Building Classifications and Sub-Markets
BUILDING CLASSIFICATIONS Building classifications have proven effective when analyzing market trends, vacancy rates and rental rates, while also generally ordering buildings in terms of their desirability. Over the years, a more or less standardized method has evolved to evaluate building desirability based on locational and physical considerations. Buildings are classified as either Class A, Class B or Class C. Some expand this three-party system into further sub-sets, such as triple A (AAA) or double A (AA). However, caution is advised as no definitive or universal criteria exists to precisely classify buildings and subjective interpretation is a well-acknowledged reality. SUB MARKETS Larger urban markets contain several sub-markets, which are viewed as distinct and most commonly arise due to geographic considerations. In Toronto, for example, the downtown office area is a distinct submarket characterized by high density, high rent properties with a preponderance of Class A buildings. Sub-markets can also be identified within midtown and suburban Toronto areas. Notable examples are found along the Yonge Street corridor including Yonge/Bloor (midtown), Yonge/ St. Clair, Yonge/Eglinton and Yonge/Sheppard (North York) Airport Corporate Center, Meadowvale, Markham Vaughan, Brampton, Oakville.Each sub-market offers slightly different options and benefits, as well as lower real estate costs than downtown Toronto. Sub-markets usually develop along transportation route, as evidenced on the Yonge Street corridor. They may also form near a key transportation complex (e.g., Pearson International Airport) . Many factors can be a result in the growth of office sub-markets. While general considerations such as accessibility and proximity to attractive housing, shopping and other amenities are always a consideration, specific circumstances also come into play. For example, the location of government offices in Toronto and Ottawa can result in spinoff buildings for those businesses closely aligned with the respective government activities. High tech needs can give rise to an office sub-market in close proximity to a widely-acclaimed university. In Kitchener/Waterloo, for example, a sub-market exists near the University of Waterloo given the desire of high tech companies to be geographically close to this valued resource.