Classes of Space
Commercial real estate is categorized into Classes (from Class A to Class C). These classes or categories are used in the industry to denote the quality and desirability of a building.
Class A space
Class A properties are usually in a prime location and are newly developed. Sometimes class A space can be in an older but highly sought after building, in which case the interiors have been recently updated to a high standard. Class A buildings will have the highest rental rates.
Class A spaces meet high quality standards, such as sleek design, green and energy efficient elements, state-of-the-art facilities, stylish furniture and excellent accessibility. Many large international companies and high profile businesses occupy Class A buildings to boost their image. They are willing to pay a premium for this space to be in a well recognized top-tier location. Class A buildings also typically have on site management, on site maintenance, 24/7 security and other amenities and services.
Class B space
A Class B property is typically available in less exclusive areas or in older buildings that have not been renovated. While Class B spaces do not offer the amenities and prestige of Class A, they are not considered sub-standard. Many Class B buildings were once Class A properties. The facilities and overall value are usually above average and satisfactory for standard business requirements.
Class B space is much more affordable for small or medium size businesses. Class B space appeals to a wide range of companies. This space is ideal for any business that values cost saving over image.
Class C space
Class C is functional, but is generally not updated or maintained to the level of Class B space. The level of amenities and services provided by the landlord tend to be lower with Class C buildings. The property is usually located outside of a major business district or in a suburban area, Class C spaces will have some of the lowest rental rates in the market.
Class C buildings, despite a generally lower level of maintenance, usually maintain steady occupancy.