Office space is critical to operating any type of business and many small businesses simply can’t afford to purchase a building in which to operate. Renting is, of course, a great option, but there’s no equity build up in renting – except for the landlord. With a Charlotte office condominium, a small business owner can purchase office space, build equity, and even sell the office space if and when desired.
The concept of office condos is a rather new one. It provides the owner with more power to change the interior space to make the interior setting most conducive to their particular business. They come in all sizes and classes of buildings. Because the commercial office condo is purchased, the business owner is not going to be hit by a lease change in rental rates. There are lots of benefits to the small business such as tax advantages and residual value.
Ownership to Lease Comparison
- The lease renewal offers the landlord the chance to increase rents. Sure, rent could go down, but more often, it goes up and up over time unless the rental market is extremely soft.
- At lease end, the small business owner must either accept the new lease terms or find a new location and bear the expenses involved in moving, as well as the business disruption.
- Depending on lease language, a lease renewal might not be available if the landlord decides to sell the building.
- Much of the interior of the business office is controlled by lease language, leaving few options for the business owner for customization.
- Rent is a liability in the accounting process.
When buying a Charlotte office condo:
- If purchased on a fixed interest rate mortgage, the payments for the property will not change over time, allowing long-term budget and financial planning.
- Some restrictions apply to use and interior change per the laws of the condominium association, but they are usually not nearly as limiting as when renting.
- There is a fee paid for upkeep and maintenance of common areas, sometimes even including common lobby assistance.
- The commercial condo becomes a business asset rather a liability.
- The office condo ownership shares, in the case of partnerships, can be legally willed to the other partners so that the business can proceed without disruption.
The Condo Association
Commercial condos, like residential condos, are operated and governed by a Condominium Association made up of condominium owners. The members operate within a set of Bylaws adopted by them and which must meet certain legal requirements. If considering the purchase of a commercial condo, it is very important to read and understand the governing documents such as the associations’ Covenants, and Conditions and Restrictions (CC&Rs). These documents outline exactly what is permitted and restrict, as well as the rights and duties of the owners of the commercial condos in the buildings. They also outline what the association can be expected to be responsible for in return for the monthly condo maintenance fee paid by each office condo owner.
We’ll be looking at more aspects of commercial condos and how they can benefit the business owner in the next updates. This concept is a great way for business to stop paying rental fees and build equity in real property while providing workspace for their operations.