If you have considered leasing office space in Boise anytime during the last 20 years you probably have heard the term Class A. But is the building deserving of a Class A designation, or is that just a marketing claim? The listing of which actual buildings are considered Class A, B, and C is a local decision, and since most building owners and developers always refer to their buildings as Class A, regardless of the location, construction, or design, this term can be confusing.
When considering office space, tenants will find that office buildings are generally classified as being either a Class A, Class B, or a Class C building. The difference between each of these classifications varies by market and class B and C buildings are generally classified relative to Class A buildings. In Boise, the Class A designation is generally misused to demote new construction. In reality, the age of the building is but one factor. If age was the deciding factor, then one could say all new cars are Class A in luxury or performance. And if you’ve ever driven a brand new Gremlin, you know that’s simply not true.
Before we go on, let’s consider how the term Class A came to be and how it is commonly used in other parts of the U.S. Class A steel frame construction became associated with city hi-rises in the early 1920s. Initially, Class A was a description the basic building construction and materials such as steel framing, that allowed buildings to reach greater heights; unlike wood frame or masonry/brick materials, which had limitations on the ability to carry the weight of the building itself. Wood frames were unable to resist lateral forces (i.e. wind and seismic), and masonry construction needed to be very thick and solid at the lower floors, which greatly reduced openings for windows. Consequently, Class A was originally used to describe multi-floor, steel constructed buildings. It morphed into a term to demote quality later.
We asked Tom Zabala, a founding principal of ZGA architects with over 30 years of experience, if he was aware of a commonly accepted practice or definition to designate Class A office buildings. According to Tom, “There is no simple answer or uniformly accepted definition (of Class A space) because various national and international organizations across the country define it differently. One thing to consider about building classifications is that buildings should be viewed in context and relative to other buildings within the sub-market; a Class A building in one market may not be a Class A building in another.”
Tom went on to say, “One of the more generally accepted descriptors is provided by the Building Owners and Managers Association (BOMA) that classifies office space into three categories:
Class A office buildings are the most prestigious buildings competing for premier office users with rents above average for the area. BOMA states that ‘Class A facilities have high quality standard finishes, state of the art systems, exceptional accessibility and a definite market presence.’
Class B office buildings are those that compete for a wide range of users with rents in the average range for the area. BOMA states that Class B buildings have ‘adequate systems’ and finishes that ‘are fair to good for the area,’ but that the buildings do not compete with Class A buildings for the same prices.
Class C office buildings are aimed towards ‘tenants requiring functional space at rents below the average for the area.’
The definitions provided by BOMA leave a little bit of room for interpretation. Basically what they are saying is that Class A offices are new, classy and with lots of cool doodads.”
It may go without saying that Class A offices are the most prized and sought-after offices. They are often new construction or have been recently redeveloped to a very high standard that allow them to compete with other newly-built office structures. They are fitted-out to top quality standards, complete with sleek design, state-of-the-art technologies and required infrastructure, top-notch furniture, excellent accessibility and professional management.
Class A offices are well-located relative to the needs of the major tenant sectors in the marketplace. Building systems (mechanical, HVAC, elevator, and utility) have the capacities to meet both current tenant requirements and well as anticipated future needs. The building finishes have high quality design and tenant finishes are characterized by efficient layouts and the best quality trim and interior finish. Building services are characterized by above average maintenance, management and upkeep. Occupying a Class A office boosts business image, so many top companies are willing to pay more expensive rates in order to secure the very best properties in recognized locations.
Class B offices are located in average to good locations relative to the needs of major tenant sectors in the marketplace, appeal to a wide range of companies and are typically available in less exclusive areas. The buildings are of good quality and design but are older and characterized by some functional obsolescence or deterioration. Building systems (mechanical, HVAC, elevator and utility) have adequate capacities to deliver services currently required by the tenants. Tenant finishes are characterized by fair to good quality trim and interior finish. The building services are characterized by average to good maintenance, management and upkeep. The cost of occupying a Class B office is often more affordable for small or medium businesses. While Class B offices fall below the quality of Class A offices, they are not considered sub-standard. In fact, some Class B offices are ex-Class A properties.
Class C offices are spaces that are typically 15-25 years old, characterized by functional and technological obsolescence, and generally fit out to a much lower quality level than a Class B office. Building systems may not meet current tenant standards. Tenant finishes are functional with no frills. Building services are characterized by the existence of below average maintenance, management and upkeep. These offices are usually located in out of town areas and suburbs, and as a result the tenants will often pay much lower rents than those charged for Class B offices or above. Despite a generally lower level of maintenance the spaces maintain steady occupancy.
If there were a more scientific method for classifying buildings, some of the basic building characteristics which could be used to compare and rank buildings would include:
- HVAC Capacity
- Elevator quantity and speed
- Backup Power
- Security and life safety infrastructure
- Ceiling heights
- Floor load capacity
- Location
- Access (freeway, public transportation)
- Parking
- Construction, Common Area Improvements
- Nearby and/or on-site amenities (dry cleaning, restaurants, ATM, etc.)
- Age of the property
- Tenant fit-out
- Landlord credibility and professional management
To conclude, the age of the building is important, but not the 100% deciding factor on the Class designation of the building. An older building can be upgraded, systems retrofitted, as well as conversely a Class A building can be neglected and be downgraded over time. At the end of the day, there is no exact formula to automatically define the category of a building. There is always personal judgment involved, especially when discussing characteristics of quality.
Is your space Class A? Do you need Class A space? An experienced, knowledgeable broker such as Tenant Realty Advisors can assist in asking questions about building materials and systems that are particularly important for your comfort and future occupancy costs.