Classes A, B, and C categorize commercial real estate buildings. With every market around the country being different, the class is determined in relation to other buildings in the area. For example, a Class A building in Northern Colorado could be considered a Class B building in a larger city market.
The classification levels have pros and cons, and each one of the three classes presents a unique opportunity.
Class A Buildings
As you might have guessed, Class A buildings are the top tier. They are generally very aesthetically pleasing and are the newest buildings in their area. Class A structures have premium construction and building materials, prime locations, impressive amenities, and robust building management.
The above-mentioned characteristics mean that Class A buildings can demand the highest rent and retain quality tenants. Class A structures tend to sell quickly and above the average price point of their given market.
Class B Buildings
Class B buildings are average overall. These structures are reasonably attractive, moderately well-located, and slightly older than their Class A counterparts. Class B buildings still function well and have decent management and tenants.
Investors tend to be attracted to Class B options as buildings can often return to Class A status with renovations. Class B buildings command fairly good rental rates and sell at fair prices.
Class C Buildings
Class C buildings are the bottom category. They tend to be outdated (aesthetically and internally), much older, and located in undesirable areas.
Some will approach Class B buildings as an investment opportunity, but typically for redevelopment purposes rather than simple renovations. Class C buildings have the lowest rental rates and are slow to lease and sell.
How is Your Building Classified?
We would love to discuss any questions you have about the classification of your current buildings or any other properties in your market! Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 regarding any commercial real estate needs in Longmont, CO, and our neighboring communities.
We give out $250 gift cards for referrals that become our real estate clients.
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