WITH THE DESIRE TO OWN RATHER THAN RENT,THE OFFICE

» January 1,2005 - Orlando

EVERYWHERE YOU TURN from Lake Mary to Maitland to Celebration to downtown Orlando, you see the signs: "Now Selling! Office Condos!"The office condo - owneroccupied office space - is the next new investment trend in the region. And, business is booming.

"One year ago, we had less than 50.000 square feet of office space on the drawing board," says developer Cameron Kuhn, of Kuhn Development. "Now, we have over 1 million. In my project, the Premiere Trade Plaza, some 85 percent of office condos are reserved already," he says.

More and more small-business owners are investing in office condos rather than leasing space. Why? "It's cheaper than renting," says Kuhn."People want their owri space. It serves
as asset protection because the principals buying the space can then rent it back to themselves, and they have more control over rental increases. In fact, condo mortgages are
running 20 to 30 percent less per month than traditional office leases."

Buying rather than leasing is an attractive proposition for many business owners. "You build equity, have tax benefits, and you have more control over a tenant." says Steven W. Moreira, CCIM, "It's also an excellent retirement proposition," says Moreira, a member of the Greater Orlando Regional Realtor Association and founder of Magic Financial Services and Magic Properties, a full-service boutique mortgage banking service. "After all, paying rent doesn't give you much to show when it's time to move or retire. But, when you buy, you make money when you sell the office."

Across the country, both residential and commercial rental markets are down, says Kuhn. "The residential market is being converted [to condos] because it's easy to get financed, and the rental market is feeling that pain It's true across the whole country. Office condos are going to change the market and give rental institutions a wake-up call," he says.

Around Central Florida, projects such as 55 West, a downtown multiuse project, which is selling 21,500 square feet of office space in an otherwise residential and retail condominium project, and Colonial Town Park in Lake MarylHeathrow, offering 1,500-square-foot office condos, realize the popularity of owning office space.

Fort Lauderdale-based Abdo & Burts LLC began a $30 million, goo,ooo-square-foot smallbay industrial project at Airport International Office Park. Called South Orange Business Park, the 26-office/warehouse features individual
condos for sale.

Elsewhere, projects in Baldwin Park, Maitland, MetroWest and Osceola County point to the success of owning rather than leasing. Some other advantages to buying rather than leasing, says Kuhn, are that "the entrepreneur can build out, offer flex space and move with the market, while the larger rental institution doesn't have that flexibility, nor do they care to do so."

"There's a 14 percent vacancy rate in Orlando rentals, and I see the office condo market causin the rental market to drop in the future," says Kuhn.

"I'm seeing that buying office condos for the medical profession is at an all-time high It benefits the doctors because they like to have upscale furnishings and improvements. In some cases, they can even finance up to go percent for medical offices, including equipment, with only lo percent down," says Moreira. "For example, if a doctor wants to buy an office condo for $250,ooo and put in $50,000 worth of furnishing, he or she would only have to come up with $3o,ooo plus 3 to 4 percent dosing costs," he says.

Some other businesses buying office condos are dentists, orthodontists, insurance agents, attorneys and financial service providers.

While there are many benefits to office condos, there are also some disadvantages. "I have lo. 800 square feet and 36 offices in one of my buildings," says Moreira. "I chose not to do condo, so I rehabbed the office building. What concerned me about the office condo is that it can be structured in a way that isn't fair. In one project, a one-third owner paid 50 percent of the operating expenses because the owner developed three condos in the office building and kept one. You have to be very careful that you're sharing equal expenses," he says.

About Kuhn Companies

Customer service is truly important to us and we strive daily to make sure each building and every space is perfect for our tenants and their guests. Kuhn Management has been adding to the development of Orlando for the last twelve years by purchasing old, rundown properties and turning them into unique buildings with distinct personalities.

Our goal is to create spaces that allow our tenants to be successful by creating an atmosphere that allows them to focus on their businesses without worrying about the buildings.