When Vern Buchanan, CEO of Buchanan Enterprises, purchased the 35,000-square-foot ninth floor in Plaza at Five Points last summer for his headquarters, he clearly decided it was better to own than to rent space for his expanding company.
He isn't alone. Historically low interest rates have convinced other business owners that the opportunity to build equity and control their occupancy costs makes sense, and, in the last couple of years, a spate of local developers have responded with office condominiums. "With interest rates being so low, if you do the math, it's a lot cheaper to buy than to rent," says Albert Myara, listing agent for the Professional Center at Lakewood Ranch, where about 30 percent to 40 percent of the 130,000 square feet of office condo space is already under contract and within a few months of coming online.
Other pluses include greater control over their business environment. "When you rent an office, you're subject to changes in management and the quality of management," says Bernie Croghan, president of ComCenters, the developer of Riverwalk Professional Park in downtown Bradenton. And many successful business owners, weary of the uncertainty of the stock market, have decided "they might as well invest in their own workplace," says Croghan.
This new trend allows developers to get in and out of projects more quickly, taking a profit up front rather than waiting for long-term gains. "We typically advise developers to offer their space for lease and for sale because it's more flexible," says Ian Black, president of Ian Black Real Estate. "If they simply go on the market and just make the space for lease, it limits their opportunities."
At Riverwalk Professional Park (being built adjacent to a new condominium project on the site of downtown Bradenton's old "Sandpile"), only a handful of office condos are still available, and Croghan believes they will be sold out by the time the project is completed in the first quarter of 2006. Prices start at $190 per square foot for unfinished space, and businesses can hire their own design team or take advantage of ComCenters' design-to-build services.
The site's pair of two-story buildings are designed in the Spanish Colonial style, and the developer lists easy ingress and egress, ample parking and a prime location on U.S. 301 as some of the best features for companies. "We're receiving interest from businesses in the medical, legal, accounting and marketing fields," says Croghan. "That was our intention, to appeal to all professions."
Office condo shells at the Professional Center at Lakewood Ranch go for between $210 and $240 per square foot. Set on 18 lakeside acres just off I-75, the site offers a parking ratio of four spaces per 1,000 square feet purchased. Real estate, architecture, legal, insurance and engineering firms have expressed interest in space at the Professional Center, which is expected to be completed by the middle of next year.
In North Port, office condo space is available at Bobcat Village Center, where 50 percent of the space already has been sold for $186 to $205 per square foot, and at North Port Park of Commerce, where space is going for $195 per square foot.
The Plaza at Five Points in downtown Sarasota, where Black serves as the commercial real estate broker, no longer has any office condo space available. But even though office condos are being snatched up throughout the area, Black does note that there are some disadvantages to owning rather than renting a workplace. "If you need to expand or contract your business, it's sometimes easier to get out of a lease" than to sell your space and buy a new one, he says. In the current real estate market, selling property may not be difficult at all. But things could change down the road.