Commercial Property Classifications & Types of Office Spaces (Class A Office, Creative Office, etc.) (2023)

We at AQUILA know that when beginning to look for an office space, it can be hard to know exactly what you’re looking for. The different types of office properties and styles of office spaces can be difficult to compare and understand if you’re new to commercial real estate.

Luckily, there are industry standard classifications, which allow you to compare properties on an apples-to-apples basis.

Below you will found definitions and overviews of:

  • Classifications of office buildings, including Class A, Class B and Class C
  • Types of office space, includingTraditional Office,Creative Office,Co-workingSpace,Executive Suites andFlex Space

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Classifications of Office Space

When beginning the search for your office space, one of the first things you must decide is how much money you have to spend on real estate. This can impact the area in which your office is located, the age of the building, what kind of amenities the building offers and, essentially, the class of building you can consider.

Office properties are typically divided into three main categories, Class A, Class B and Class C. While there aren’t any all-encompassing rules to these classifications, they are typically based on quality factors such as building age, amenities and aesthetics.

Class A Office Space

Class A space is comprised of the nicest space in the market.

Class A buildings are generally either new developments or properties that have had significant improvements and renovations in recent years. The building’s common areas will have high-quality finishes and amenities such as covered parking, fitness centers, leisure areas (putting greens, pool rooms, spa center), on-site mailing office, restaurants or cafeterias.

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These buildings are also typically conveniently located, either in the epicenter of central business districts or along major streets, highways or transit centers.

Downtown skyscrapers and prominent office campuses are typically Class A properties.

Some examples of Class A office buildings in Austin’s primary submarkets include:

  • CBD: 210 West 7th, headquarters of The University of Texas System
  • Northwest: 7700 Parmer, prominent tenants include eBay, Paypal, Google, EA, Fico and Oracle
  • Southwest: The Terrace, home to Drilling Info, Broadcom, Bowman and Brooke, and MedSpring

Because Class A space is the nicest space, it also commands the highest rents.

To learn what Class A rental rental rates are in Austin, read our article How Much Does it Cost to Lease Office Space in Austin, Texas?

Class B Office Space

As you may have guessed, Class B office buildings are going to be slightly lower than Class A in terms of quality. If you are a company that wants to office in a quality building, but are unable or unwilling to pay high rental rates, then Class B offices may be a great alternative.

These buildings can be found in major commercial areas, but are more commonly found in the suburbs. Age is a common factor contributing to a building being considered Class B, as they are usually older than their Class A counterparts. Oftentimes, a Class B office office building was originally Class A, but has been downgraded due to age and deterioration.

These properties typically have good amenities, management companies and tenants, and can even be brought up to Class A standards with common area renovations and amenity upgrades.

Rental rates for Class B buildings will typically be lower than Class A. The buildings themselves are usually considered average, and the rental rates they draw are average for their markets.

Examples of Class B office buildings in the Austin area are:

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  • CBD: 800 Brazos, while most properties in the CBD are considered Class A, there are a handful of towers that are actually Class B options.
  • Northwest: 3305 Steck
  • Southwest: Plaza 290

Class C Office Space

If you are a company that is looking for a functional space with below-market rates, or if you are a commercial real estate investor interested in purchasing a redevelopment opportunity, then Class C buildings may be an option.

Class C properties are typically very dated, with minimal amenities and located in less desirable locations. These properties are sometimes slow to lease and occupied by tenants requiring value office space.

Class C offices can also appeal to small, start-up tenants as it allows them to allocate much of their financial resources towards growth, while keeping a sufficient roof over their heads.

Examples of these types of office buildings in the Austin area are:

  • Congress Square
  • Vaughn Building at 807 Brazos Street
  • 8100 Cameron Road

Types of Office Space

In addition to quality, office space can also be categorized into different types. Some of these types include:

Traditional Office Space

Traditional office space is the most conventional way of housing business. This kind of space will have all of the customary features that one might expect to find. Typical traditional spaces may include:

  • Reception area
  • Private office(s)
  • Open area for cubicles
  • Conference room(s)
  • Break room and/or printer room
  • Mailroom

In these types of offices, employees usually work in a cubicle or “bullpen” style area, and managers, principals and executives will be in private, built-out offices.

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This type of layout is often found in law firms, accounting firms and professional services. Although, these firms maybe trending away from the traditional layout.

