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The logical hierarchy based on the building categories is Geographical area -> Site(s) -> Building(s). Buildings with the same category can also have a hierarchy. For example Building -> Sub building(s). The categories do not impact the use of parent/sub buildings. Technically it is possible to have a deviating hierarchy like Building -> Geographical area(s), but this is not advised because this can lead to issues when using Workplace Experience.
Next to Workplace Experience, also other integrations can have specific rules for the building hierarchy. So it is advised to used use the recommended logical hierarchy of the categories.