The class of a company building is defined by the building’s characteristics. Let’s discuss this is further detail.
Class A Buildings
To categorize a structure as a Class A building, it should be brand-new or, at minimum, have been built-in this current building cycle. It has all the bells and whistles that the very best buildings in town include. It’s typically downtown, usually a high-rise, and it has no functional obsolescence. Additionally features, it has the highest 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 understand the class of a building instantly by the rent per square foot when compared with other building rents.
Class B Buildings
Class B buildings are often over eight years old or older, depending in your neighborhood. If the present building cycle you’re in is only three to four years old, then the five or six-year-old building might be Class B. Essentially, it’s not the age of the building that is so important, because buildings don’t age quickly hongtower. It’s the systems within these buildings.
If it is a five-foot hallway instead of six feet, that’s a Class B building. People will feel this way about this, because nobody built six-foot hallways until fairly recently. Now, if they were like hospital corridors with that extra one linear foot, it just feels a lot more luxurious.
Class C Buildings
In Orlando, a Class C building will be significantly more than 17 to 20 years old. This really is a good example, and understand that drops in class will soon 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 a company building.
A Class C building could have additional and certainly more functional obsolescence when compared to a Class B building. Functional obsolescence is likewise found in areas like the hallways, where you’d have 4 feet or less of hallway. If you have a building with 3- 4 foot hallways, you are feeling closed in, since you are so 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 so it is wearing the visitor. It doesn’t cost the builders much to achieve that, but it lends an upscale feeling to the building.
Class C buildings are older, with plenty of functional obsolescence and with systems just starting to wear out. Maintenance on a Class C building costs a good deal more compared to the other two categories.
Once the restrooms are between floors, it is a hard thing to repair because you have to increase or down half a journey of stairs to get there, typically utilizing the fire stairs. Not merely is that not ADA compatible, but it’s inconvenient and outdated. That specific 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 are going by their age. However, they could still command high Class B-rate rents. This difference just depends on what you maintain your property. At this time, if you get a Class A building in Orlando, Florida, you’d pay the same of a 6% “Cap Rate”- quite simply, you should not buy one because there’s more bang for the buck as of this writing in older buildings.
It is no economically sound investment. However, you can do fairly well with a Class B building. If you get it on a 9% “Cap Rate”, the investment will likely produce cash flow for a considerable period of time.
Tip: Office buildings work for decades and more, especially if they’re built correctly. Therefore, the greatest bang for the buck is from the Class B building, since it will soon be that class for a long time if it’s well-maintained.
Keep in mind that the class of a company building is defined by its characteristics and not just by when it absolutely was built. I really hope this information will allow you to broaden your knowledge on the best way to define the class of a company building.