Creative Office Space

Creative office space is a growing trend in office environments. It’s key identifiers include:

  • Open floorplans, with minimal private offices and no cubicles. Instead, the open areas are full of low-walled workspaces or desks.
  • Design features often include aspects such as open ceilings with exposed ductwork or exposed concrete floors.
  • Collaborative spaces, including conference rooms and group work stations throughout the office.
  • Often, creative offices include amenities such as large kitchen and break rooms, game rooms, and even lounge areas. These areas are meant to encourage collaboration amongst employees and spark creativity.

Creative office space can be found in all three building classes. It isn’t uncommon to find one or two floors of a Class A building to be dedicated to open, creative environments. Also many investment groups have snatched up affordable Class C buildings, renovated them, and churned out entire buildings of strictly creative offices.

Creative office space are for businesses of all shapes and sizes. With this office form becoming more mainstream, the style is not only are appealing to tech and advertising companies, but is gaining popularity amongst large corporate companies, including real estate groups, law firms and financial service providers.

Commercial Property Classifications & Types of Office Spaces (Class A Office, Creative Office, etc.) (2)

Capital Factory recently renovated their offices at Austin Centre to be on the cutting edge of co-working trends.

Co-working Space

Co-working office space is an office concept that offers rentable office space or desks for small startup companies and entrepreneurs, though many traditional businesses are getting in on the co-working trend as well. With self-employment on the rise (40 percent of the US workforce by 2020), many freelancers are looking for alternative options to accommodate their office space needs.

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Co-working offices are taking the form of the new age officing experience. Open area’s which promotes collaboration, social synergy, and detailed business interaction. Ideally, this form of officing would appeal to a person or entity that is unwilling or unable to pay the premium market rates for commercial space, do not have the flexibility to commit to a lease agreement, and or are looking for a space that is renewed on a month to month basis.

Co-working space offers a wide variety of benefits. Financially, you avoid the extreme upfront costs normally associated with lease agreements. Co-working space typically is rented out on a month to month basis, while some vendors offer week to week or day to day renting predicated on availability. Co-working space costs are all inclusive, meaning utilities, common area maintenance (CAM) expenses, insurance and other costs are worked into the agreement, so you don’t have to be burdened with the many intricacies of traditional commercial office leases.

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In sum, co-working office space promotes a more relaxed office environment that is conducive for companies looking for flexible terms and collaborative, modern working environments.

WeWork and Capital Factory are two prime examples of co-working and incubator spaces available in Austin.

Executive Suites

Executive suites are the more traditional version of co-working spaces. Renting an executive suite allows you a lot of the same benefits of a co-working space, including smaller lease size in desirable areas and term flexibility.

These were the original alternative to working from home or working from a coffee shop. Often leased by small law firms and other professional service firms or remote sales teams, an executive suite lends a small business the authority of a professional office space as well as the benefits included in such a space, including:

  • A receptionist or call system to manage incoming phone calls
  • Conference rooms in order to meet with clients or team members
  • A business mailing address for mail delivery
  • Printers and photocopy machines
  • Private office(s)

A couple of notable examples of executive suites in Austin include Regus and Intelligent Office.

Flex Space

Flex space is a type of office in which a tenant who occupies industrial space also has office space built-out within the building. This kind of space is for tenants who need to have both the front and back end of their business under one roof, from warehouse and/or distribution to sales, accounting and management.

Flex buildings allow you to build-out the style of office space that you main need, be it traditional office space, creative space or even a high-end showroom space. Having the administrative portion of business close by central operations has its benefits, as executives and managers can oversee day-to-day operations of manufacturing, handling, shipping, and research and development. Flex space also holds a financial advantage by consolidating real estate expenses.

Traditional industrial space will utilize about 95% of the square footage towards central business operations, while the remaining 5% is built out for small office space or a reception area. In flex space, this ratio tends to range between 70-75% industrial space to 25-30% office space.

Examples of flex space in Austin include:

What’s Next?

Hiring a tenant representation broker can help you define what type of office space is right for your company. Learn more about how hiring a tenant rep can help you in your search for office space in our article 7 Benefits of Hiring a Tenant Representation Broker.

