If you’re in the market to rent an office, or you’re looking to buy commercial property to lease to tenants, you might have heard about spaces that are classified as A, B and C. What exactly does all of this mean?
In short, office classes are a general way of categorizing commercial properties based on characteristics like their age, their architecture and infrastructure, their amenities and tech capabilities, and even their looks (hey, we all want our office space to be attractive, right?).
These classifications are subjective and can vary from location to location, so what is considered class A in one city might be considered class B in another. In general, they are helpful for proprietors who are trying to market to the right tenants. They’re also helpful for tenants who are trying to find the right office that matches their needs and budget.
Here’s what you should know about each class of office space. Remember, there are no fool-proof methods for categorizing buildings, and some of these qualities may not be applicable in all situations; however, this will give you a general idea of what to expect.
Class A: The Top of the Line
Class A offices are the best of the best, usually rented and occupied by big-budget, high-earning tenants who seek to maintain an image for their clients — think law firms or financial advisers. These properties are in high demand and are not often vacant for long.
Because Class A offices are often new buildings constructed within the last 10 years, they will have the most up-to-date amenities available and their aesthetics are usually very attractive (picture elegant designs with shiny tile or gleaming wood paneling). They will likely have a spacious central lobby and covered parking. Expect them to be professionally managed with the best security, landscaping and custodial services.
These kinds of office buildings are frequently built in ideal locations right in the heart of business districts. Because they are competitively sought, businesses that are looking to move into a Class A office should be prepared to accept the rental terms as they are and not be able to negotiate.
From the proprietor’s perspective, Class A offices are great because they go for high rental prices, but under unfortunate circumstances, such as a recession, it can be hard to lease them at their true value.
Class B: The Functional Middle Level
Class B offices might not be as nice as Class A offices, but they still have everything a business needs. In fact, most Class B offices probably were Class A offices at one time, but they’re not as shiny and new as they used to be. Their architectural design might be a little outdated, or they are equipped with HVAC systems and technology that are a few years old.
The location of Class B offices are still good. They might not be built in the part of the business district that’s currently booming or growing, but they are close enough to still get in on the action, or maybe they’re built in a nice suburb nearby. They offer decent parking even if the lot isn’t as large as that of a Class A building.
These offices are the middle-of-the-road option that fits most businesses. They’re functional without being flashy, and practical without being pricey. Everything is still in good condition even if it isn’t brand new.
Class C: You Can Make This Work for You
Class C offices are older and in need of repair. No proprietor wants to describe their property as low quality, but that’s often what Class C offices are.
Picture a building that is more than 20 years old, where everything about it is showing its age. The technology might be outdated, parking options might be limited, and it might be located in an inconvenient part of town.
The good news? Class C offices might be a little worn, but they’re usually still practical. For a business on a budget that doesn’t need to impress any clients, Class C offices serve as a place where you can set up a few desks, plug in a Wi-Fi router and make the space work for you. In many cases, you might be able to make a few repairs to restore some of its old glory and bring it up to the level of a Class B office.
These properties sometimes take a little while to fill with tenants, and although proprietors won’t be able to charge a very high rent, these properties do have potential for redevelopment if the resources are available.