In most cities like Austin, Tx for example office buildings are classified based on their age, location, condition, and amenities. The Class designations A, B, or C are not official gradings however are classified by the building owners. Among commercial real estate brokers there is typically a consensus on what is actually A, B, or C class space.
Class A – Class A buildings are typically your top notch nicest office buildings. Most are newer buildings built within the last 5-7 years or so. They include amenities such as fitness facilities, covered parking, onsite delis, very nice finishes, and updated technology options such as fiber. They are typically located in popular areas or have a prominent address. Many of the tenants in these types of buildings are looking to have a great image and consists of financial companies, law firms, and other high profile technology companies. Class A office buildings will be the most expensive of the 3 classes.
Class B – These office buildings are a little bit older than Class A buildings however are typically maintained very well. Many Class B buildings were once Class A however after showing some signs of wear or in an area that is not as desirable as it once was have been downgraded. Most have standard amenities (some more than others) and are well suited for most types of professional companies. Lease rates are priced to suit most companies. They are just as functional as Class A however not as nice or expensive. If you don’t entertain high profile clients then these buildings will work just fine.
Class C – These office buildings are typically older buildings (10-15 years or more) with few improvements and are not maintained as well as Class A or B. The types of tenants you see leasing Class C properties are non-profits, startups, or other price sensitive tenants that don’t care as much about image or location. Lease rates in Class C office buildings will be the lowest and they may or may not be found in less desirable areas.
You can also learn more about office building classifications here.