It is important to know the class of a building as it pertains to leasing commercial office space. What does the category of a building tell a potential client? Basically, it is a somewhat subjective breakdown of commercial buildings by different standards that can indicate how desirable this property is to both tenants and lenders. It can be very helpful in deciding where to place a business and if that location and structure can support the business goals of the company.
The Building Owners and Managers Association (BOMA) is an organization in the field of commercial real estate. They have come up with some building class descriptions to aid in standardizing certain business audiences and in particular individual structures. One of their goals is to achieve a unified approach to office market conditions as based on certain parameters.
The market is divided into two bases: international and metropolitan, with the obvious differentiation being looking at a particular venue through more local or world-wide eyes. Most businesses will be looking at the metropolitan base for the class of a particular building.
Metropolitan Base Structural Divisions
Class A - Structures that fall into this designation are those buildings that have unique features and whose office spaces usually lease higher than the average in a certain location. Such buildings have business space that is equipped with avant-garde systems, above average accessibility, located in areas that are well-known in the market, have a physically impressive and probably newer structure and usually offer high quality amenities and facilities.
This type of category would greatly benefit any company and probably ensure that relocation any time in the near future to pursue a market advantage over competition would not be necessary. Of course, along with this high quality is undoubtedly going to be a high price as compared to other classes of buildings perhaps in the same general vicinity.
Class B The buildings that fall in this classification have adequate facility systems, good accessibility for clients, are located in decent districts, have physical structures that offer functionality with limited extras and may be over 10 years old and are certainly capable of meeting most of the tenants basic office needs. It is not, however, in the competition as a Class A structure.
Obtaining leasing in this classification could be a little difficult as this is an extremely popular type of building for many businesses. The economic twists and turns of the past few years have opened up some office space that was formerly unavailable so it is certainly a good time to look for openings in this type of building.
Class C - Although this is the lower category of structure, it does not automatically mean that this is a poor office in a bad location. Office space in this type of building may be adequate for many businesses, particularly start-ups that need to find below-market rent at least for the immediate future. The only thing it definitely means is that tenants actually pay lower than the average rent in a particular area. It won't look as great on the outside and the interior facilities won't be state-of the art; it still may be adequate for the need of some businesses.
If a business needs inexpensive office space, this may be the structure that best suits those needs. Sometimes the historic value of the structure can become a competing advantage to a particularly-targeted market. The potential downside to this class could be on the maintenance, ventilation, electrical and mechanical systems of the structure.
Knowing these three designations and determining an office space floor plan will greatly help get the best size and functionality of a structure that meets necessary business requirements. Bear in mind, when looking at potential office space, that this is a voluntary rating system with no current repercussions for inaccurate classifying by a developer or broker. So there is room for some negotiation if the structure and office space doesn't seem to be accurately identified within a particular designation. Know office spaces classes and work out the most economic settlement for your business!