitive method for classifying a building. The general description of each classification is as follows:

Class A:

  • Uppermost quality buildings in their market

  • Generally the best-looking buildings with the most effective construction and top-quality infrastructure

  • Well-located, good access, and professionally managed

  • Attract the highest quality tenants and command the highest rents

Class B:

  • Generally, a touch older but still have good quality management and tenants

  • Value-added investors target these buildings as investments since well-located Class B buildings can be returned to a Class A rating through renovation

  • Class B buildings should generally not be functionally obsolete and be well maintained

Class C:

  • Older buildings (usually more than 20 years old)

  • Situated in less desirable areas

  • In need of extensive renovation

  • Least desirable with outdated infrastructure and technology

  • With rock bottom rental rates

  • Take longer to lease, and are targeted as a re-development opportunity

Since there is no formal standard for classifying a building, the important thing to remember is that buildings should be viewed in context, and in relation to other buildings. BOMA is usually against the publication of a classification rating for individual properties.

This is why most commercial and industrial buildings may be classified as "C" not because they are old or obsolete - but because they are compared to office buildings. In commercial real estate, we don't pay too much attention to classification but more on other characteristics, such as:

* HVAC capacity

* Elevator quantity and speed

* Backup Power

* Security and life safety infrastructure

* Ceiling heights

* Floor load capacity

* Location

* Access (major roadway, public transportation)

* Parking

* Construction, common area improvements

* Amenities

Source: Square Feet Blog –

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