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What are Commercial Property Asset Classes?

For anyone interested in buying, renting, or investing in commercial property, a thorough understanding of property asset classes and industry terminology is essential. We’ll explore the different commercial property asset classes in the UK, giving you some insight into the market.

Use Classes

In the UK, property is categorised by four different use classes: Class A, Retail; Class B, Business and Industrial Activities; Class C, Hotels; and Class D, Non-Residential Institutions. The four use classes are also broken down into further subclasses. For example, within Class B there’s B1 (Business), B2 (General Industrial) and B8 (Storage and Distribution).

Use classes determine what a particular property can lawfully be used for, helping local and national government to plan urban settlements and create a balance between residential and commercial space. It is possible to change between different use classes, however, it generally requires planning permission. Changing use within a class does not usually need permission.

Retail

Let’s take a more in depth look at the retail use class. There are five subclasses:

  • A1, Shops. This accounts for all spaces in which retail goods are sold to the public. Hairdressers, retail warehouses, travel agencies, dry cleaners, internet cafés, pet shops, sandwich bars, undertakers and more. If you’re looking to for shops to let, chances are it’ll be in the A1 class
  • A2, Financial and Professional Services. Covers professional services which are on offer to the general public, including building societies, banks, bureau de change, employment agencies, betting shops, estate agents, and payday loan shops
  • A3, Restaurants and Cafés. Any establishment whose primary purpose is to sell food which is to be consumed on the premises is within the A3 use class
  • A4, Drinking Establishments. Pubs, wine bars and other drinking establishments are all grouped within the A4 use class
  • A5, Hot Food Take-away. This use class covers property whose main purpose is to sell food to be consumed outside of the premises.

If you’re looking for a shop to rent, an understanding of the retail asset class is vitally important. It can help you to narrow your search, helping you to match the right property to your business.

Tim Vallance, Head of Retail and Leisure, JLL, reinforces this advice, noting: “Distinctions between retail premises are not as clear cut as they once were. For instance, a shop that is primarily retail may also be selling food and beverage and vice versa.

“This means that it is becoming more important than ever to ensure that a building has the right business class to enable the business to grow and flourish.”

In fact, it’s helpful for any SME or start-up business owner looking to step into the commercial property market to understand the asset classes when looking to buy or rent property such as office space or retail units.