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Or, continue reading to learn more about finding the right office space for you. Here are some recommended articles to continue learning:

  • The Ultimate Guide to Finding Office Space
  • How Much Does It Cost to Lease Office Space in Austin, Texas?
  • How Much Does It Cost to Use a Tenant Representation Broker? (Fees/Process/Benefits)
Commercial Property Classifications & Types of Office Spaces (Class A Office, Creative Office, etc.) (3)

FAQs

What is Grade A office space? ›

What is Grade A Office Specification? A grade A office building is the pinnacle quality that can be achieved. This property will be brand new or have undergone a complete redevelopment with a high-specification renovation, it will be well-located with good access and be professionally managed.

What is Grade A office Singapore? ›

What is a Grade A Office? Generally a Grade A Office in Singapore is an office space in office buildings that have just been constructed, approximately less than five years. The bulk of Grade A Office buildings are located in the Central Business District (CBD) of Singapore.

What use class is office space? ›

Use Class E – Commercial, Business and Service –

a) for the display or retail sale of goods, other than hot food, principally to visiting members of the public, (shops & Post Offices etc.) (ii) professional services (other than health or medical services), or (estate & employment agencies etc.)

What does class A office mean? ›

What is Class A office space? These are the “most prestigious buildings competing for premier office users with rents above average for the area,” and they have a “definite market presence.” Class A buildings have a prime central location with exceptional accessibility and are usually of significant size.

What is the difference between Class A and B office space? ›

Class A office building would be a building that you would typically see in a downtown setting, that would be a skyscraper, it would have marble and glass lobby, a very fancy decorations, you would see a parking garage. Class B buildings would be of a smaller stature, they may be a mid-rise, or shorter than that.

What are the 4 types of office? ›

The different office types
  • Private Office.
  • Coworking Desk.
  • Virtual Office.
  • Enterprise Office.

What is an office and types of office? ›

An office can also be defined as a place where the planning and organization in connection with the production and distribution of goods and services are done. Examples of offices are the principal's office, Banks, Restaurant, Shops etc. In the Principal's office, records of both students and staff are kept.

What is a commercial office? ›

Office: A commercial office is a property that is used by business professionals, medical and dental professionals, tech firms, and more. A standard office space is divided into separate rooms, and typically includes restrooms, and a possibly a residential-style kitchen.

What is Grade A commercial property? ›

Grade A buildings are those that enjoy a premium over the average rent prevailing in the area where they are located because they a usually newly built and have all the requisite infrastructure. These buildings are the best looking buildings of the city and have very good amenities.

What are the types of commercial building? ›

These five categories include:
  • Offices.
  • Retail – retail stores, shopping centres, shops.
  • Industrial – warehouses, factories.
  • Leisure – hotels, pubs, restaurants, cafes, sport facilities.
  • Healthcare – medical centres, hospitals, nursing homes.
28 Feb 2019

How do I calculate my office grade? ›

Generally, CBRE Research defines a Grade A building as a landmark building with modern flexible layout and floor plates above 18,000 square feet (sq ft). The building size is above 300,000 sq ft and offers underground parking and good lift services zoned for passengers and goods delivery.

What is A1 use in commercial property? ›

A1 Use Class – Retail and Shops

The A1 use class (generally known as general retail) includes shops, retail warehouses, hairdressers, undertakers, travel and ticket agencies, post offices and many more.

What is A1 A2 A3 Licence? ›

Class E was formerly composed of the following: Classes A1 (Shops), A2 (Financial and professional services), A3 (Food and drink), B1 (Business), D1 (Non-residential Institutions), D2 (Assembly and Leisure)

What is class E in commercial property? ›

The new Class E effectively amalgamates the former Class A1 (retail), Class A2 (financial and professional services), A3 (restaurants/cafes), B1 (offices) along with health/medical uses, creches, nurseries (all formerly D1 uses) and indoor sports/recreation (formerly D2 use).

What does Class A mean? ›

Class A shares are common stocks, as are the vast majority of shares issued by a public company. Common shares are an ownership interest in a company and entitle purchasers to a portion of the profits earned. Investors in common shares are usually given at least one vote for each share they hold.

What is a Class A building type? ›

Class A buildings are the newest and highest quality. They tend to be less than ten years old and are typically located in or near the Central Business Districts and/or most desirable locations of major cities (like New York City).

