Commercial Real Estate Building Classifications: Class A, B, & C

In commercial real estate, buildings are commonly categorized into three general classes - Class A, Class B, and Class C - based on factors like age, location, physical condition, amenities, and infrastructure. These classifications help set expectations for everything from rental rates and occupancy levels to investment risk and long-term value.

While there’s no single governing body that enforces these standards, building class terminology is widely used across the industry and serves as a helpful shorthand for brokers, investors, developers, and tenants. Importantly, what qualifies as Class A in one market might only qualify as Class B in another. Each classification should be viewed in the context of its local market.

What Defines a Class A Building?

Class A properties represent the highest quality buildings in a given market. These are typically newer, well-located buildings with modern construction and top-tier finishes. They often feature high-end lobbies, efficient building systems, and up-to-date mechanical, electrical, and HVAC infrastructure. Class A buildings are commonly found in major urban centers or other highly desirable locations, with excellent visibility and access.

Tenants in Class A buildings often include multinational corporations, financial institutions, or tech firms that place a premium on image, efficiency, and amenities. Features like covered parking, high-speed elevators, energy-efficient systems, advanced telecommunications infrastructure, and on-site amenities such as cafés, gyms, and conference centers are often standard.

Because of their quality and prestige, Class A buildings command the highest rental and sale prices in their respective markets.

What Makes a Building Class B?

Class B buildings are generally older than Class A - often 10 to 25 years old - but still in good condition and fully functional. They may lack the cutting-edge design or amenities of newer buildings, but they typically offer reliable infrastructure, solid construction, and convenient locations. Some Class B buildings may have undergone partial renovations to maintain competitiveness, while others may be well-suited for tenants who don’t need the premium features of a Class A space.

In many markets, Class B buildings offer a balance between cost and quality, appealing to a wide range of businesses. They may not include luxury amenities, but they typically provide adequate parking, standard telecom capabilities, and acceptable access to public transportation and highways.

Investors often view Class B properties as value-add opportunities. With upgrades and repositioning, these assets can sometimes be elevated to Class A status within their market.

How Are Class C Buildings Characterized?

Class C properties are usually the oldest and least improved buildings in a given market. They may be more than 20 years old and often show visible signs of wear or deferred maintenance. These properties may lack modern building systems, energy efficiency, and updated finishes. Ceiling heights may be lower, natural light may be limited, and common areas may be dated or in need of repair.

Class C buildings are typically located in less desirable or less accessible areas. They may suffer from limited visibility, reduced foot traffic, or weaker surrounding infrastructure. Amenities are generally minimal or outdated, and internet or telecom services may not be up to modern standards.

Despite their drawbacks, Class C buildings can serve a purpose for cost-sensitive tenants or those with flexible space requirements. They may also be targeted for redevelopment, adaptive reuse, or affordable housing conversions depending on zoning and location.

Additional Information on Building Classification

It’s important to remember that building classification is relative. A building considered Class B in one city may easily be Class A in a smaller or less competitive market. The criteria shift depending on the local real estate landscape, supply and demand, tenant expectations, and comparable buildings in the area.

In some cases, you may hear references to “Trophy Properties” or “Class A+.” These terms refer to the most prestigious, architecturally significant, or landmark buildings in a market. These buildings go beyond standard Class A definitions with best-in-class design, technology, and tenant experience.

Also worth noting: building classification isn’t static. A Class A building can drop in status over time if it isn’t properly maintained or updated. Similarly, a Class C property can be repositioned and reclassified with the right capital improvements and strategic upgrades.

How Building Class Affects Tenants and Investors

For tenants, building class plays a central role in lease pricing, experience, and operational costs. High-end tenants may seek the prestige, amenities, and efficiency of Class A space, while budget-conscious or smaller tenants may prioritize location and cost over finishes.

For investors, classification influences everything from asset valuation and loan terms to marketing strategies and future returns. Class A properties tend to be more stable but expensive, while Class B and C buildings offer more opportunity for value creation through renovation or repositioning.

In Summary

Understanding how buildings are classified into Class A, B, or C provides valuable insight into their market position, performance expectations, and investment potential. Whether you're leasing, investing, or evaluating a commercial real estate opportunity, building class offers a helpful framework for making informed decisions.

Interested in learning more commercial real estate terms? Visit our glossary >