When exploring options for office space, buildings are often marked with a letter designation of “A”, “B” or “C”. Understanding the differences between the Classes of A, B, and C buildings will help you focus on options that are the right fit for your company. Each class of building has its benefits and drawbacks.
A building designated as Class A is the highest quality building in the area. Most buildings with this designation have been constructed within the last 15 years or have been renovated recently.
Maintenance and repair should be minimal with this class of buildings. This helps to stabilize Common Area Maintenance (CAM) costs and reduces inconveniences. Buildings in this class have a good reputation and prominent businesses are tenants. Usually Class A buildings are more energy efficient and may have green features that minimize utility costs for tenants. Class A buildings are usually professionally managed which means concerns are addressed quickly. These buildings tend to have many great amenities such as: café’s, a gym, security services and shared facilities like common boardrooms or tenant lounges.
With so many benefits, Class A buildings have the highest rental rates.
Class B designations are given to buildings that are older but usually still in good condition with professional property management services provided and offer limited amenities to tenants.
Despite their age, Class B buildings are still functionally sound and are not likely to have major unexpected repair and maintenance issues. Due to the age of the building rental rates tend to be reasonable, making Class B buildings optimal for small businesses. Buildings with professional management services offered ensures the same responsiveness to concerns you would receive in a Class A building. Amenities are usually limited and not best-in-class. For example, most Class B buildings will likely have a small café, but unlikely to have other offerings such as a gym or security guard etc.
Class B buildings are not shiny and new which can result in higher Common Area Maintenance fees and utility costs. Older buildings also require more routine maintenance and lack energy efficiency features and cost savings newer buildings offer. Offering office amenities is any easy way to attract and retain top talent. If your company is in a growth phase the lack of amenities in Class B buildings could be a hurdle.
Class C buildings are the oldest in a geographic area and are usually low rise office buildings. These buildings may or may not offer on-site building management. They also tend to lack all amenities such as; renovated common areas, cafe & coffee shops, gyms and security services. But offer functional office space at below average rental rates and are ideal for short term-leases.
Class C buildings have the lowest rental rates. Space is usually more readily available even in areas where commercial real estate is in high demand. A good Tenant Representation Broker can use this to negotiate more favourable lease terms and secure funds for tenant improvements.
Class C office buildings do not usually provide the corporate “look” that many companies are seeking. The lack of amenities can negatively impact attracting new employees and decrease employee morale. You get what you pay for and it’s more than likely in a Class C building that repairs and maintenance will be required frequently.
An office lease is usually the second-greatest expenditure for a business. A Tenant Broker Representative ensures that an office lease is more than a cost centre but a competitive advantage. The Tenant Brokers’s job is to secure the best terms and perks for your company in any class of building. They will also provide insight into the property management services, utility costs and maintenance fees you can expect. Providing you the peace of mind and the best possible terms.
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