Commercial space (units) is defined and ranked by the quality of the property as:
- Class A – The highest quality of commercial space available;
- Class B – The second highest quality of space available in the market; or
- Class C – Suboptimal space for rent, usually because the property is relatively dated or located in less desirable areas.
Certain descriptive terms are often used in promotional material prepared for commercial real estate that is listed for rent or sale. Although there is no universal agreement on their definition, the following are commonly used to distinguish both the physical specification of a building and the property’s location in terms of quality, primarily for investment purposes:
- Prime property – New, investment-grade commercial property with buildings of first-rate design having high-quality building systems, amenities and management that commands the highest rent and attract the most creditworthy tenants – the most valuable property from an investor’s viewpoint;
- Secondary property – Well-constructed, well-maintained commercial property with buildings of an earlier generation that are in good – commonly prime – locations, with sound management and relatively little functional obsolescence or deterioration, it commanding lower rent and attracting less creditworthy tenants than prime property; and
- Tertiary property – Commercial real estate with buildings that are often significantly older than prime or secondary and functionally obsolete, but where the cost of removing the property or refurbishing them could have a negative impact on the value of the property.