I recently discovered a subcategory of commercial office, the office condo. I know this is not a new concept and has been around for years, however I see it as a trend that can take off in the near future if it hasn’t already. Our offices are based in Pasadena, CA, and we do substantial business in the San Gabriel Valley and beyond.
I recently was approached by a client to sell her office condo in Diamond Bar. I looked at the property and comped it out via other office condos in the area, did a rent versus purchase analysis and looked at per square foot sales prices. What surprised me about the property was that it was a good investment regardless of how you looked at it. To me that means the fundamentals for the property were still intact.
The developers of the office condo have developed several in the Tri-Counties area and I am sure the construction costs were not too bad. They were selling for $300 to $400 per square foot. What amazed me about the business model was that the buyer had to pay the TI costs themselves! That saves the developer so much in construction capital, time, etc. There was nothing special about these developments, just nice neat boxes zoned for professional office. The beauty of it is that you can just stamp these out wherever you have the space. There is no need for creativity or uniqueness.
And now with the huge influx of Chinese immigrants to the greater Los Angeles area, who are all seemingly looking for small office space and who always prefer buying versus leasing, this market should start booming. I hope I am not on the tail end of this trend. We shall see.