Oct 24, 2016

Building Class For Corporate Tenants

By Don Catalano

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When you start to look at building classifications while doing your research on available office space, things can begin to seem like alphabet soup pretty fast. You'll often find A, B and C class buildings located within the same general geographic area, and all those letters can begin to blur together after awhile.

 

The truth is, though, that building classifications provide valuable information to prospective tenants, making it important that you understand their meanings and implications. Let's take a look at each:

 

Class A Buildings

What They Are: 

Class A buildings are the most modern in a given geographic area. They feature state-of-the-art systems like the latest innovations in heating and cooling and are usually professionally managed. To obtain a Class A status, a building must typically have effective onsite security and amenities available to tenants.

Benefits for Tenants: 

A Class A building means getting the best of the best in a given area. Often, Class A buildings feature green technologies that can reduce utility costs. Normally, the buildings are the most prestigious and attract the most successful companies in the area. Often, property managers have offices right on the property to provide immediate assistance to tenants.

Drawbacks for Tenants:

With all that Class A buildings have to offer, landlords are able to charge the highest possible rental rates for spaces within them.

 

Class B Buildings

What They Are:

Class B buildings are usually older than Class A properties, but they are generally in good repair. They have reliable building systems and their facilities are well kept and may even have been renovated in recent years. Some features that are considered standard with Class A buildings like on-site parking, amenities and securities may not be offered with a Class B property.

Benefits for Tenants: 

Rental rates in Class B buildings will generally be lower than those for Class A buildings, yet with the discounted rates, you'll still get the benefits of reliable building systems. In highly competitive areas, Class B buildings may offer many amenities.

Drawbacks for Tenants:

With Class B buildings, there is more of a risk for things breaking and repairs being necessary. Some will appear dated, and you're less likely to find any green improvements in buildings of this class.

 

Class C Buildings

What They Are: 

Class C buildings are usually more than 25 years old and have not been renovated in recent years. As a result, they usually have outdated decor and building systems. Buildings in this class are not always professionally managed, and you're less likely to get special amenities.

Benefits for Tenants: 

The biggest benefit of a Class C building is very low rental costs. Also, some properties will have more relaxed standards and may be willing to accept riskier tenants like startups and those with past credit problems.

Drawbacks for Tenants: 

The drawbacks for Class C buildings are quite similar to those of Class B buildings but to a greater degree. You should expect routine repairs to be necessary, and the lighting, heating and cooling systems are unlikely to be efficient.

 

Other great CRE articles:

Five Office Space Myths Debunked

Office Planning Tips for Corporate Tenants

The Benefits of Leasing a LEED Certified Building

 

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Topics: corporate tenants, building class

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Don Catalano

Don Catalano

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