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Office building construction has slowed or halted in many parts of the country due to lease rates that have leveled off or declined and mounting vacancy rates. One bright spot, however, has been office condominiums, which have continued to gain in popularity. Last year, The Wall Street Journal's RealEstateJournal.com noted in an article, "Amid Low Interest Rates, Office Condos Multiply," that "while average office-rental rates in Manhattan have fallen about 30 percent during the last three years, prices for office condos have increased 50 percent during the same period." Skyline News & Research newsletter reported that "In Florida, Arizona, Minnesota and cities such as New York, Atlanta, Washington, DC, and Los Angeles, commercial condominium development has yielded high returns for investors." Office condominiums are uniquely positioned to meet the needs of small to mid-sized businesses, usually firms such as medical practices, dentists, lawyers, engineers, accountants, architects, real estate companies, mortgage brokers, insurance brokers, general contractors, dance studios and other service-oriented businesses with established practices. Business owners and partners in these organizations are receptive to the benefits that owning versus leasing office space provides. They welcome the opportunity to buy property without the expense of purchasing land and the aggravation of supervising the construction of a building. Benefits of ownership include:
Office condominiums work much like their private housing counterparts. Instead of renting a suite of offices, some companies purchase an individual unit in an officecondominium complex. The common areas are co-owned by all of the tenants and a board usually oversees landscaping and other maintenance issues. Office condominiums are often created as part of a mixed-use renovation in downtown areas of medium to smaller cities. There are some advantages and disadvantages to office condominiums. One plus is increased ownership rights compared to renting or leasing equivalent space. Rental properties are always under the control of a landlord, which means that monthly rent could be raised or the lease terminated with short notice to the tenant. By owning the space, companies in office condominiums can avoid such surprises. The monthly mortgage should remain relatively stable over the life of the loan. Office condominiums are ideal for professionals and companies that can safely predict their permanent space needs. An architectural firm or small advertising agency might do well in office condominiums, but a fledgling manufacturing company could find future expansion nearly impossible. There may also be restrictions on the type of business which may be conducted in office condominiums. The facilities may not be able to accommodate excessive customer parking, for example. One plus for those leasing office condominiums is the benefit of mixed-use buildings. It is not unusual for restaurants, specialty stores and other consumer outlets to share space with office condominiums. This means that employees of these offices don't have to travel far for entertainment and food. Mixed-use buildings with office condominiums tend to be located in downtown areas or other high-traffic business centers.
Beacon Builders
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