What is the Difference between Class A, Class B or C Commercial Buildings

City_Scape_Copywrite FreeYou will often hear those in commercial real estate make reference to the building classification.  It can be concluded, that from an aesthetics perspective Class A is better than B, and Class B is better than Class C.  However, depending on the situation and intended use, a B or C building may be the better choice.  If a real estate professional is asked, “which building class is best” the answer should be “it depends…”.

The first order of business is to answer, are you a buyer or seller, or maybe a perspective tenant.  The natural follow on question should be “what are your specific goals for the use of the space”.  Like many other determinants in real estate, building classifications can be subjective to the market and to the person making the analysis.

There is however, a body of professional guidelines that offers standardization for everyone involved.  The leading industry organization for this effort is Building Owners and Managers Association International (BOMA) which was founded in 1907 to advance a vibrant commercial real estate industry through advocacy, influence and knowledge.  BOMA International is a primary source of information on building management and operations, development, leasing, building operating costs, energy consumption patterns, local and national building codes, legislation, occupancy statistics, technological developments and other industry trends.

So what are the differences?  For the purposes of comparison, office space is grouped into three classes in accordance with one of two alternative bases: metropolitan and international.  These classes represent a subjective quality rating of buildings which indicates the competitive ability of each building to attract similar types of tenants.  A combination of factors including rent, building finishes, system standards and efficiency, building amenities, location/accessibility and market perception are used as relative measures.  The metropolitan base is for use within an office space market and the international base is for use primarily by investors among many metropolitan markets.

Building amenities include services that are helpful to either office workers or office tenants and whose presence is a convenience within a building or building complex.  Examples include food facilities, copying services, express mail collection, physical fitness centers or child care centers. As a rule, amenities are those services provided within a building.  The term also includes such issues as the quality of materials used, hardware and finishes, architectural design and detailing and elevator system performance.  Services that are available readily to all buildings in a market, such as access to a subway system or proximity to a park or shopping center are usually reflected in the quality of the office market and therefore all buildings are affected.  The class of a specific building may be affected by proximity only to the degree that proximity distinguishes the building (favorably or unfavorably) from other buildings in the market.


Class A
Most prestigious buildings competing for premier office users with rents above average for the area.  Buildings have high quality standard finishes, state of the art systems, exceptional accessibility and a definite market presence.

Class B
Buildings competing for a wide range of users with rents in the average range for the area.  Building finishes are fair to good for the area.  Building finishes are fair to good for the area and systems are adequate, but the building does not compete with Class A at the same price.

Class C
Buildings competing for tenants requiring functional space at rents below the average for the area.


Investment quality properties are those that are unique in their location in the best metropolitan markets in the world, their design and construction quality, the solidity of the tenants and the tenant markets that they serve and the outstanding building management that is responsible for operating and maintaining them.  These properties stand out as leaders not only within their own metropolitan areas but also within the international investment community.

Investment properties usually contain state of the art mechanical, electrical, life safety, elevator and communications systems.  Their finishes are of the highest standards and they often provide the occupants with a mix of amenities – in variety and quality – that is exceptional.  Often they house a lead tenant for whom the property is named and usually they are located in a premier metropolitan area.  Investment grade properties need not be considered to be “trophy” material but trophy properties are usually investment grade.

Institutional grade properties are those of sufficient size and stature that they merit attention by large national or international investors, hence the name.  These properties are of good design and construction, although they are rarely monumental in design or the use of construction materials.  They are typically large.  They may be located in secondary metropolitan areas, but invariably they will have a very stable tenant base.

Speculative properties usually will conform to popular design conventions (at the time that they are constructed), but without the use of exceptional materials or construction methods.  The design and construction of these properties emphasizes functionality, in contrast with aesthetics or image and the design rarely reflects the image of any particular tenant or occupant.  To attract national or international attention, speculative properties must be relatively large, although minimum size requirements are lower for properties located in premier office markets.  They are often occupied by multiple tenants.

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