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Commercial Condos - Beware the Condo Association

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If you happen to live in a condo, then you'll easily understand why a small business considering purchasing a commercial office condo needs to know about how and when to interface with the Board of Directors of the condo association. However, if you own a small business but have never dealt with a condo board, then you should be aware of the rights and obligations involved before purchasing an office condo.

Just as with any type of building there the common spaces that are mutually and equally shared, a commercial office condo is operated based on the Bylaws developed and adopted by that condo board. One of the requirements outlined in those Bylaws is how often the Board of Directors must meet, what repairs or changes require board approval and what repairs or maintenance can be done by the management team of the commercial condo.

Of course, you want to understand the other portions of the Bylaws as well because these binding agreements control how you can or cannot use the building. For example, you would expect to see in a set of Bylaws that any damages done to common areas by visitors to your office condo are your responsibility. You might also expect to find clauses which prevent owners from drastically changing the exit doors to their condos and other similar restrictions on use or changes.

The Board of Directors of a commercial condo association is made up of elected officers that are owners or designated representatives of owners of units in the building. When a commercial condo is first completed and the building opened for purchase of units, the board may be made up of the developer and other designates that have direct interest in the development. However, after a period of a year or once there are sufficient owners to build a sound, responsible board from, officers are elected from the owners.

You may think, at first glance, that control of everything is given to the selected owners that are elected to the board of directors. This really isn't true at all. The board can, without bringing a motion before the condo owners association members, take care of some expenditures and other business as outlined in the Bylaws. But all major changes are brought up as business during a Condo Association Board of Directors’ meeting, which must be announced formally in plenty of time for owners to notice and attend. In other words, you get a vote in any actions which might impact your business significantly.

In mixed use properties there may be more than one Association involved. Master associations and sub-associations should be used when the users of the units in a single condominium are restricted to significantly different uses. An example would be a condo that has a combination of residential, retail and office uses. In those situations there could be more opportunities for deadlock votes. For that reason dispute resolution to include mediation should be include in the Bylaws.

The best way to interface with the board of a commercial condo association is to attend, or have a designated representative attend, each meeting of the Board of Directors. This way, if any unexpected business is brought up, or if you need to bring up an issue, you'll have your ownership represented.

If you know you need to bring up a topic before the board, it should be sent in writing well before the meeting to the President of the Board of Directors so that it can be placed on the agenda. Taking an issue up on the fly can backfire and fail to get your issue noticed.

An even better way to keep up with what's going on with the board and to interface your business with them is to agree to hold a position on the board of directors. Most condo association board meetings are not lengthy and are critical to the maintenance of the lovely commercial condo office you purchased into.

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Buying Office Space , Commercial Condo , Investment Real Estate , Office Building Sales , Office Space

Five Years Before Office Space Market Recovers?

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In  a recent Blog post by James Quinn, a senior director of strategic planning for a major university, the time period of the office space market recovery is questioned and predicted to be much longer than many industry experts predict.  The main reason for his prediction is his belief that consumers are beginning to "Deleverage," spending less, and it will cause major changes in the economy over the next decade.

"They have no choice. Boomers have come to the shocking realization that you can’t get wealthy or retire by borrowing and spending."

His thoughts on the Office Space market:

"The current office vacancy rate of 17.5% is the highest since 1993 and is just below the all-time high 18.7% in 1992. The WSJ has concluded, with no data or analysis, that the vacancy rate has bottomed. As the employment data proves, companies are not hiring employees. New companies are not being formed. Government mandates and regulations regarding healthcare and uncertainty about taxes will keep the formation of new small companies at a minimum. Conglomerates continue to ship jobs overseas. Part 2 of this Depression will drive more companies out of business. Office vacancies will remain at record levels for the next five years."

On the other side the Wall Street Journal came out with an article, Signs of Recovery For Office Market, last week that predicts that the office space market has bottomed out and that we are starting see some stabilization in the market. They also state that the recovery will be a slow one, but don't define how long that could be.

For us at OfficeFinder.com, over the past 3 weeks we have seen a surge in closed deal reporting in the neighborhood of 2 - 3 times over those of the previous several months. These reports come through our network of office space tenant representatives and executive suite members. We are hoping this continues and identifies the start of the small business recovery.

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Commercial Real Estate , Lease Negotiations , Office Rental , Office Space Negotiations , Office Vacancy Rate

Have Office Rents Stabilized?

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In a sign that the country's commercial real-estate market is finally turning the corner, new statistics show that office rents that have been falling throughout the economic downturn are beginning to stabilize.

The industry's recovery is likely to be a slow one. Many businesses are continuing to give up office space as new hiring stays sluggish, the timing of the economy's recovery remains uncertain and companies figure out how to fit more workers into less space.

More at the Wall Street Journal

Buying Office Space , Office Rental , Office Space , Office Space Negotiations

Survey Says 32% of Businesses in US Plan to Hire New Employees Next Year

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A little more good news on the employement front. A new survey says 36 percent of businesses worldwide plan to hire new employees in 2011.

That includes almost a third (32 percent) of U.S. businesses, according to the biannual Regus Business Tracker survey, which is based on interviews with more than 10,000 senior businesspeople in 78 countries. Employment and office occupancy go hand in hand. Without job growth Sixty-five percent of U.S. businesses expect revenue to increase during the next year.

However, 41 percent of companies still are looking for ways to cut overhead, though they don’t intend to do so by cutting employees.

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Commercial Real Estate , Office Space

Commercial Real Estate Loan Delinquency Rate at an All Time High

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Delinquencies for commercial-mortgage-backed securities have topped 9 percent for the first time.

The Trepp National CMBS Delinquency Report shows that 9.05 percent of about $694 billion in commercial loans that back outstanding CMBS were 30 days or more delinquent as of Sept. 28 versus 6.49 percent at the beginning of 2010 and just 0.38 percent three years ago.

Source : Wall Street Journal (09/29/10)

Commercial Real Estate , Investment Real Estate