Understanding how Class A, B and C office buildings differ

On Behalf of | Feb 22, 2023 | Commercial Real Estate Leases | 0 comments

Many people in Florida choose to invest in commercial real estate to generate passive income. This is especially common among individuals who have recently retired, or are planning to retire, and are looking for ways to maximize their income, post-employment. Many who choose to invest in commercial real estate wind up investing in office buildings, and most office buildings fall into one of three main categories.

According to Bankrate, anyone looking to invest in commercial office properties should know these different categories and what they mean for each office building.

Class A buildings

Class A office buildings are typically the most modern and desirable in terms of location, amenities and so on. Such buildings are often either brand-new or recently remodeled, making them attractive to profitable companies and quality tenants.

Class B buildings

A step down from Class A office buildings, Class B buildings are generally in decent shape, but they may lack some of the bells and whistles Class A properties often have. They may be in slightly less desirable areas, too.

Class C buildings

Class C office buildings are often the most affordable of the three main types of office buildings, but there are reasons this is the case. Class C buildings are often older and less centrally located than Class A or B buildings. They may also lack modern amenities and require considerable renovations or repairs to become functional or profitable.

The type of office building an investor chooses impacts everything from how much he or she may charge for rent to how much he or she must sink into the property to make it usable.