What are the differences between Trophy, Class A and Class B Buildings in Washington, DC?

Categorizing building class is a fairly subjective and arduous task. Like most things in life, beauty lies in the eyes of the beholder, and people value certain qualities over others. Luckily, there are several widely adopted standards to measure the quality and marketability of office product, which are then broadly classified as either Trophy, Class A, or Class B. The primary considerations when determining a building’s class are as follows:

Location –As cliché as it sounds; location, location, location is the driving force behind marketability and value. Naturally, buildings closer to the District’s core command higher rents than those farther out (Farragut North vs Cleveland Park, for example). Where a building is situated on its lot– corner vs mid-block – and its proximity to quality amenities, public transportation and major throughways also greatly impact its classification.

Age of Building & Quality of Finishes/HVAC & Operating Systems – Most newly constructed office buildings over 100,000 SF are Trophy assets. Land, labor and material costs, coupled with the strict building and environmental standards, make building anything less than Trophy cost-prohibitive. New construction will generally include state-of-the-art operating systems, efficient floor plates with generous column spacing, and thoughtful amenities to enhance the user experience.

This is not to be confused with renovated or re-positioned buildings. In the last 24 months, DC has seen a boom in buildings being re-positioned from Class B to Class A. In these instances, owners may pour money into an asset to upgrade certain deficiencies, such as the exterior glass, common areas, lobbies or dated operating systems. Examples of recently re-positioned buildings include 1800 K Street, 1627 Eye Street, 1275 Pennsylvania Avenue and 1401 New York Avenue.

Amenities – Rooftop terraces, tenant-only fitness centers and dedicated conferencing space are becoming more prevalent in buildings throughout the DC-region. A building must have one spectacular amenity, or multiple quality amenities, to be considered Class A or Trophy. The rooftop terrace at 101 Constitution Avenue, the fitness center at 1800 M Street, and the conference center at 1350 Eye Street are examples of high-end amenities that set the standards in the marketplace.

Access to Public Transportation, Bike Racks & Availability of Parking – In the age of Uber, Capital Bikeshare and personal segways, companies are becoming less focused on accommodating drivers, and more so on alternative forms of transportation. Law firms, accounting firms and companies with a high volume of visitors will always pay a premium for parking, but it is becoming less of a priority for those with millennial employees. Still, the presence of a suitable parking garage goes a long way in determining building class and rents.

Efficiency – Buildings today are built much differently than they were 10-20 years ago. Column spacing has improved, allowing for tenants to utilize space more efficiently. As a result, we have seen a ‘flight to quality’ whereby tenants are relocating from inefficient, lower-cost buildings to higher quality buildings that enable them to occupy less space and pay the same net effective rents.

Below is a breakdown of the rents and concessions associated with Trophy, Class A and Class B buildings in DC, along with 10 examples of each.

Trophy

Rent: $75.00 – $90.00/SF, Full Service
Variance in rent from top floor to bottom floor: ~ $5.00/SF
Free Rent for a 10 year transaction: 12 – 15 months
Tenant Improvement Allowance (TIA) for a 10-year transaction: $90.00 – $120.00/SF
Characteristics: New construction/delivered in past 5 years, corner building with views, state-of-the-art operating systems, high-end amenities (i.e. rooftop terrace, fitness center), 9’+ ceiling height, 30’+ column spacing, floor-to-ceiling glass, close to metro, parking
Examples:

• 101 Constitution Ave
• 1000 F Street
• 300 New Jersey Ave
• 600/601 Massachusetts Ave
• 900 16^th Street
• 1200 17^th Street
• 2200 Pennsylvania Ave
• 800 17^th Street
• City Center
• 1900 N Street

Class A

Rent: $55.00 – $75.00/SF, Full Service
Variance in rent from top floor to bottom floor: ~ $5.00/SF
Free Rent for a 10-year transaction: 10 – 12 months
Tenant Improvement Allowance (TIA) for a 10-year transaction: $75.00 – $100.00/SF
Characteristics: Constructed/major renovation in past 10-20 years, corner building with views, efficient/high end operating systems, desired amenities (i.e. rooftop terrace, fitness center), 8’6”’+ ceiling height, good column spacing, a lot of glass line, close to metro, parking
Examples:

• 1425 K Street
• 1050 Connecticut Ave
• 1350 Eye Street
• 901 15^th Street
• 1201 Pennsylvania Ave
• 1301 K Street
• 1201 F Street
• 1800 M Street
• 1625 Eye Street
• 601 New Jersey Ave

Class B

Rent: $45.00 – $55.00/SF
Variance in rent from top floor to bottom floor: ~ $5.00/SF
Free Rent for a 10-year transaction: 6 – 12 months
Tenant Improvement Allowance (TIA) for a 10-year transaction: $60.00 – $85.00/SF
Characteristics: Second generation space, delivered in past 20+ years, mid-block building, outdated operating systems, no or few amenities (i.e. rooftop terrace, fitness center), 8’-8’6’’ ceiling height, poor/narrow column spacing, poor window line, limited or no parking
Examples:

• 1100 H Street
• 1101 14^th Street
• 1001 Connecticut Avenue
• 1101 15^th Street
• 1156 15^th Street
• 1620 Eye Street
• 1825 K Street
• 1120 Vermont Avenue
• 1150 17^th Street

If you have any questions or feedback, we’d love to hear from you!