High-A Office Test
Back office investments that give employees compelling reasons to leave home
- Difficulty
- Moderate
- Time to result
- ~weeks to results
- Steps
- 6
- Confidence
- 94%
The High-A Office Test replaces the broad Class A label with an employee-centered assessment of whether a building can sustain demand in a hybrid-work market. Location remains necessary but is no longer sufficient. The building must combine modern systems, healthy air, light, wellness features, sustainability credentials, amenities, and public-transport access to create an experience employees prefer to staying home. These characteristics help employers recruit people and persuade them to attend, which in turn supports tenant demand, income, and asset value. The framework therefore connects physical attributes to employee behavior and then to investment performance. Buildings that fail the test face greater leasing difficulty even when historically classified as premium offices.
Origin
Extracted from Masters in Business during Kathy Marcus's discussion of post-pandemic office winners and losers.
Core principles
- 01A prestigious location no longer guarantees a winning office asset
- 02The office must compete directly with the employee's home environment
- 03Wellness, sustainability, and accessibility affect tenant demand
- 04Nominal Class A labels can conceal meaningful quality differences
How to run it
- 1
Ignore the headline classification
Treat Class A as a starting label rather than proof of durable quality. Determine whether the property is genuinely at the top of its competitive market.
Pro tip Compare the building with employees' alternatives, not only with nearby offices.
Watch out A strong address can mask obsolete systems and a poor workplace experience.
- 2
Inspect environmental quality
Evaluate natural light, ceiling height, fresh air, air filtration, outdoor access, and other physical wellness attributes.
Pro tip Ask whether occupants are likely to feel energetic and comfortable after a full day inside.
Watch out Air-quality upgrades may be difficult when the underlying systems are obsolete.
- 3
Assess access and convenience
Measure proximity to reliable public transportation and the friction involved in commuting to the building.
Pro tip Consider the needs of younger employees and workers without cars.
Watch out A beautiful building can still struggle if reaching it is inconvenient.
- 4
Evaluate amenities and social draw
Identify food, fitness, collaboration, outdoor, and community features that make attendance worthwhile.
Pro tip Distinguish amenities people actually use from decorative features designed for marketing brochures.
Watch out Amenities cannot compensate for poor fundamentals such as darkness, bad air, or weak access.
- 5
Verify sustainability credentials
Examine energy and water efficiency, ESG certification, and the ability to meet sophisticated tenants' environmental requirements.
Pro tip Translate efficiency improvements into operating-cost and net-income effects.
Watch out Uncertified or inefficient buildings may be excluded by major tenants regardless of nominal rent.
- 6
Connect features to income
Estimate how the combined attributes affect occupancy, tenant quality, rent resilience, operating expenses, and capital expenditure.
Pro tip Underwrite the building as a workplace product rather than passive shelter.
Watch out Do not pay premium pricing unless the attributes generate defensible tenant demand.
In the wild
Marcus describes Bloomberg's bright, active office with food, snacks, and vibrant colleagues as a workplace that gives people reasons to attend. It illustrates how environment and social energy reinforce the physical quality of a premium building.
→ The building functions as a destination rather than merely shelter, supporting attendance and tenant appeal.
A hypothetical investor reviews an office in a prestigious district but finds low ceilings, limited light, obsolete ventilation, no amenities, and a long walk from transit. Applying the test reveals that the address alone cannot sustain premium demand.
→ The investor avoids pricing an obsolete building as a resilient Class A asset.
Common mistakes
Equating location with quality
A prime address does not overcome poor air, obsolete systems, weak amenities, or an unpleasant daily experience.
Treating the office as shelter
Under hybrid work, employees have an alternative at home, so a functional but uninspiring space may not attract attendance.
Counting amenities without testing value
A checklist of nominal features is meaningless unless those features improve employee experience and tenant demand.
Is it for you?
Best for
It is best for investors, lenders, tenants, and asset managers evaluating office buildings after the shift toward hybrid work.
Not ideal for
It is not ideal for specialized laboratories, medical offices, or properties whose demand is not driven by conventional office attendance.
From the transcript
“Now the office is it has to be better than your home or people are not going to come.”
“You have to be kind of a high A.”
“You have to be an A that isn't just an A because of its location.”
From the episode
Cathy Marcus on Commercial Real Estate
Cathy Marcus