Understanding The Different Commercial Building Classifications

For those pursuing commercial real estate for the first time, we understand that there’s a lot of information you need to keep straight in order to be successful in the South Shore area. From understanding Net Operating Income and Debt Coverage Ratio, to Capitalization Rate and Cash Return — there are a lot of Real estate terms that you’ll need to understand. However, one of the most important concepts to grasp is building classification.

What Is Building Classification?

No matter whether you’re looking for commercial Real estate in the Boston area or across the country, every commercial building or property will be classified according to it’s intended purpose and building type. Classifying commercial property helps potential buyers differentiate buildings as well as assists with the reporting of overall market data. At Quinn & Associates, we have a variety of different commercial buildings that fall under various building classifications because we believe it’s important to give our clients options. Below is an in-depth look at the 4 types of building classifications.

Types of Commercial Building Classifications

1. Class A. This building type represents commercial spaces that are brand new and include the best amenities such as private parking lots. These properties will also be located in the best areas and, as a result, have the highest rent. These buildings will also attract the highest quality tenants due to their beautiful and superior construction and constant property upkeep. These properties will often include high-end appliances, hardwood floors or marble flooring, elevators, nice bathrooms and other features.
2. Class B. These commercial buildings listed in Class B are those that fit a wide range of potential buyers or tenants. These buildings will include rent that is typical to the area in question. Class B properties also include desired amenities, though they will not be the newest and latest amenities. The buildings will often be a bit older or outdated but still have a functioning interior and systems.
3. Class C. Class B properties are usually subsidized buildings, many of which were built back in the 1980’s or earlier. While these buildings may be structurally sound, they often lack amenities that would fall under Class A or Class B. These commercial properties compete for tenants requiring functional space at rents that fall below the average for the area.
4. Class D. This type of commercial building is less commonly found throughout the South Shore area, but can be an attractive investment for the right type of tenant or buyer. Class D commercial spaces will be in need of extensive repairs or renovations as a result of deterioration, vacancy, or neglect. While the Building Owners and Managers Association does not consider “Class D” as an official classification, it is important to understand this type of property.

A Few Things To Consider

During your evaluation of any property, don’t forget to make sure the property is correctly classified for the area it’s located in. As professional commercial Realtors in the South Shore area, we’re here to help you determine which building classification is best for your needs. If you are a first-time purchaser or tenant of a commercial building, then we highly recommend steering clear of Class D or Class D properties as they will require renovations and repair work.

Have questions or ready to start delving into the property search? Check out our commercial Real estate listings online or contact us to request more information.