Different Grades & Classes of Office Spaces in the Philippines

Premium, Grade A, Grade B, or Grade C. Sound familiar? Well, you may have come across these words when you were looking for a location for your business. These are terms that indicate the market value of an office space. When setting up shop in the competitive business world, the difference among the office grades you’re considering could mean success or failure for your company.

Essentially, there are no established definitions for office space grades. However, there are general classifications where one can find common denominators as defined by key players in the real estate industry.

In the US, the Building Owners and Managers Association (BOMA) International created general definitions to classify each type of office space. They first identified two bases: metropolitan and international. The first one is used specifically “within an office space market.” For the latter base, it is used mainly by investors “among many metropolitan markets.”

The metropolitan base identifies buildings Class A, Class B, and Class C. Meanwhile, the international base defines properties as investment, institutional, and speculative. Although BOMA has set descriptions, they do not encourage the publishing of individual classification for buildings. This is only for the sake of comparison in order to make discussions on office market easier.

The Property Council of Australia and Property Council of New Zealand also came up with a similar guideline in determining where a particular building fit. In Australia, buildings are classified into Premium and Grade A, B, C, or D. The grading used by New Zealand are Grade A, B, C, and others. And like BOMA, these criteria are merely used for office market statistics.

The Philippine Office Space Grading

In the Philippines, there is no governing body or private organization that provides specific grades for office/commercial buildings. This is the reason you will find several classifications for office space grades in the country. These definitions solely depend on the criteria set by a particular real estate firm. It may include: location, floor area, design, building specifications, environmental performance, security, and other services and amenities.

From the Real Estate Firms’ POV

The Global Office Occupier Guide 2011, published by CBRE, enumerated the different requirements that a particular building should feature in order to be grouped in a specific grade.

• Prime (Premium): Buildings included in this cluster generally feature high quality interior and exterior finishing. They have large floor plates of not less than 1,000 square meters. Parking space and elevator service is very sufficient. There is also 100% back-up power. These are centrally located in business districts. For final touches, they have a variety of exceptional and state-of-the-art amenities aside from the usual, basic building facilities.

• Grade A: This type of building share very similar attributes with that of Prime buildings. The main difference is the lack of extra amenities that are featured above.

• Grade B and C buildings: The architectural structure and facilities of Grade B and C buildings are of lower quality compared to Grade A buildings. Floor plates are much smaller. In addition, back-up power and parking is normally limited. Compared with other office grades, rents are lower.

In “The Little Book of Real Estate Definitions,” published by Jones Lang LaSalle in 2006, shorter descriptions were given.

• Grade A: High quality building located within the CBD, building age, professionally managed, 100% back-up power, building specification, good tenant mix/profile.

• Grade B: Good quality building located within or near the CBD, building age, not professionally managed, 50% back-up power, average handover condition, average tenant mix.

• Grade C: Low building quality and specification, basic handover condition, no back-up power.

In an article in the KMC MAG Group’s blog, only Grade A and grade B buildings are defined.

• Grade A: Buildings identified as Grade A are either newly built or have undergone modern upgrades. These are mostly located in prominent areas. Common occupants embody an image of financial success such as banking institutions, law firms, investment firms, and others.

• Grade B: As a whole, buildings in this category are functional. It is usually located in populated areas. Furthermore, building specifications and amenities are basic.

Overall, most firms share the same criteria used in classifying buildings. To summarize,

Premium Grade

Giving smart edge to any local or international firm, buildings classified as Premium grade are the crème de la crème of all the building types. These are typically located in most sought-after areas in key markets.

They feature impressive and cutting edge facilities and amenities, making them a very cosmopolitan office building. From the exterior to the interior, the finishing is extraordinary and exudes elegance throughout. The sophisticated and state-of-the-art materials and resources used to construct these buildings make it very high maintenance. Only a select few represent this type in the country.

Given the first class services provided in Premium buildings, it attracts the highest quality tenants and commands the highest rents. Putting up your business here is worth the costly expense as it gives the best advantages – prominent and convenient address, classy interior, full security, and other interesting amenities.

Six buildings in Makati City fulfill these requirements, namely – Alphaland Tower, Enterprise Centre, Philam Life Tower, RCBC Plaza, Tower 1 and Exchange Plaza, and the Zuellig Building. In Bonifacio Global City, Sun Life Centre and Net Lima showcase the magnificent features of a premium grade building.

Grade A

Grade A buildings enjoy almost the same features as premium buildings, with few exceptions like the newest technologies in their facilities and extra amenities. They feature contemporary finishing, with visually appealing facades.

These distinguished buildings are also set in highly visible areas. The entire structure is well-kept, secured, and comes in excellent condition. Occupants are also high-profile international and local companies.

Some office buildings that exemplify the specifications for Grade A buildings include 6750 Ayala Avenue Building, BTTC Centre, GT Tower, Net Cube Building, PBCOM Tower, and Citibank Tower.

Grade B and C

Grade B and C buildings are typically old buildings situated in secondary or noncore locations. The design is utilitarian rather than stylized. It lacks the sophisticated and elegant décor that higher grade buildings feature.

Materials used to construct these buildings are not at par with that of Grade A buildings. The finishing is fairly good, but needs a lot of modernization. Furthermore, it is not maintained regularly or to a high standard.

This is the most prolific type as it offers a more competitive price. It is home to companies who are looking for a very affordable rental, with adequate space and good enough environment.

Buildings identified with this category include Burgundy Corporate Tower, King’s Court Building, Salcedo Tower, and Multinational Bancorporation Center.

When everything has been taken into consideration, the definitions given are still just general classification as no formal standard really exists or until a fixed one is created by an authorized organization. Note that office buildings are simply classified relative to other buildings within the same market.

If you are looking to rent an office space or buy a building, we have a lot of listings for you!

Sources:

http://www.boma.org/research/Pages/building-class-definitions.aspx

http://www.propertyoz.com.au/Article/Resource.aspx?media=501

http://www.cbre.com/assetlibrary/globalofficeoccupiersguide2011.pdf

http://kmcmaggroup.com/blog/2013/4/1/the-differences-between-grade-a-and-grade-b-buildings/#.UedbeNJvBeY