Benefits of Condo Ownership
A growing trend in the Manhattan office market is increasingly small and mid-size firms and nonprofits are opting to buy their work spaces in the city’s expanding office condo market.
“People like engineers, law firms, contractors, architects, attorneys and consultants—small to midsize businesses—are entering the space to buy these floors,” as reported in the Wall Street Journal. “Property owners have all seen the appreciation in New York City over time and they want a piece of the action.”
In one example, tax-law firm Marcus & Pollack LLP paid $27 million for 44,500 square feet at 633 Third Avenue. It used 12,000 square feet and sold the remainder of the space at a substantial profit. A second example is a marketing firm purchased a 7,000 ft. floor at 131 west 35th street its second condo floor purchase in 7 years.
Many new commercial condo and coop spaces are now on the market. Buyers quote “rather than pay rent to a landlord we could actually own for less. We ultimately believe this is going to appreciate. There are many purchase alternatives in all NYC neighborhoods. Most popular are midtown east, Penn Station area, Chelsea, and Union Square / Flatiron areas.
The top advantages to purchasing are:
- Significant Savings
The yearly cost of office condominium ownership is historically not exactly the cost of leasing. Current market lease rates far exceed the annual office condominium carrying costs, which incorporate regular charges, real estate taxes and if relevant, mortgage payments.
- Attractive Financing Costs
There are a variety of financing options that make claiming an office condominium more affordable for businesses and non-profit organizations. Interest costs stay low, and borrowers can regularly discover loans as high as 90% loan-to-value, including development costs.
- Real Estate Tax Exemption
Numerous non-profit and government associations are excluded from paying real estate taxes when they possess and occupy an office condominium. Tenants leasing office space are required to pay real estate taxes regardless of their status.
- Permanent Upgrades
From office furniture to glass conference rooms, planning and building an office space includes significant capital. At the point when a business cannot renew their lease, they lose their investment and have to expend further capital to move and improve elsewhere. By owning office space, a business can justify a higher-end build-out that increases their competitive edge and improves the estimation of their land.