CRE Class is in Session: Learn the 3 Different Types of Office Spaces

Generally speaking commercial office buildings are classified into three divisions: Class A, Class B, and Class C. Every category varies in relation to regional markets. This classification system helps to rationalize real estate market data  and standardize the myriad of differences between buildings. Because it’s virtually impossible to create a perfect system around so many variables, the system is continually developed more as and art rather than a science.

Sheryl Mazirow, Southern California’s most trusted name in tenant representation, is an aficionado in this CRE art, and explains the three different types of office spaces available to you as you go through the process of finding the kind of space that will work best for you and your business:

Class A: As you might tell by the category, these are at the top of the rank, and include the highest quality commercial building spaces available in their regional market. With top tier tenant improvements, and new or cutting-edge infrastructure, these listings are usually the highest quality properties.

On-point, responsive property management, easy access, and substantial amenities are among some of the common perks of a Class A building–and large, sprawling space is a typical indicator. Case in point; a Class A listing located in the west suburbs of Los Angeles average about 50,000 square feet or more. These ideal conditions and features attract high quality tenants, and set the bar for the highest rent.

Class B: Accordingly, buildings in the Class B category are usually situated in secondary locations, but are newly built brick and mortar. Or, they typically could be older buildings in a prime real estate location in the local area. These common suburban properties range anywhere between 5,000-25,000 square feet on average, which omits some amenities Class A buildings enjoy such as 24-hour maintenance and management on call, or attached covered parking structures or adjoining lots.

It’s a common market trend that investors will acquire Class B properties because they are riddled with Class A potential with the right strategic remodel. It’s likely that a Class B space has been previously occupied, however the general function of the building is up to par or slightly above.

Class C: As you may have guessed, these are the lowest grade office buildings. Class C spaces are considered dinosaurs compared to their counterparts being more than 30 years old on average. These properties are in the worst condition, and in least accessible locations in their local region, and often times need a major overhaul in renovations and restorations. These buildings tend to overwhelm prospecting tenants because of their decrepit infrastructure, and outdated technology. This being the case, Class C spaces command the lowest rent and take painstakingly long to lease. Generally, they are acquired as redevelopment projects.

As mentioned before, there is no perfect formula to each of these categories and how buildings fall in line with each tier. Local markets are always the larger context and the above listed is just a general guideline to CRE buildings.

Our team at Mazirow Commercial, Inc. is dedicated to helping educate business owners on the many facets of the CRE market of Los Angeles, Ventura County and Southern California. Our founder and President, Sheryl Mazirow has over 30 years of lease negotiation experience to help you locating and obtaining the perfect property for your growing business.