When talking about office space, the term ‘Grade-A’ is widely used in the industry as a description of what we perceive to be the highest quality accommodation. However, while design, technology and occupier needs have all moved on over the last decade, the classification for Grade-A has remained broadly the same.

There has never been a precise definition, Grade-A has historically been applied to open plan office space that includes raised floors; air conditioning; suspended ceilings and recessed lighting. But with so many buildings now satisfying this criteria, the simple designation of Grade-A does not always identify product that is best in class.  

While many occupiers still require the Grade A standard, ESG and wellness now define the top of many wish lists, but ironically not all Grade A-designated buildings are able to satisfy these criteria.  Similarly, many buildings that are not Grade-A (Grade B or even Grade C) can still meet an occupier’s expectations around ESG and wellness if that office is refurbished, or developed, to be energy efficient and provide facilities such as shower rooms. So where do we go after Grade A to define best in class?

I suspect that a raft of relatively new classifications such as “prime”, unless very tightly defined, will be subject to a similar lack of clarity. At the current time, many use prime to cover Grade A office buildings that are very often fewer than three years old (either new build or refurbished), that incorporate good wellness facilities and satisfy sustainability criteria.  

The issue with lack of clarity regarding classifications is well illustrated by the Edinburgh office market. While there is arguably not a shortage of Grade A supply in the city, there is an acute current shortage of prime office accommodation and the development pipeline is not substantial enough to address this. As a result, this should mean that for prime offices, both headline and net rents should remain robust and we should see growth coming through. This is good news for some, but it does not apply to all product that is classified as Grade A.

Certainly, in the first six months of 2021, we have seen that occupier demand in Edinburgh has focused on prime, new build office accommodation. However, with supply of such stock tightening dramatically, this may start to focus on well-located, quality (or prime) refurbishments.   

The debate on classifications will continue but for those that have sites and the ability to deliver prime new build and refurbished offices in Edinburgh, the future looks especially bright whether Grade A, B or C.

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Contact Mike Irvine

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