Office condos for sale at Bethany Village
After three years of watching his newest 24,300-square-foot office building sit half-full, Bethany Village Developer Roy Kim had an inspiration – stop trying to rent the space and start selling it, like condominiums.
Though they have yet to make an appearance in Portland, office condos have been cropping up in markets like Atlanta, Dallas, Miami, Los Angeles, Denver and Scottsdale, Ariz. The combination of low interest rates and high vacancy is driving their growing appeal for both business and property owners.
It hasn’t caught on here because growth is managed so tight and land is so valuable, but since the office market’s so soft, we think that once we start, the trend will catch on, said Matthew Sichel, a broker at Elliott Associates who’s marketing the condos for Kim.
Located in Portland, near the western flank of the west hills, Bethany Village is a master-planned, 135-acre, mixed-use development made up of more than 300 apartments, 102 townhouses, 103 condominiums, more than 150,000 square feet of commercial space and 70,000 square feet of office space spread over four buildings.
Senior Project Coordinator Carolyn Sloan said space in three of the office buildings leased quickly and remains about 95 percent full. However, like other office properties throughout the Portland metropolitan area, the most recently constructed Bethany office building, Laidlaw Tower, has languished in an office market that’s seen double-digit vacancies for more than three years.
Kim said he was surprised that a search of the Portland market turned up no other office condominiums for sale.
It’s an obvious way for the tenants to go with no lease-renewal concerns and no rent-increase concerns. With the low interest rates, the mortgage can be lower than what a tenant is currently paying in rent, Kim said.
The Class A space in Bethany’s Laidlaw Tower is for sale for $250 per square foot. It can be purchased in sizes ranging from 1,000 to 6,000 square feet. Some of the space is completed, while other parts of the building are what brokers call a vanilla shell, or without the finishing touches like paint or carpet.
Like residential condos, owners at Laidlaw Tower will belong to a building association that will oversee care of common areas and settle on other expenses.
A lot of small business owners feel like property owners pad these kinds of things on, so this should give them a sense of comfort that they’re paying what they know they’re paying, Kim said.
Sichel said Laidlaw Tower is being marketed to medical and dental offices, as well as other professionals such as attorneys and accountants. He said selling the space while interest rates are at historic lows is important, but not the only factor.
There are certain tenants, particularly medical professionals that will benefit whatever the interest rates are because of the capital they put into the space, he said. It’s a unique situation for small businesses that want to own their own space but can’t afford to own their own building.
Key, said Sichel, is finding businesses that are established and know what size space they need.
This won’t work for a company that’s expanding and contracting all the time, he said.
Current tenants in the building, including a pediatric dentist and an orthodontist, have already expressed interest in purchasing their space. A chiropractor leasing space in another Bethany office building has also indicated an interest in Laidlaw Tower, Sichel said.
Orthodontist Sue-Chin Liu filed her letter of intent to purchase last week. She said she’d looked to buy long before signing the lease at Laidlaw Tower.
It was hard to find a place to purchase. Before I came here, I looked, but I was only interested in certain areas and there was nothing for sale, she said. I like the space. I’ve settled in here and have a good business. I don’t want to go.
Kim said sales at Laidlaw Tower will determine how he approaches Bethany Village’s next office project, projected for construction sometime next year. He said he’s open to selling the space – planned as four, 30,000-square-foot office buildings – as office condos as well.
Copyright 2004 Dolan Media Newswires
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