Commercial Real Estate - Class A, B or C building.

My client asked me today what I meant when I described a building as a "Class A" building.

Class 'A' Building

These buildings are new, built of the highest quality building material, can be considered land marks because design, style and visual appeal are more important than the actual function, these building are more akin to a sculpture, than a building. Because of the design and quality of material, these structures are generally have excellent locations, managed professionally and have high quality tenants. These buildings, because of their prestige also demand higher rents than B and C buildings.

Class 'B' Building

These buildings like Class A buildings have very high tenant standards, good locations, managed by a professional company and exhibit little obsolescence and deterioration. These buildings offer very competitive rents with other Class B buildings but are typically lower than a Class A.

Class 'C' Building

These buildings are are between 15 and 25 years of age, maintained well and always have steady occupancy.

In general

Tenants go from Class C to Class B and to Class A as their business grows, also it stands to reason that as one moves from Class to Class the rent per sqr foot also increases. Class A rent will cost more than Class B, and Class B rent will be more than Class C. What one gains is visibility and access provided by the better locations of the higher class building.