Office Condo's
Commercial Condominiums: Who Wins, Who Doesn't?
Further Pro-Bono Info from Your Best Choice for Commercial Real Estate Brokering
Traditionally, office condominiums have appealed to small businesses, professional firms and medical
practices with stable business models. 
These office-users typically purchase 1,000-5,000 square feet - well below the focus
of the usual commercial broker who searches for tenants with far larger space needs. I'm proud of my
20 years of commercial broker experience serving all sizes of companies, budgets and location specific
needs.
PROS: In recent years we've experienced a slow-growth national economy,
historically low interest rates and a volatile Wall Street. 
These factors have led many successful professionals and entrepreneurs to look at alternative
investments in the real estate market - including owning their own office condo space.
The key driver of the office condo market is the prevailing rental rate. If new office space is leasing at $25-26 a square foot, and a user can buy new office space at $16-18 a square foot, there's an immediate return on that real estate investment.
Because of the savings per square foot, many medical practices, laboratories, ambulatory surgical
centers and other healthcare businesses find owning office space makes financial sense and provides a
stable, familiar location for their patients. 
Condo ownership works well for medical professionals because build-out costs are extraordinary.
Bringing in water, vacuum, gas and air, and electric to the center of the office, then repair the floor
- this gets expensive quickly.
CONS: On the other hand, much of corporate America prefers to lease office space - a trend that shows no sign of abating. A Fortune 500 company with large space will invariably select leased space or a build-to-suit single-user investment. Most large space-users understand that owning the real estate is not the best investment. For instance, Walgreen's makes a 40 percent return from its products and 7 percent on its real estate.
For national and regional companies, office condominium ownership has some significant potential pitfalls. It's very difficult to move to a newer building, add more space to accommodate growth, or downsize in the event of a staff reduction.
Disputes can arise among owners about the costs associated with maintaining common areas, allotting
parking spaces or renovations to "freshen" an older building. 
When you start dealing with larger users, a condo form of ownership for office buildings
becomes complicated. A condo association can be a distraction from day-to-day business activities.
Finally, office condo ownership raises the question of an exit strategy. What happens when a small company closes its doors, or an entrepreneur decides to retire?
More on about Office Condos
Michael Coretz, Your Best Choice for Commercial Real Estate Brokering.
As your commercial real estate broker, you can be assured that your concerns are my concerns. I use the most up-to-date analysis technology in the business. As my client, whether looking to lease or buy, you will receive clear, timely information enabling you to make smart decisions that increase your bottom line.
the Arizona Department of Real Estate