Current market conditions have given one commercial property owner the incentive to make a sales offer that would normally be seen as too good to be true: Lucerne LLC, headed by James Bruno, is selling suites in its Centennial Park building in Cascade Township at a price that is supposedly less than what renting a comparable space would cost.
Cascade Office Condos at 2905 Lucerne SE, just off 28th Street and not far from the I-196 expressway, is a 30,000-square-foot building that Lucerne LLC wants to divide into suites of at least 2,500 square feet each. The reason behind that move is there are quite a few office structures of 30,000 square feet and larger that are for sale in the region. When there are more sellers than buyers in the market, as is the case now, prices usually fall.
But in today’s office market, not every company interested in buying can afford to purchase an entire building. Firms may be able, however, to buy just the space they need, and that is what Lucerne LLC is counting on.
“Right now is a great time to buy commercial real estate in West Michigan because prices are still really low and financing is real cheap,” said Peter Colvin, national director of single tenant investment for Sperry Van Ness Silveri Co., which represents Lucerne LLC.
“Right now, there are a lot of big buildings for sale in Grand Rapids — probably more than ever before — of 30,000 square feet and bigger. But the market is for 2,500 to 5,000 square feet, so the big buildings aren’t selling. So we took a big building and split it up into the market’s sweet spot,” he said.
But even in a buyer’s market, Colvin pointed out there are a few reasons companies don’t buy. One is they might not have enough cash on hand to make a down payment. Another may be that they’re unable to cover moving costs.
Colvin said the offer Lucerne LLC is making for Cascade Office Condos covers both of those potential deal killers and adds a few other amenities it hopes will be additional incentives.
He said a company can buy space in the Cascade building without having to make a down payment. “We can do seller financing with zero down. Or the buyer can use a bank, and the seller will hold the note for the down payment,” he said.
As for moving costs, Colvin said that expense will be built into the purchase price. “So, as a bonus, the seller, Bruno, will pay for each company’s move and there will be some money left over for new furniture, computers and phones — the things people need when they move their office,” he said. He added that Dixon Architecture will provide each suite buyer with space planning at no charge.
“Someone can buy their own suite for about half the price of buying a small office building, and then they only pay a small share of the (building’s) cost,” said Colvin because the maintenance cost will be spread across all the owners. “So they may save 30 to 40 percent in cost,” he said.
“The cost to own with zero down is considerably less per month than it is to rent a similar space in Grand Rapids. It’s about 20 percent less.”
Condo office space isn’t new to the market, but it hasn’t been done here for a while. Colvin said the idea of selling space resurfaced recently in the nation’s larger markets and has taken off.
He said the management and maintenance of the Cascade Office Condos is taken care of, so a buyer doesn’t have to worry about mowing the lawn, plowing the parking lot or making equipment repairs.
“There is a big, pent-up demand among people that have been in what’s considered a ‘wrong’ space for the last three years. They’ve been kind of trapped because they weren’t sure how the economy was going to do or if they were going to grow or downsize, so they just kind of put up with what they have because it was too expensive and a little risky to make a change,” said Colvin.
“Now that things have stabilized, they can rearrange that office to be perfect and get a chance to start fresh at about 50 percent of what it should cost.”