The class of an office building is defined by the building’s characteristics. Let’s discuss this really is further detail.
Class A Buildings
To categorize a structure as a Class A building, it should be brand new or, at the very least, have been built in this current building cycle. It’s all of the bells and whistles that the best buildings around include. It’s typically downtown, usually a high-rise, and it doesn’t have functional obsolescence. On top of that features, it’s the best rent tier. Currently in Orlando, Class A buildings are between $25 and $30 a square foot, while Class B buildings are between $18 and $23 a square foot. Notice the gap of a few dollars between those two tiers – that’s typical in your community, too. You realize the class of a building instantly by the rent per square foot when compared with other building rents.
Class B Buildings
Class B buildings usually are over eight years old or older, depending in your neighborhood. If the present building cycle you’re in is just 3 to 4 years old, then the five or six-year-old building may be Class B. Essentially, it’s not the age of the building that is so important, because buildings don’t age quickly. It’s the systems within these buildings.
If it is a five-foot hallway as opposed to six feet, that’s a Class B building พื้นที่ให้เช่า. People will feel like that about it, because nobody built six-foot hallways until fairly recently. Now, if they certainly were like hospital corridors with this extra one linear foot, it really feels much more luxurious.
Class C Buildings
In Orlando, a Class C building would be significantly more than 17 to 20 years old. This is a good example, and remember that drops in class will be different on the basis of the building cycles in YOUR area. This is very important to comprehend when attempting to define the class of an office building.
A Class C building could have additional and certainly more functional obsolescence than a Class B building. Functional obsolescence may also be present in areas like the hallways, where you’d have 4 feet or less of hallway. When you yourself have a building with 3- 4 foot hallways, you are feeling closed in, because you are very used to the newer buildings having five and even six foot hallways.
If no buildings over the past building cycle were built in your town with six feet hallways and you walked into a building that way, you’d be surprised at the impact that it has on the visitor. It doesn’t cost the builders much to accomplish this, but it lends an upscale feeling to the building.
Class C buildings are older, with a lot of functional obsolescence and with systems needs to wear out. Maintenance on a Class C building costs a whole lot more than the other two categories.
Once the restrooms are between floors, it is a hard thing to fix because you have to increase or down half a trip of stairs to get there, typically using the fire stairs. Not just is that not ADA compatible, but it’s inconvenient and outdated. That particular functional obsolescence immediately marks the building as Class C.
You could own some buildings you will have to classify as Class C buildings, if you should be going by their age. However, they could still command high Class B-rate rents. This difference just depends on how you maintain your property. Today, if you buy a Class A building in Orlando, Florida, you’d pay very same of a 6% “Cap Rate”- quite simply, you should not get one because there’s more bang for your buck around this writing in older buildings.
It’s no economically sound investment. However, you are able to do fairly well with a Class B building. If you buy it on a 9% “Cap Rate”, the investment will likely produce cash flow for an amazing amount of time.
Tip: Office buildings last for decades and more, especially if they’re built correctly. Therefore, the greatest bang for your buck is from the Class B building, since it will be that class for quite a while if it’s well-maintained.
Remember that the class of an office building is defined by its characteristics and not just by when it had been built. I hope these details can help you broaden your knowledge on the best way to define the class of an office building.Read More