Commercial condos are an increasingly popular choice for savvy business owners who understand the value of building equity in their own company. In Vancouver and Toronto, the popularity of commercial condos is on the rise and availability is scarce. But in Calgary, there are more options for businesses wanting to buy into new, high quality, Class A commercial buildings.
In Calgary’s Meridian/Franklin area, for example, Hungerford Properties’ Nexus Business Centre is attracting companies like True Directional Services that purchased 4,100 square feet of office and warehouse space. After 5 years of renting, the directional drilling technology company felt that buying was the only option that made economic sense.
“With such low vacancy rates, rent in the Calgary market can be expensive,” says CEO Sean Senos. “Owning for my company means we can have more capital to invest in tools and growing the business, rather than throwing the money away at rent. It costs us 25% more to rent rather than to own.”
In addition to Nexus Business Centre, the top selling commercial condo in the Calgary market, there is Hungerford’s Fairmore Business Park, in South Central Calgary. Fairmore is a new 7-acre development located by Chinook Centre that is 48% sold and offers high-quality, Class A space in a brand new building.
Vanessa de Mello, who co-owns Beauty Depot and The Esthetic Institute Training Center, has just purchased a new office and warehouse space at Fairmore. It will be an expansion for their growing business, and a cost effective way to replace one location with a bigger, newer one. “Our dream was to one day own our own building. The cost to lease in Calgary is atrocious and we wanted to buy and have a beautiful building of our own. That dream is now a reality. We are expanding from 8,000 to 12,000 square feet and we have warehouse space to expand into. We are really excited.”
“The attractiveness of commercial condos is that, with a low interest environment, small business owners see real value in ownership,” said partner Michael Hungerford. “These businesses are able to grow equity through their real estate. They’re able to improve space and reinvest in it knowing that they’ll benefit once the time comes to sell the property. There can be tax advantages for them if they own their own property. They’re able to control their costs and expand or contract their business instead of being at the whim of a landlord.”
Here are the top reasons for businesses to consider buying office or warehouse space:
This is obvious, but easily forgotten. As you pay down your principle and your property appreciates, so does your equity. This is an investment in a hard asset.
No rental hikes.
This doesn’t happen when you own your own space. And stable mortgage rates offer the kind of stability and security leasing can’t provide.
Depreciate your unit and write off operating and mortgage interest expenses.
Improving your space.
Money you spend renovating – whether its upgrades to an office or a showroom – increases the value of your real estate and of your business.
Alternative financial options.
Your space can be wholly or partially rented or sold any time you want, giving you flexibility.