What is the difference between Class A and Class B? ›

A class A license is considered the “universal” CDL, providing the opportunity to drive multiple types of commercial trucks and tractor trailers. A class B license also allows operation of different types vehicles such as straight trucks and dump trucks, but it is more limiting than a class A CDL.

What is Type C building? ›

Type C includes buildings that have a lower risk and is therefore the least fire resistant.

What is a Class A facility? ›

Class A buildings are the most prestigious buildings with the most amenities in the best locations. They generally are the most attractive buildings built with the highest quality materials and construction methods.

What is a characteristic of a Class C space? ›

The lowest classification of office building and space is Class C. These are older buildings (usually more than 20 years), and are located in less desirable areas and are in need of extensive renovation. Architecturally, these buildings are the least desirable and building infrastructure and technology is out-dated.

What is an A grade property? ›

An A-grade property is a home that ticks many of the desirable boxes for buyers to a point where the property is going to generate serious competition and fetch high prices regardless of market conditions.

What is the grade of a building? ›

Grade is the quality of construction of a residence. The quality of construction of a residence will influence its value and it may vary within a given type of residence. Examination of both materials and workmanship is fundamental when determining the overall quality of construction.

What is a grade commercial? ›

Definitions of commercial-grade. adjective. of the kind or quality used in commerce; average or inferior. synonyms: commercial inferior. of low or inferior quality.

What is a premium grade building? ›

Premium Grade buildings naturally hold the highest-price range and more often than not, occupied by internationally recognised company's or very client facing businesses.

What does it mean to grade a lot? ›

Land grading is a leveling of the surface. Dirt from higher up is moved into the lower lying areas to create a nice level surface to serve as the foundation for your project. Sometimes land grading may require you to move in additional dirt from somewhere else to complete the job. Land may be graded flat or sloped.

What is an A class investment property? ›

The demand for quality will remain no matter what, so an A-grade property will always have a depth of buyers wanting to buy it regardless of market conditions. These types of properties, therefore, make the best investments because they will withstand market volatility the best and generate the best capital growth.

How are investment grade properties calculated? ›

The things I look for in any investment (including property) are:
  1. strong, stable rates of capital appreciation;
  2. steady cash flow;
  3. liquidity - the ability to take my money out by either selling or borrowing against my investment;
  4. easy management;
  5. a hedge against inflation; and.
  6. good tax benefits.
18 Sept 2022

What is a grade B property? ›

A class B property is viewed as riskier than class A, and therefore buyers acquire these properties at a higher cap rate than a comparable class A property. These properties are still in a good location and are in good condition. They've proven to be quite desirable because they offer more growth potential.

What are grade A builders? ›

In India, such spaces are built in around 1 lakh square feet area. Grade A buildings usually have well-known and highly reputed corporate companies and Multi-National Companies (MNCs) as clients. They also keep competing with other rivals in the same locality for getting the best companies.

What is construction quality grade? ›

Construction Quality

It describes the cumulative effects of workmanship, the costliness of materials, and the individuality of design used in constructing an improvement.

How do you know if something is commercial grade? ›

A simple way to tell the quality of a product is to look at its warranty policy. For example, residential furniture is typically covered for one year, whereas commercial ones typically range from 5 to 10 years. The fabrication process, materials, and components used are the key differentiators between the two.

What is B grade construction? ›

Grade B. These buildings are not as centrally located and are usually not architectural marvels but still have professional management and decent location. These buildings have elevators that do the job but are not start-of-the-art.

What is industrial grade and commercial grade? ›

Industrial Grade products have off the shelf extended temperature ratings of -45C to 90C. In addition, they can be screen tested to much higher and lower temperatures. Commercial Grade products are typically rated at only 0C to 70C or in many cases not rated.

What is a PCA rating? ›

A Private Credit Analysis is not a credit rating. It is a credit estimate accompanied by a written report on the rationale for the credit estimate. A Private Credit Analysis provides a confidential third-party opinion of a target entity's likelihood of default when a public credit rating is not available.

What is the PCA method of measurement? ›

PCA Method of Measurement means the method for the measurement of buildings utilised by PCA at the relevant times for the type of building the subject of this Lease or, if no such method exists or ceases to exist, such method or criteria as the Lessor may from time to time select as the most appropriate.

How many commercial office buildings are there in Australia? ›

There are 9,170 Commercial and Industrial Building Construction businesses in Australia as of 2022, a decline of -0.6% from 2021.

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