Download A Guide to Building Classifications

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.)
cite: http://www.squarefeetblog.com/commercial-real-estate-blog/2008/07/06/aguide-to-office-building-classifications-class-a-class-b-class-c/
Property classes
In every community there are several types of multi-family housing,
properties are typically put into one of four property classes.[6] Each "class"
of properties has a letter grade. These grades are used to
help investors and real estate brokers speak a common language so they
can understand a property's characteristics and condition quickly. They are
as follows:
Class A properties are luxury units. They are usually less than 10 years old
and are often new, upscale apartment buildings. Average rents are high,
and they are generally located in desirable geographic areas. White-collar
workers live in them and are usually renters by choice.
Class B properties can be 10 to 25 years old. They are generally well
maintained and have a middle class tenant base of both white and bluecollar workers. Some are renters by choice, and others by necessity.
Class C properties were built within the last 30 to 40 years. They generally
have blue-collar and low- to moderate-income tenants, and the rents are
below market. This is where you'll find many tenants that are renters "for
life." On the other hand, some of their tenants are just starting out. And as
they get better jobs, they work their way up the rental scale.
Class D properties are where you'll find many Section 8 in the US or
government-subsidized housing tenants. They are generally positioned in
lower socioeconomic areas.
cite: http://en.wikipedia.org/wiki/Apartment
The Building Owners and Managers Association (BOMA) classifies office
space into three categories: Class A, Class B, and Class C.[3] According to
BOMA, Class A office buildings have the "most prestigious buildings
competing for premier office users with rents above average for the area."
BOMA states that Class A facilities have "high quality standard finishes,
state of the art systems, exceptional accessibility and a definite market
presence." BOMA describes Class B office buildings as those that
compete "for a wide range of users with rents in the average range for the
area." BOMA states that Class B buildings have "adequate systems" and
finishes that "are fair to good for the area," but that the buildings do not
compete with Class A buildings for the same prices. According to BOMA
Class C buildings are aimed towards "tenants requiring functional space at
rents below the average for the area."[4]
cite:
http://en.wikipedia.org/wiki/Office
METROPOLITAN BASE DEFINITIONS
Class A
Most prestigious buildings competing for premier office users with rents above
average for the area. Buildings have high quality standard finishes, state of the
art systems, exceptional accessibility and a definite market presence.
Class B
Buildings competing for a wide range of users with rents in the average range for
the area. Building finishes are fair to good for the area. Building finishes are fair
to good for the area and systems are adequate, but the building does not
compete with Class A at the same price.
Class C
Buildings competing for tenants requiring functional space at rents below the
average for the area.
cite:http://www.boma.org/Resources/classifications/Pages/default.aspx