Understanding the Three
Office Space Classifications
Commercial office space refers to any commercial property that offers one or more rooms suited to a business performing office-related or administrative duties, such as meeting clients, housing documentation, or scheduling appointments, to name a few. Just as the term itself can encompass a broad variety of different businesses, there are different classifications within the genre of commercial office space that deserve understanding as well. The standards that define these different office space classifications will vary from market to market, but there are some general characteristics that will help you to determine what type of property you are looking at.
Office Space - Class A
Class A commercial office space is typically the most sought-after in any market. These properties are generally newer buildings that are well constructed and offer high-quality infrastructure to tenants. You may be able to identify these types of properties by their visual appeal, too, as upkeep and maintenance on Class A buildings are of the utmost importance. Features such as top-notch amenities, upgraded fixtures, top-of-the-line HVAC systems, and eco-friendly upgrades may be offered standard. These spaces may also come with hefty price tags. The high costs are associated with the fact that these properties offer the best accessibility and exposure, located in high-traffic areas and conveniently near major roadways and airports. Class A buildings will also likely be professionally managed by a reputable company and will boast many quality, long-term tenants.
Office Space - Class B
Class B commercial office space may be a slight downgrade from Class A properties, but it still holds a lot of weight in the commercial world. These buildings offer much of the benefit of Class A properties, such as professional management companies, quality tenants and good access, without all of the extra costs. Class B properties will likely be a bit older, but will still have good bones and be well maintained. This classification is quite appealing to investors, as their value can generally be increased easily by making simple upgrades and repairs (sometimes even enough to move them up to a Class A property).
Office Space - Class C
Class C commercial office space does not typically offer the same level of building quality as its counterparts. In fact, Class C properties are among the most poorly constructed and tend to be located in much less desirable locations. They often require quite a bit of time, money and attention just to get them ready for tenants to occupy. Often, this is simply a result of the building’s age, as Class C properties tend to be twenty years old or more. They do, however, also serve a purpose. These types of properties are great for big-scale investors looking to rehab areas within a city. They are also quite often suitable for smaller companies that don’t have the finances available to invest in a higher class property. With some work and effort, these properties might be able to upgrade to Class B, but the likelihood of them ever making Class A status is slim, largely due to their location.