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Should You Invest in Class C Office Space?

Recently there’s been a lot of talk about classifying commercial real estate and deciding which office space is ideal to rent. Whether you’re a small business owner at the start of your entrepreneurial journey or you’re the head of a large corporation looking for a new location, this article might be of interest to you.

After some thorough investigation, we decided to clear the air regarding whether or not investing in a Class C office space is worthwhile. We’ve looked at all the perks of a Class A building, checked out the features of Class B office space and analyzed the characteristics of Class C property in order to have a full picture of the entire commercial real estate inventory. Here’s what we’ve come up with:

How is office space categorized?

Naturally, there are very many ways to rank and classify commercial real estate, but today we’re taking a look at the list that BOMA (the Building Owners and Managers Association) has put together, ranking office spaces into three subcategories: Class A, Class B and Class C. The association categorizes a commercial building by taking into consideration four main factors: the location and neighborhood where it is situated, the age and condition it is in, the amenities it offers, and the overall appearance of the construction, both inside and out.

We decided to succinctly present to you all three types of office space in the U.S., so you’ll have a better understanding of each category’s features and can decide for yourself whether or not a Class C property is right for you.

Class A and Class B office spaces

A Class A commercial property is known as the crème de la crème of all commercial real estate, offering the best of everything. These buildings are often LEED-certified and sustainably-powered, boasting sleek designs with matching furnishings, distinctive architectural features, and hard-to-beat locations with an abundance of parking spaces and high-end concierge or valet services, along with the finest and newest amenities you can imagine.

Class A office buildings are mostly for large and wealthy businesses that aim to make a bold statement about their status in their line of work and can also keep up with the high maintenance costs that such an office space entails. Large corporations, such as those who are active in fields such as finance, accounting and law, often opt for Class A offices.

Class B buildings might have been classified as Class A in their prime, but have been reassessed and recategorized mostly because they are now older. They also tend not to have such a central location as Class A offices and can lack some high-end features. They are still well-maintained, are in quite good condition and are less expensive than Class A buildings.

Class B office spaces are meant for people looking for an affordable place with an agreeable location and good amenities. They don’t mind that the building is slightly old, since it’s still well-functioning and offers all that’s required for getting the job done.

Characteristics of a Class C office space

As you might have guessed, Class C buildings are at the bottom of BOMA’s list and offer less desirable features than the two categories described above. They offer no-frills spaces in aged structures, and though they can enjoy a reasonably nice location they are usually not exactly situated at the heart of the action. Extensive renovations are probably needed and there might be limits to the types of amenities you can arrange for a Class C office space if you decide to rent one.

Pros and cons of investing in a Class C office space

One of the greatest advantages of Class C buildings is the fact that you might have scope to turn it into the office space of your dreams. As we’ve mentioned before, you’ll probably need to do renovations before you move in, but you can turn this to your advantage. You can possibly add amenities and features that were not available to tenants in the past and you will probably benefit from quite a budget-friendly price, considering the present state of the building.

On the downside, Class C office spaces might be too run-down for a completely modern revamp, something you will need to consider when you’re viewing the place. Considering the cut-price cost of Class C buildings, vacancy levels can be quite low, so coming across such an office space might prove to be difficult.

Is a Class C building for you?

Class C commercial buildings can be ideal for those who are not so impressed by the “wow” factor of a property and are much more interested in having an affordable base from which they can attend to their business. They are great for people who are not afraid to do some renovation work and who can live without some high-end amenities like valet parking and a bank of elevators. Just make sure you do a bit of a research before signing the dotted line on a Class C office rental, so you’ll have a functional, accessible and inviting place in which to carry out your business.

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