Building Classification Types: Office Grades Explained

Inside a modern office hallway


Office space classifications were created to help estate agents, surveyors, investors, and everyone else in the property industry categorise building quality in order to justify property prices. However, there is no formal international standard for classifying office buildings.

So, to clarify the difference between a grade A office building and class c office space once and for all, we’ve compared resources from around the web, talked to industry experts, and drawn on our own knowledge from years in the industry to create a definitive explanation.

Discover the differences between building classification levels below.

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.

Generally, there tends to be a larger provision of this classification of offices in large cities where demand is highest and there is a higher level of occupier churn. Also, grade A offices can often be found in high-rise buildings, meaning higher ceilings, a more spacious, naturally-lit space and central, manned lobby.

Due to their high standards, these properties cost more to purchase, however they offer higher rentals.

What is Grade B Office Specification?

The term ‘class B office space’ refers to property that has been previously occupied and is not quite to the level of quality expected of a grade A office. Grade B office space is considered ‘average’ and perfectly usable.

This type of commercial space may be categorised as so because it is in a less desirable location, for example in an out-of-town industrial estate rather than in the city centre, or because it hasn’t been renovated in recent years. In fact, some properties start out as grade A, but get downgraded with time.

What is Grade C Office Specification?

Class C office space is the lowest specification available. This usually refers to buildings that are twenty plus years old and are found in less desirable areas. These buildings are not aesthetically pleasing, technology is out-dated, and infrastructure is lacking, therefore they offer the lowest yields and are often targeted by developers and utilised by smaller companies.

With extensive renovation, grade C office space can become grade B, but it will never become grade A due to its age and location.

What Influences an Office Space Classification?

When defining which category a commercial property fit out adheres to, there are a number of elements to consider, including:

• Property age
• Location
• Access
• Parking
• Number and speed of elevators
• Security
• Construction
• Nearby or onsite amenities

How Does Grade Affect Value?

The specification of your commercial building can have an impact on not only the purchase price, but how much you can rent it out for in future. For example, office design company Oktra has reported the following price differences for London in 2018 per sq. ft.

Of course, where your grade A office is located also influences the value you could achieve. According to Colliers International Offices Rents Map, a grade A office in the City will cost you £68.50 per sq. ft. and a grade B will cost £52.50 per sq. ft. But the same class A property will cost half the price, £34.00, in South London’s Croydon, and just £24.00 for Grade B.

Similar disparities can also be seen when you compare commercial property hotbeds across the country. Here are some typical costs for grade A office space per sq. ft.:

Belfast – £21.50
Birmingham – £33.00
Brighton – £30
Bristol – £32.50
Cardiff – £25.00
Dublin – €65.00
Edinburgh – £32.50
Exeter – £19.50
Glasgow – £31.00
Liverpool – £22.00
Manchester – £35.00
Newcastle – £23.50
Reading – £37.00

Should You Invest in a Grade B or C Office Building?

If you’re looking to do little to no work, and have plenty of cash to spare, then a grade B or C office space probably isn’t for you. Instead, you may choose to invest in grade A property as a long-term investment which will provide a higher value yield over the long term.

However, if you’re an experienced developer, have an eye for a bargain and are keen to put in some elbow grease in order to make a profit, then grade B or C property could provide you with an affordable project and long-term money making strategy.

Updating your property from a grade B to a grade A can vary in cost. A standard renovation will cost around £35.00 to £45.00 per sq. ft., whereas you can expect to pay at least £70 per sq. ft. to get the highest-spec possible. However, as shown above, in prime locations, you could make this money back (and more) in rent or sale.

Make Funding Your Development Simple

Developments and refurbishments don’t come cheap; however, our experienced team of commercial finance brokers can find you a great deal on funding.

If you’re considering transforming an office building very soon, get in touch with our development finance brokers today to find a competitive finance deal that suits your needs.

BCO Design and Specification, Oktra – How Much Does London Office Space Cost in 2018?, Colliers International Offices Rents Map

Ready to talk finance?

Call us and speak to one of our experts

02920 766 565 Request a Callback