It’s time to change the hierarchical class system that exists in the office markets across the U.S., including Chicago and the suburbs.
For decades, commercial real estate brokers, developers, investors and, to a lesser extent, tenants have designated office buildings according to a Class system. Depending on a number of variables, buildings are considered Class A, Class B or Class C. The newer the building, the better its location and the greater the mix of on-site amenities, the higher in class the building is categorized.
According to Costar, the inventory of 3,128 office buildings in the Chicago metro area totals 284.7 million square feet, including downtown and suburban properties. Of that total, 470 buildings totaling 157.0 million square feet are considered to be Class A properties. Not one is a single-story building.
Some would argue there has been a bias against single-story office properties. Single story buildings by definition aren’t included in the A classification. After all, they don’t typically have extensive amenities such as a fitness center, shared conference rooms and co-working spaces. Further, the perception is that these buildings are where back offices and local businesses are located—certainly not satellite offices of Fortune 500 firms.
Some might say that the hierarchical building class system generally has served the market well, until today. The fundamental shift is that tenants increasingly are looking for an experience that is both first class and safe. And there is a distinction between a Class A experience and a first-class experience. In today’s changing work environment there is increased life safety and security that comes with the lack of a common lobby, shared elevators and public restrooms.
As the owner of Concourse Chicago, a 165,000-square-foot office complex in the O’Hare office market, I understand it may be an almost unwinnable battle to have a single-story building (complex) classified as Class A by Costar and a vast majority of commercial brokers. The more compelling argument, with a great potential to be victorious, is that a single-story office building can more easily achieve the status of first class by the overall experience and value it provides to those who matter most, its tenants.