Office condos are similar to private housing, where companies can purchase a unit in a complex instead of renting. They offer increased property rights, but may not be suitable for businesses that require future expansion. Mixed-use buildings offer additional benefits, but ownership may not be beneficial for smaller companies.
Office condos function much like their private housing counterparts. Instead of renting an office suite, some companies purchase a single unit in a complex. The common areas are co-owned by all tenants, and a board of trustees usually oversees landscaping and other maintenance issues. Office condominiums are often created as part of a mixed-use renovation in downtown areas of small to medium-sized cities.
There are some pros and cons to office condos. An advantage is the increase in property rights compared to renting or leasing an equivalent space. Rental properties are always under the control of a landlord, which means that the monthly rent could be increased or the lease terminated at short notice for the tenant. By owning the space, businesses in condos can avoid such surprises. The monthly mortgage should remain relatively stable over the life of the loan.
Office condos are ideal for professionals and businesses who can confidently predict their permanent space needs. An architectural firm or small advertising agency might do well in such an environment, but a fledgling manufacturing firm might find future expansion nearly impossible. There may also be restrictions on the type of business that can be conducted in units. For example, facilities may not be able to accommodate excessive customer parking.
One advantage to those leasing office condos is the advantage of mixed use buildings. It’s not uncommon for restaurants, specialty shops, and other outlets to share space with apartment buildings. This means that the employees of these offices don’t have to travel far for entertainment and food. Mixed-use buildings tend to be located in downtown areas or other high-traffic commercial centers.
During economic downturns, larger companies may invest in condominiums to consolidate departments. Smaller companies may not see the benefits of condominium ownership if their current rental or leasing arrangements appear beneficial. Units are often built on the “If we build it, they will come” business model.
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