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How are office buildings classified in real estate?

On Behalf of | Nov 21, 2022 | Commercial Real Estate |

For people attempting to get into real estate investment, office buildings make for a good potential starting point. However, it is important for potential investors to know exactly what they are buying.

This means understanding the classification system for office buildings. This system provides crucial information about the quality of the space and what experience it may offer.

Class A buildings

According to Building Owners and Managers Association International, different buildings have different classes. They are broken down into Class A, Class B and Class C buildings.

Class A buildings are at the top of the list in all matters, including rent, efficiency, amenities and architectural features. They appeal to tenants with more money to spend, offering top-grade amenities like fitness centers, food service areas, and top-of-the-line equipment and technology.

Class B buildings

Class B buildings are just a step below. They have standard features and amenities without any of the additional bells and whistles of Class A buildings, but they are still relatively comfortable and thus attract a lot of buyers in the moderate spending range. Because of its similar pricing to many other units in any given area, Class B buildings can often have high rates of competition among sellers.

Class C buildings

Class C buildings are the lowest grade. Though the rents here are lower than average for Class B or Class A buildings, they also only have the functionality and none of the comfort or conveniences.

When deciding which building type to buy, remember to also take a look at the type of market in the area, which can affect how well properties do.