Commercial real estate office properties include single-tenant buildings, small professional buildings, skyscrapers, and everything in between. Buildings are classified into three categories: Class A, Class B, or Class C.
Class A buildings are often newer buildings but may be old buildings that have been extensively renovated. Class A buildings are usually in prime locations with good access and are professionally managed.
Class B buildings are usually well-maintained and well-managed, but infrastructure may need some capital investment. They are often targeted by investors, because while they may be older, they have the potential for a high return on investment through renovation and improvements.
Class C buildings are older and often in need of extensive renovation and updates. They usually have lower rental rates to compensate for the lower quality office space. Class C buildings are often vacant longer than higher-classed buildings and can be targeted for redevelopment opportunities.
Office space in commercial real estate is not restricted to metropolitan areas; suburban office buildings dot the landscape everywhere there are residences to support them. These buildings are usually mid-rise structures, located outside the city center and into the suburbs. Office complexes are also included in this category of commercial real estate.