When Owning a Commercial Condominium Makes Sense
Stable companies can benefit from the predictable cost of owning commercial real estate space.
Office and Industrial condos, also known as commercial condominiums, operate like their private housing counterparts, but with somewhat fewer complications.
- Companies can purchase units in a condominium complex.
- The common areas such as lobbies, parking and landscaping are owned by all of the tenants.
- A co-tenant or association board oversees landscaping and other maintenance issues.
Why Buy?
Office condominiums are ideal for small businesses, professionals and companies that can safely predict their permanent space needs. An architectural firm or small advertising agency might do well in office condominiums.
On the other hand, a fledgling manufacturing company could find future expansion nearly impossible.
There also may be restrictions on the type of business that can be conducted in a particular office condominium. For instance, the facility may not be able to accommodate excessive customer parking.
Smaller companies may not see the benefits of condo ownership if their current rental arrangements appear beneficial.
Renting vs. Owning
When compared to renting equivalent space, one advantage of owning is increased rights.
Rental properties always are under the control of a landlord, who could raise the monthly rent or terminate the lease at the end of the lease term with short notice to the tenant.
Renters could see their rents escalate in a tight market because of rising construction costs.
By owning the space, companies can avoid such surprises. The commercial office or industrial condominium owner can lock in occupancy costs. Buying space insulates a company from rising base rents since mortgage payments are fixed by the terms of a loan, not the landlord’s rising development costs.
The condominium owner builds equity with the principal portion of the mortgage payments. The owner has the opportunity for equity growth as the market value of the condominium appreciates. While no one can guarantee that phenomenon, few would deny that it occurs quite regularly.
Space Flexibility
Well-planned, new-construction condo projects permit the buyer to purchase one or more adjacent units whose sizes and interior improvements can be configured to meet the owner’s precise needs.
Commercial Real Estate Group of Tucson can help business owners determine if condo ownership is right for them. Contact the tenant representation company to learn more.
