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Class Of Property

By on October 23, 2018

The class of property is an industry term used to describe the quality of a building based on various factors such as types of tenants that desire them, amenities it provides, design of the property, etc.

There are no official government standards that distinguish between the different classes of buildings.

But players in the property industry, especially builders and investors use these classifications to sieve out real estate that they might be interested to invest in.

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There are typically 3 classes.

A class A building will have high build quality, impeccable design, often with over the top facilities. They tend to attract the most wealthy tenants who are usually well-established muli0national corporations or residents who are professionals.

A class B building is usually one with a no-frills building plan. It provides tenants with all the necessities without going beyond it with luxuries. Tenants are mostly small and medium enterprises who seek value without needing to compromise on practicality or residents in the middle class.

A class C building is usually one that provides cheap commercial and office space, but might not have all the needs that a business requires. Even maintenance might not be property scheduled.

While class A buildings tend to be the pinnacle of real estate investors, the best return on investments usually come from class B.

Because of the high capital requirement, working capital, and operating cash flow required to successfully build and run a class A building, they are often assets owned by REITs which has access to the equity markets.



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