May 7, 2021

Commercial Real Estate Classes & How They Differ

Commercial Real Estate Classes & How They Differ

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Private real estate broadly divides into two types: residential and commercial. Though news headlines often lump commercial real estate under a single header, the commercial real estate industry comprises multiple subsectors. Moreover, many commercial real estate firms and investors maintain assets in multiple subsectors to diversify their portfolios. Sometimes, different areas of commercial real estate overlap.

By and large, each type of commercial real estate is monitored and reported on separately to identify potential trends and investment opportunities. Read on to learn about the property types that fall under the umbrella of commercial real estate.

Office Real Estate

Office buildings may vary widely in architecture, from small multi-story structures to large urban high-rises. Office real estate typically falls into one of three categories:

  • Class A. Class A office properties usually have prime locations and are considered the best of the best. You’ll find the word “high” often attached to Class A buildings—they feature high security, high property values, high rents, high-quality construction, and high-profile tenants.
  • Class B. Many Class B buildings used to be Class A buildings, but time has taken its toll. Class B office locations usually offer convenient locations, good function and aesthetics, and mid-range rents.