In Moscow's fast-developing commercial real-estate market, increasing numbers of businesses have started opting for Class A space.

But, what is Class A space? And what are the demarcations that separate Class A from Class B or A1? Is there a certain standard for determining these classes?

According to Stiles & Riabokobylko, in April 2002 there were about 120 Class A buildings available in Moscow, but, according to Noble Gibbons, there were only 30.

Vague classification is a problem for end users, as they are not sure exactly what a broker means when he or she classifies a building.

Despite the fact that all companies refer to BOMA (the Building Owners and Managers Association) to define what class buildings fall into, in practice definitions vary widely.

In its effort to maintain a single standard, BOMA has attempted to cover all the issues that might be relevant to commercial space – from plumbing and window-cleaning safety standards to fire and energy efficiency standards, floor-space measuring criteria and the various economic factors affecting the space status in a given market.

FACTBOX

Definition of Class A, B and C buildings according to Jones Lang LaSalle:

Class A

Class A space is characterized by high quality of construction, its central location (usually within the Garden Ring) – its physical characteristics guaranteeing a minimum loss factor, maximum efficiency and a high level of amenities. This latter includes excellent security, adequate parking availability, a concierge, reception desk and a wide variety of services in the building, including banks, restaurants, retail outlets, fitness clubs, etc.

This space is generally delivered by a foreign construction company and is professionally managed by an experienced property-management company.

The list of Class A office buildings in Moscow is not very long and consists of approximately 20 projects. It includes such developments as Riverside Towers, Ulansky Center, Usadba Center, Paveletskaya Plaza I and II, Samsung Center, and Smolensky Passazh. These are the most significant buildings in Moscow, although their share in the total office stock is small.

Class B

Class B space is characterized by less-than-perfect location and/or lower efficiency. These are mostly the buildings located outside the Garden Ring. The level of amenities in Class B buildings is medium to high. A medium level of amenities is characterized by security, adequate parking availability, a concierge, a reception desk and a limited variety of services (for example, a restaurant only).

Centrally located buildings may also be classified as Class B space if they lack a high level of amenities.

Many refurbished and refitted buildings fit into this category, such as the Meridian Commercial Tower and Meta Dom Business Center projects.

Class C

Class C is largely represented by so-called "Russian-standard office space." A large percentage of such space is offered by former Soviet research centers and social institutions, including kindergartens, schools, etc., suffering from severe financial cuts. They are usually of poor quality and in secondary decentralized locations. Examples include 72 and 80 Leningradsky Prosp. and 65 Profsoyuznaya Ul.

Thus, setting a certain standard that a majority of commercial space owners can refer to is important. Not only that, its latest standards define the techniques used to assess them.

But building class definitions may still vary from place to place in both Russia and other countries, says Gerald Gaige of Ernst & Young: "A building with certain standards may be considered a certain class in New York, but may have a different classification in Rhode Island. It is a relative factor that affects how a building is classified – each region and each market has its own peculiarities and factors of influence.

"Every building is influenced by local market factors and the pressure in Moscow is to have high regional relativity. That's why we have a relative rating, and it becomes difficult to have a uniform ratio. The definition is subjective."

Gaige added: "Though there are certain standards for determining individual features in a building – for example we can say that a two-pipe air-conditioning system is Class B and a four-pipe one is Class A – but then we have to look at other factors, such as the overall design flexibility, comfort level, proper space usage, location, and so on. A building may be considered Class A in one region, while a very similar building is listed as Class B in another. So it tends to be pretty subjective. A round building may not have the same space usage as a square one, even though it's located in a good, central spot."

In the Moscow market, brokers such as Noble Gibbons and Colliers International divide Class A space further into A1, A2 and A3.

Anna Molodtsova, head of the tenant representation department of commercial real estate broker DTZ, said the current definitions of Classes A, B and C are not the same for everyone, creating confusion for the end user.

"That's why we just don't put emphasis on using these terms at all.

"We have international-quality commercial space. As most of our clients are Western companies, they understand what it means, and then each client comes with his own budget, something that is also the deciding factor for him," she said.

However, one important factor in determining building class is its location.

Even though it may not be inside the Garden Ring, the location should be well known and accessible by a major road, and in a decent commercial area, not a residential neighborhood.

Until the market matures and market players start using a more coordinated and cooperative approach to these definitions, the end user will continue to have a flexible and vague definition.