Defining building class in Fairfield County. (Insiders outlook).

In the real estate business, brokers often refer to available office space as either class "A" or class "B". This is more than just an arbitrary classification system -- there are real differences in terms of price, availability, and amenities. What is the difference between a class "A" and a class "B" building in Fairfield County?

Terms class "A" and "B" are not legal terms, and the classifications are admittedly subjective at times. Classifications are based on a variety of factors, including location, age of building, building materials, and type of construction. Details sometimes make the difference: an office building with such appointments as gas filled glass window panes would almost automatically give the building a grade of "A". In terms of location, a class "B" building in downtown Stamford might immediately upgrade to class "A" status if it sat in a suburban area of Shelton, for example.

Although by no means a steadfast rule, the type of business often dictates the type of space occupied. Financial services businesses, insurance firms, or Fortune 500 companies usually inhabit "A" space, while many small businesses and back office operations can often be found in class "B".

A local owner, Trefz Properties, recently decided to upgrade Park City Plaza, transforming it from a "B" to an "A" property. Park City Plaza is an 180,000-SF, 18-story office building located on Middle Street in downtown Bridgeport. Given the building's excellent location at the junction of rail, highway, and ferry transportation, the bulk of the work was upgrading building systems and finishes to the building, which was constructed in 1973. (In fact, the building rated an "A" at the time it was built; over the years it was downgraded to a "B" due to age.) Trefz Properties updated common areas and laboratories, updated the lobby, and made it unique with the addition of a waterfall and ca large outdoor Japanese garden on the terrace.

The company also wired the building with T-1 and T-3 lines, bringing its telecommunications abilities into the 21st century. No matter how beautiful the building, an office will never be class "A" in today's economy without high-speed communications capability. Today, communications infrastructure is a critical factor of a class "A" building.

Class "A" office space is where most companies want to be. In Fairfield County, the construction of 1.066 million SF of class "A" office space is currently underway. The square footage of class "B" space being constructed is zero. Generally speaking, all new construction is class "A" just by virtue of the fact that it is new.

Given the relationship between location and grade, central business districts or areas near public transportation offer a much greater percentage of class "A" space.

In the Stamford central business district, only 722,000 SF of 5.6 million SF of inventory is considered class "B". Outside Stamford's central business district, nearly 2 million of the 6.3 million inventory is class "B". The areas of Fairfield County with the greatest percentage of class "B" inventory are the South Central area, which includes the suburban towns of Darien, New Canaan, Weston, and Wilton, as well as the more urban Norwalk, and the Eastern area, which includes Bridgeport, Shelton, Stratford, and Trumbull.

Businesses are becoming increasingly focused on class "A" space. There is substantially more class "B" space available in Stamford downtown, but demand is primarily for class "A". In addition, the amount of class "A" space available in downtown Stamford has decreased recently, as evidenced by two major lease deals signed in the wake of the World Trade Center disaster, totaling several hundred thousand SF.

Trefz Properties also sees a trend emanating from downtown Stamford. Don't be surprised if within the industry we see a shift from talk of class "A" and "B" space to class "A" and class "A+" space. Stamford currently has a handful of offices that are as well-wired, appointed, and luxurious as anywhere in the world. Stamford is Connecticut's trend setting city and we expect increasing demand for topnotch office space statewide.

What will "A" type office cost you? In Fairfield County, the price difference between "A" and "B" space depends on the area.

However, in terms of actual deal rates, the difference between "A" and "B" rates is very high. Once the deal is sealed, class "A" can cost as much as an extra $15 per SF. In downtown Stamford, the difference in rates range from $10 to $15 per SF; elsewhere you can expect to tack on an extra $5 to $8 per SF.

Through an analysis of vacancy rates, availability, and rental rates, it's obvious that the demand for class "A" space in extremely high in downtown Stamford. We predict a spillover of that demand, with Fairfield County showing a growing need for class "A" space throughout the county -- not just the tight downtown Stamford market.