If you’re my vintage, you might remember Steve Martin’s catchy 1978 hit tune, “King Tut,” whose protagonist “lived in a condo made of stone-a.” Good luck getting this out of your head.
We’ve come a long way since 1978, and an even longer way since 1323 BC. While condominiums have always been fit for kings and other homeowners, they have become popular for business professionals, such as medical doctors. As the doctors might say, let’s examine why.
Office condominiums can offer the best from both worlds of commercial real estate—owning and renting.
In addition to tax advantages, owning an office condominium provides equity in the property. Instead of paying rent year after year, then walking away at the end of the lease term with nothing, office condominium owners—like other property owners—build equity in their spaces.
But unlike other property owners, office condominium owners share maintenance and other costs of the entire property. In that sense, office condominium owners are like tenants. With limited responsibility, they can focus on their professional practices, not on commercial real estate.
And even if equity is the most important consideration, office condominiums provide other efficiencies, such as economies of scale. Instead of having to bear the sole effort and entire expense of buying or constructing a building—and then having to play landlord to others—business professionals can limit their stake to only what they need, and without the fear that a lease might not be renewed at the end of a term.
Like any business decision, office condominium ownership can be problematic if not properly planned and implemented. While offering the best of owning and renting, legal requirements for office condominiums are more complex than the more traditional options.
To avoid the “mummy’s curse,” consult with your commercial real estate attorney on all aspects of purchasing and owning an office condominium, which can include contracting with the developer and others, financing, and ensuring that the owners’ association is properly formed and maintained, and that all costs are known and understood.