Understanding Office Space Classifications – Class A, B, and C Buildings Explained

Building classes are a method of organizing office space and other commercial properties into categories which demonstrate their value. Office spaces are classified into Class A, Class B, or Class C by taking into account features such as the condition and age of the building, amenities, market location, infrastructure and building materials, design and curb appeal, and more. 

While older buildings in less desirable areas may be grouped into the Class C category, the highest quality buildings with best-in-class amenities and located in a central business district are slotted into Class A, and procure the highest rents relative to the area.

Why Office Classifications Matter

Property classifications offer an at-a-glance understanding of a property’s value and characteristics to brokers, buyers, and renters. While there’s no universal standard for filing properties into each specific classification, a building’s allotted office class gives a convenient understanding of where it falls in comparison to others in its local area. 

This information allows tenants to quickly decide whether a prospective building aligns with their goals for business image, employee experience, cost, and more. It can also give insight into value-add plays, where Class B or Class C assets can be upgraded through building improvements, system upgrades, and amenity additions to capture higher rents. 

Who Determines a Building’s Classification Between Class A, Class B, and Class C?

The office classification system, while widely used, is informal in that it is not a standardized grading system with specific metrics for categorizing buildings. Instead, classes are relative – based on neighborhood comparables and driven by local market data. They can shift as buildings age or are updated, or as localities improve or deteriorate.

No single entity determines the classification of a commercial office building. Instead, building owners, brokers, lenders, or landlords assess the building and place it into its most reasonable office classification bracket for the purpose of informing potential tenants and other brokers.

Key Factors That Drive Building Classification

What factors primarily determine whether an office space gets marked as a Class A, Class B, or Class C? Before we dive into what each of these types of spaces might look like more specifically, let’s take a look at the most common qualities that help sort buildings into their specific classes.

Key driving factors for office building classification include:

• Location: A property in a prime location among a busy business district may be classified as a Class A building, while a less accessible office in a fringe district may be a Class C space.
• Age and condition of the building: Newer buildings with on-trend updates and maintained systems and infrastructure, or overhauled buildings with new infrastructure upgrades pose a stark contrast when compared with Class C properties that are aging and require significant maintenance or remodeling work.
• Amenities: Modern amenities such as fitness centers, on-site parking, conference rooms, modern lobbies, fully-outfitted break rooms, and food centers have Class A qualities, while commercial buildings with fewer amenities and employee comforts are typically grouped into Class B space or even Class C. 
• Building systems: The existence and quality of HVAC systems, elevators, energy efficiency systems, security measures, and IT infrastructure are other factors that help to determine whether a commercial space should be classified as Class A, B, or C.
• Building materials, design, and finishes: Metal panels, floor-to-ceiling glass, stone tile, high-quality finishes, and premium millwork differentiate Class A buildings from Class B or Class C office buildings. Lower classes may feature utilitarian physical characteristics such as older brick construction, mid-grade carpet or tile, standard hardware, minimal detailing, simple dropped ceilings, and standard building lighting. 
• Tenant mix: Tenant mixes can swing significantly from national or blue-chip tenants to smaller local tenants with a high turnover skew. A property’s tenant profile is another determining factor in the organizing of building classes.

What is Class A Office Space?

Class A office spaces are the most modern, elegant, and well-cared for buildings in a given market. They’re the highest-quality buildings available in a locale, and are typically either new buildings or newly renovated spaces in the most desirable locations, such a busy financial district. 

Class A offices often have high ceilings, new roofs, modern HVAC and electrical systems, and glass, metal, or premium stone materials. Not only are they constructed with top-grade materials, but their high-end finishes, appealing landscaping, professional management, and accessibility add to their curb appeal. 

Class A offices typically have high lease rates and are often occupied by law firms, financial institutions, corporate headquarters, and regional offices.

Common Features of Class A Office Buildings: 

• New office space or newly renovated buildings in prime locations
• Top-notch security systems
• Ornate lobbies
• Fast Wi-Fi 
• On-site property management
• Parking garages
• Fitness centers, cafés, daycare, valet service, elevators
• Green building certifications
• Premier tenant mix 
• Green space

What is Class B Office Space?

Class B office buildings are typically 10-20+ years old. They may be situated in prime locations with good access, but lack modern updates and systems. In other cases, they’re located in slightly less desirable areas, but are bolstered by updated infrastructure and systems and plentiful creature comforts. 

Class B offices are typically recognized by functional materials and finishes, satisfactory security systems and HVAC, adequate building management, and decent access.

In some cases, well-located Class B buildings can be restored to Class A level with system and construction updates and the addition of contemporary amenities.

Class B properties are usually leased by cost-conscious growing companies, local professional services, IT centers, creative agencies, consulting services, and other local businesses.

Common Features of Class B Office Buildings:

• 10-20+ years old
• Basic finishes
• Functional construction
• Clean lobbies
• On-site parking 
• Decent accessibility
• Adequate technological capacity
• Basic security
• Shared outdoor areas
• Fair to good curb appeal
• Class B tenants in close proximity

What is Class C Office Space?

Class C buildings are the most affordable, but also the most dated, least desirable buildings in the market. General characteristics of these spaces include being at least 20 years old with older systems (mechanical, HVAC, electrical, etc.) and few amenities. In addition, they’re most often located in fringe areas away from the central business district. 

While Class C offices are not a first choice for those who want a turnkey space or a prime location, they can be a top choice for tenants who are ready to invest in re-development opportunities or put some elbow grease and cash into remodeling the building. Since they have the lowest rental rates, sometimes they’re the best candidates for conversion or adaptive reuse over time.

Typical tenants who gravitate toward Class C buildings include startups, small businesses, non-profits, and back-office operations that are primarily driven by low rent. For creative or niche users, they’re often worth the flexibility that low rent provides.

Common Features of Class C Office Buildings:

• 20+ years old
• Undesirable locations with limited access and away from downtown areas
• Bare-bones structural shell/outdated designs
• Outdated technology and infrastructure
• Very limited amenities (such as meeting rooms, lobbies, common areas, outdoor spaces, natural light, parking, centralized HVAC, and shopping conveniences)
• Extremely affordable options often in need of substantial updates and renovations

Side-By-Side Overview of Office Building Classes (Class A, B, and C)

Get A Free Customized Market Report for Metro Charlotte Offices

The metro Charlotte commercial real estate market is bursting with options for office space – from high demand Class A new builds to compelling prospects for Class C office opportunities with significant future promise. Whether you’re looking for a premium office building with flexible floor plates and open ceilings in Uptown, or need a functional space with quick access Charlotte’s convenient interstates, our team at Regent CRE is here to help you hone in on your ideal office opportunity.

As an industry leader in the world of commercial real estate, Brian Smith has completed nearly 1000 successful sales and lease transactions in the greater Charlotte area and holds prestigious real estate credentials, including SIOR and CCIM. But what sets him apart is a true concern for each client’s need throughout every step of the process. 

Ready to find your next Charlotte office space? Request your exclusive commercial property report or contact us to start the conversation.