Many Real Estate Developers as well as
the loan underwriters categorize commercial office buildings
by their appearance and location.
In addition they can be further categorized by their construction
type. For example you can construct commercial buildings
as low-rise, mid-rise and high-rise buildings.
WITH REAL ESTATE LOCATION IS THE KEY FACTOR,
THEREFORE COMMERCIAL OFFICE BUILDINGS ARE DIVIDED INTO
DOWNTOWN AND SUBURBAN BUILDINGS
Building and Owners Association or BOMA classifies building
types into three classes, A, B and C.
Class A Properties
"Defined by BOMA as the most prestigious buildings
competing for premier office users with above average
rental rates for the area along with high-quality standard
finishes, state of the art systems, exceptional accessibility
and a definite market presence."
Class B Properties
"Defined by BOMA as buildings competing for a wide
range of users with rents in the average range for the
area and the systems are adequate, but the building does
not compete with Class A at the same price."
Class C Properties
"Defined by BOMA as buildings competing for tenants
requiring functional space at rents below the average
for the area."
After the commercial office buildings are divided into
classes they are further divide by location, either a
downtown location or a suburban location.
Developers will build a different product based on location
of the acreage they are planning to develop.
Density is the reason for the distinction...
Developers all have a great need to build the most square
footage in the least available space. The public agencies
place density restriction upon developers when they are
seeking their maps, and later building permits.
When a developer is limited to the available acreage
and resulting construction footprint, the square footage
of the building foundation, they can therefore only build
a certain amount of building space in the limited footprint.
There answer is to go up. By building mid-rise and high-rise
commercial office buildings downtown they can provide
more units per square footage, thus building at a higher
The downtown districts for commercial loan purposes is
called Central Business Districts or CBD's.
So with commercial property selling at a premium per
square foot in downtown locations, the answer is to build
taller buildings, providing the developer with a greater
return on their investment.
Builders may construct these CBD for either single tenant
or multiple tenants. They often come with underground
parking as well. The Suburban Office Building is built
away from the City Districts.
When a builder builds away from the downtown area density
is not as much of an issue, because the cost per acre
of the lot is not at a premium you will tend to see many
low-rise and few mid-rise and high-rise buildings.
Suburban Office Buildings are usually constructed by
a single developer of large office parks
For further discussion of office buildings and their
respective underwriting loan requirements click