Understanding the differences between industrial building classifications will help you narrow down your search for commercial space and find exactly what you’re looking for!
Industrial Building Classifications
Commercial buildings are classified as A, B or C according to their price level, value, quality and amenities. Real estate and demographics vary from place to place, and as a result, the classification standards are subjective based on the area and market. For example, a Class A building in a smaller suburban setting might be a Class B in a large urban area.
Here are the 3 industrial real estate classes in detail:
Class A buildings are the most prestigious buildings in their market, with the newest state-of-the-art facilities. Class A buildings boast high-quality infrastructure and beautiful interiors and exteriors. Tenants competing for a Class A building are typically well-established industry leaders and looking for the best that commercial real estate has to offer.
Class B buildings are slightly older than Class A buildings with visible signs of age, but still good quality. Class B buildings are oftentimes older, with Class A buildings experiencing some depreciation. Investors target these buildings as investment properties to return to or fulfill their Class A potential.
According to The Balance Small Business, the majority of Class B buildings are fewer than four stories tall and are often found in the suburbs or on the edge of financial districts. Class B buildings are a great option for businesses looking for a functional building in great shape without the high price tag.
Class C commercial spaces are the lowest quality buildings on the market. They are usually located in the least desirable areas of cities and are over 20 years old. Class C buildings typically require significant repairs and renovations, especially when it comes to technology. Class C buildings attract smaller tenants with low rental rates. As long as your landlord approves it, you can make improvements to upgrade these spaces.