The Three Classes of Office Buildings
Building amenities include services that are helpful to either office workers or office tenants and whose presence is a convenience within a building or building complex. As a rule, amenities are those services provided within a building. The term also includes such issues as the quality of materials used, hardware and finishes, architectural design and detailing and elevator system performance. Services that are available readily to all buildings in a market, such as access to a subway system or proximity to a park or shopping center are usually reflected in the quality of the office market and therefore all buildings are affected. The class of a specific building may be affected by proximity only to the degree that proximity distinguishes the building (favorably or unfavorably) from other buildings in the market. While a definitive formula for each class does not exist, the general characteristics are as follows:
Class A buildings are the most coveted, highly sought after spaces and are generally located in the most desirable areas. Besides their location, what makes them especially enticing is their modern, high end infrastructure, features and amenities. These buildings will typically have the very latest in infrastructure technology allowing them to achieve the highest standards in efficiency. Their interior finishes will be of extremely high quality; often including items like imported marble, polished solid wood surfaces or grand water features. Class A buildings have a prime central location with exceptional accessibility and are usually of significant size. 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.
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 investor’s 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. They’re typically older but still have higher-quality tenant improvements (although finishes may be somewhat outdated). Maintenance and upkeep are solid. HVAC and elevator systems are functional but not top of the line. Technological capacity is adequate. They may have on-site parking but it’s uncovered. Some Class B premises will offer on-site parking options, but these are often crammed into tight spaces, limited in number or uncovered. Security of the premises is generally minimal and manned security, if offered, is normally only provided out of hours. Many high end amenities such as concierge services, food courts and gymnasiums might also be missing.
The lowest classification of office building and space is Class C. These are older buildings and are located in less desirable areas and are often in need of extensive renovation. Architecturally, these buildings are the least desirable, and building infrastructure and technology is outdated. 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. Class C buildings are functionally and architecturally obsolete and are normally located in the less desirable areas. Because they are limited in facilities, amenities and desirability, these types of properties command the lowest rents and attract the much smaller businesses and the least credit-worthy occupants. They have poor to average-quality tenant improvements and don’t typically have elevators, on-site parking or central air-conditioning. Generally, they have lower quality of upkeep and maintenance. These buildings are generally functional, they just may not look as nice and their technology, Wi-Fi, etc., are generally older than Class A or B space.