When I say condos, I’m always talking about bedrooms, bathrooms and garages but when Lottie Michael talks condos, it’s all about ceilings heights, plumbing and medical complexes.
Lottie Michael, CCIM, heads up Berkshire Hathaway Home Services Alaska Realty’s Commercial Division, along with her partner, Michael James, and Collin Agni, associate. According to Michael, office condos are a way to have sole practitioners or small business owners be able to own their own space. Office condo sizes can range from 900 to 4,000 square feet and are generally priced between $230 and $260 per square foot. Typically, the owner pays for all utilities, including property taxes, insurance and replacement reserves which is called triple net or in other words, the owner pays for all expenses. These costs are paid directly to a service provider or through a condo association. Office condos are well maintained because everyone in the building are occupants and owners and offices are open to the public.
Medical condos are usually found in the UMED district. According to Michael, we have an aging inventory of medical condos due to a lack of any new condominium construction. Current prices can range from $190 per foot to $300. The effective price is going to be higher because each practice requires different amenities. For example, plumbing for a dental office versus a general practitioner. Oncologists needs are very specific and their medical condos are located at one of the two medical campuses. Some oncologists have offices at both campuses and some may be owned by the medical group as condos.
Warehouse condos, like medical, have aging inventory due to lack of construction. These older industrial spaces usually sell from $150 to $200 per square foot. One challenge older industrial condos face is lower clear ceiling heights. For example, 18 feet versus 24 to 30 feet high. Only a handful have dock high space. Many don’t have enough power so expensive upgrades may need to be made.
If you elect to buy a condo for your business or practice, then you really have two streams of income. You have a business income and then you have appreciation. Historically, we’ve always experienced appreciation but you might not realize it today but when you sell your practice or business, it will almost always have increased in value due to the ownership of your space. The most popular place for financing a commercial condo is the Alaska Industrial Development and Export Authority. According to various commercial lenders which lend cooperatively through AIDEA, financing may be available for about 3.5% amortized over 25 years. It’s hard not to consider owning your own commercial condo with these historic low rates.
For more information on the commercial condo market contact Lottie Michael at 646-3603. And if you are curious about the residential condo market, connect with Connie Yoshimura at 229-2703 cell.