Understanding Classifications in Commercial Real Estate: A Guide to A, B and C Class Buildings

Commercial real estate consultants and brokers often talk about different building categories, such as A, B and C class. These classification help both tenants and investors understand the location, quality and features of a building. But what do they mean? In this post we’ll explore what criteria determine the A, B and C classification of properties. 

A Class Buildings

A classified buildings are considered the highest tier of property in commercial real estate. They are characterized by their top quality, including prime location and the best amenities. Below are some defining features of A class property: 

Prime Location: A class property is usually located in the most desirable areas of the city. They offer excellent proximity to business hubs, accessibility to transport and local amenities such as coffee shops, restaurants and entertainment. A prestigious location often helps companies establish their credibility and attracts potential talent. 
Prestigious Tenant Profile: A classified buildings tend to attract successful and well-established businesses as occupiers. They are often leased by law firms, tech giants and financial institutions. 
Latest and Sophisticated Amenities: These properties offer their tenants top tier amenities such as advanced security systems, concierge services, fitness and wellness centres, sustainability features and state-of-the art heating, ventilation and cooling systems.
Well-Managed: Property managers of A class buildings ensure that all facilities and common areas are clean and kept in excellent condition. Issues should be promptly resolved and there should be easy communication between property managers and the tenants. 
High-Quality Exterior and Construction: A class buildings are often designed by respected architects and engineered to withstand the test of time, through the use of the best material and superior craftsmanship.  
High Rental Rates: Due to all the features listed above, tenants of A classified buildings can expect to pay higher rental rates. 

B Class Buildings

Buildings classified B are a step-down from class A property in terms of quality and the amenities they offer, but they are still considered desirable. They offer a balance between quality and affordable rental rates. Below is what categorizes B class buildings: 

Decent Location: While not always in a prime location like A class buildings, B class properties are often situated in good or up-and-coming neighborhoods with decent accessibility to transport and local amenities.
Mixed Tenant Profile: B class buildings tend to attract a mix of small businesses, start-ups and mid-sized businesses, as well as organizations looking to minimize rental costs while maintaining good quality office space. 
Basic Amenities: These buildings also offer amenities, but they will be more basic than those offered by A class properties. B class buildings will have functional HVAC systems, the necessary security features and a functional office space. 
Maintenance: B class buildings are reasonably-well maintained and management ensures that they stay clean and functional for the occupiers comfort. 
Well-Constructed: B classified buildings are well constructed, with good quality materials and workmanship. They are less likely to be aesthetically impressive as A class buildings, but are still reliable and of a good standard. 
Affordable Rental Rates: Due to lower accessibility to amenities and less prestigious location and design of the building, B class property will be more budget friendly. This makes them a good choice for business with budget considerations.

C Class Buildings  

Buildings classified C are a step-down from class B property in terms of quality and the amenities they offer, but they are still a good option for many businesses. They offer affordable rental rates for businesses willing to compromise on location or amenities to save costs. Below is what categorizes C class buildings:

Less Desirable Location: Class C buildings are located in areas which are less desirable or undergoing redevelopment. They’ll be placed further away from city centers and access to amenities in the neighbourhood such as restaurants and fitness facilities will be lower. 
Tenant Profile: These buildings are usually occupied by smaller businesses or startups, who are trying to save costs on space rental. 
Low Level Amenities: Overall amount and condition of amenities in Class C buildings will be lower. Common areas may be limited, and spaces such as fitness canters and conference facilities are unlikely to be present. They might have lower security measures, for example fewer surveillance cameras or security staff on site. 
Condition and Age: Class C buildings are often older than A and even B class properties, with significant wear and tear. They often don’t employ the modern construction techniques, meaning it’s harder to maintain a good condition of the property. 
Budget Rental Rates: C Class buildings are an excellent option for businesses wanting to cut operational costs. 

In this post we explained the main difference between class A, B and C buildings in commercial real estate. They are only a guide, aiming at helping tenants and investors navigate the complex landscape of property leasing. A commercial real estate tenant advisor will be able to help you find the right type of property for you and explain all the negatives and positives of all properties, considering all of your property needs.