Commercial Real Estate Building Classification Part I

CRE Building Classification Standards

When looking for new locations, tenants may come across buildings touted as “Class A”. Landlords also advertise properties as having “Class A finishes.” To an inexperienced buyer or renter, the meaning of this class distinction is a mystery. “Class A” sounds like a good grade. It’s better than a “Class D” or a “Class F,” right? Taking the steps to familiarize yourself with Commercial Real Estate Building Classification can help you to narrow down your search. You may also feel more comfortable leaving your options open.

It’s equally important to recognize that building classes are chosen by  landlords and their agents. An agent can recommend labeling a building as “Class A” without it meeting Class A standards. It’s all relative. Therefore, knowing building class standards is vital to making smart choices about your next space. Let’s take a look at where building classes originated.

The Origin Story

Buildings standards differ from case to case based on their construction, location, amenities, accessibility, rental rates, functionality and more. With all of these factors to consider, tenants and landlords need an easy way to quickly judge a building’s market value. Determining the quality of tenant attracted to the building is also a factor. Building class distinctions were developed by the Building Owners and Managers Association International (BOMA). They created standards to simplify comparing properties across local and international markets.

By using the BOMA standards to define CRE Building Classifications, landlords and their agents can attract different types of tenants to their property. Therefore, as a tenant, you can easily compare buildings in relationship to others in the market. In theory, BOMA standards are a win-win for landlords and tenants.

However, if you are looking for buildings of a certain class, you should be aware that the class chosen for buildings is a subjective quality rating. BOMA standards are just suggestions. Ultimately, the landlord and their agent choose the building classification.

Buildings can change classes as they age, become renovated, or even as popular markets shift. Even though building classes can be a helpful tool when narrowing your property search, it’s important to keep your options open. “Class A” is really in the eye of the beholder.

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