Class B office is mid-tier office space that competes for a wide range of tenants at rents in the average range for its market. Per BOMA, Class B buildings have finishes that are fair to good and systems that are adequate, but they do not compete with Class A at the same price. It is the middle of the three-tier office quality scale.
What Is Class B Office Space?
Class B office space is the middle grade in the A, B, C classification used to rate office buildings by quality and rent-earning power. Per BOMA International, Class B buildings compete for a wide range of users with rents in the average range for the area, fair-to-good finishes, and adequate but not state-of-the-art systems.
The classification is a relative, market-specific judgment, not a fixed standard. A building rated Class A in a suburban submarket may rate Class B against downtown towers. Age, location, mechanical systems, ceiling heights, lobby quality, and amenities all feed the grade. The three tiers form a spectrum operators use to set rent expectations and comps.
Class | BOMA description | Rent position |
Class A | Premier buildings, high-quality finishes, state-of-the-art systems, market presence | Above average for the area |
Class B | Wide range of users, fair-to-good finishes, adequate systems | Average for the area |
Class C | Older buildings, below-average finishes, functional space | Below average for the area |
Why Class B Office Matters
Class B office matters because grade drives the widest performance gap in the current office market. In Q1 2026, CBRE reported prime office vacancy at 12.7% versus an overall rate of 18.6%, a 6.4-percentage-point spread between prime and non-prime, the largest since CBRE began tracking it in 2018.
The gap is not cosmetic. Since Q1 2020, prime buildings logged 73 million square feet of positive net absorption while non-prime buildings, which include most Class B stock, logged negative 152 million square feet, per CBRE. For an operator, buying or holding Class B office means underwriting a market where tenant demand has concentrated in the top tier and older space carries higher vacancy risk. The offset is basis: Class B trades at lower price per square foot and higher cap rates, so the return case depends on renovation, repositioning, or a discount deep enough to absorb slower leasing.
Example
A 150,000-square-foot Class B office building leases at a $32 average asking rent, below the Q1 2026 U.S. average asking rent of $37.21 reported by CBRE. The building runs 82% occupancy against a submarket that averages 88% for Class A. The worked figures below show how grade flows to net operating income.
Component | Value |
Rentable area | 150,000 sq ft |
Occupied area (82%) | 123,000 sq ft |
Average asking rent | $32 per sq ft |
Gross rental income | $3,936,000 |
Operating expenses (40%) | $1,574,400 |
Net operating income | $2,361,600 |
Occupied area is 150,000 times 0.82, or 123,000 square feet. Gross rental income is 123,000 times $32, or $3,936,000. Subtract 40% operating expenses of $1,574,400 to reach a net operating income of $2,361,600. At a 7.5% cap rate typical of secondary office, the implied value is $2,361,600 divided by 0.075, or roughly $31.5 million.
Variations and Edge Cases
Class B office behaves differently by location and repositioning potential, so two buildings with the same grade can carry very different risk. The table lists the variants an underwriter should confirm before pricing a Class B asset.
Variant | Treatment |
Class B+ / B- | Informal sub-grades used to signal a building near the A or C boundary |
Value-add Class B | A B building bought at a discount to renovate toward A rents |
Class B in CBD vs suburban | Downtown B often outperforms suburban B on rent and demand |
Medical or flex office B | Specialized tenancy can insulate a B building from general office vacancy |
Obsolescent B | A B building sliding toward C as systems age past economic repair |
The most common error is treating the letter grade as fixed. Grade is assigned relative to the local market and can move as a building ages or a submarket shifts.
Class B Office vs Class A Office
Class B office is often confused with Class A office, and the two occupy different rungs of the same ladder. Class A office is premier space with above-average rents, high-quality finishes, and state-of-the-art systems, per BOMA. Class B office is mid-tier space with average rents, fair-to-good finishes, and adequate systems that does not compete with Class A at the same price.
The distinction drives pricing and demand. In Q1 2026, prime office vacancy was 12.7% while the overall market sat at 18.6%, per CBRE, so Class A absorbs tenants faster and commands premium rent. Class B trades at a lower basis and higher cap rate, which is the compensation an operator takes for slower leasing and greater obsolescence risk.
Frequently Asked Questions
What is Class B office space?Class B office is the middle grade of office building, competing for a wide range of tenants at rents in the average range for its market. Per BOMA, Class B buildings have fair-to-good finishes and adequate systems but do not compete with Class A at the same price.
What is the difference between Class A and Class B office?Class A office is premier space with above-average rents and state-of-the-art systems. Class B office is mid-tier space with average rents and adequate systems. In Q1 2026, CBRE reported prime office vacancy at 12.7% versus 18.6% overall, showing how demand has concentrated in the top grade.
Is Class B office a good investment?Class B office can work when the discount to Class A basis compensates for slower leasing and higher vacancy risk. Since Q1 2020, non-prime office logged 152 million square feet of negative net absorption per CBRE, so the return case usually depends on renovation, repositioning, or a deep entry discount.
Related Terms
Vacancy Rate
Market Rent
Cap Rate
Net Operating Income
Asking Rent