How to Differentiate Office Building Classes in Manhattan
Since the pandemic began, many Manhattan office buildings have undergone substantial improvements to their infrastructure and offerings in an effort to lure tenants. Accordingly, once dated assets have improved their rankings in terms of desirability. However, throwing lipstick on pigs doesn’t translate into swine becoming supermodels. As a result, understanding the building classification system in New York City can be quite confusing and subjective.
Commercial Real Estate Brokers typically refer to office towers or spaces by the quality of their finishes and age- which often translates into differences in pricing as well. To facilitate the breakdown, here is a simple way to understand the unique differentiators between Manhattan building types.
Office buildings are generally classified into different classes based on their age, location, quality, and amenities. Here are the FOUR most common classes of office buildings:
Trophy Office Buildings: Trophy buildings are typically the newest, most modern, and most well-maintained office buildings. They are often located in prime locations, with easy access to transportation and other amenities. Trophy buildings typically have the highest-quality finishes and state-of-the-art technology, and may include features such as fitness centers, on-site restaurants, and other amenities. Rental rates for trophy buildings are usually the highest among the different classes of office buildings. Some examples of trophy office buildings include The GM Building (767 Fifth Avenue), The Seagram Building (375 Park Avenue), One Vanderbilt, 9 West 57th Street, 510 Madison Avenue, 667 Madison Avenue, 425 Park Avenue, 106 West 56th Street, 66 East 55th Street (Park Avenue Tower), 280 Park Avenue, 450 Park Avenue, 512 West 22nd Street & all of the brand-new assets in Hudson Yards.
Class A Office Buildings: Class A buildings are typically very similar to trophy office buildings; however, they might be a bit more dated or lacking the most up-to-date infrastructure, amenities & cache. These buildings are usually located in the most premier neighborhoods in Manhattan and have slightly less high-end finishes than Trophy office product. Some examples are 152 West 57th Street (Carnegie Hall Tower), 888 Seventh Avenue, 110 East 59th Street, 230 Park Avenue, 780 Third Avenue, 885 Third Avenue, Rockefeller Center Buildings and 1350 Avenue of the Americas.
Class B Office Buildings: Class B buildings are generally older than Class A buildings and may not have the same level of amenities or modern technology. However, they are still well-maintained and offer good quality space. Class B buildings are typically located in secondary locations, with slightly lower rental rates than Class A buildings. Some of these types of assets are 122 East 42nd Street, 370 Lexington Avenue, 110 East 42nd Street and 295 Madison Avenue.
Class C Office Buildings: Class C buildings are the oldest and least desirable of the four classes of office buildings. They may require significant upgrades or renovations and may be located in less desirable or remote areas. Rental rates for Class C buildings are typically the lowest among the different classes of office buildings and are almost always inappropriate for financial firms.
It is worth noting that these classifications are not set in stone and can vary depending on local markets, opinions and other factors. Additionally, some buildings may be classified as Class A-, B+, or C+ or C-, indicating that they fall somewhere in between the traditional classifications.