Investing in Office Space

Welcome! Today we’re gonna talk about why investing in an office space is a great idea.

Today were gonna talk to you about the advantages of investing in office space. Investing in condominium office spaces have been the recent trend nowadays.

The first advantage why office spaces is such an attractive investment is, it is a rare opportunity.

Before, if you wanna own a commercial space you have to heavily invested in the area that means you have to buy the land and then you have to build yourself a building and then you need to hire yourself a management team to you know to make sure everything is working on your building, elevators, security, cleaning, all of these things. Say for example, you’re gonna have to buy a lot in a prime area which means say for example, you wanna buy a commercial lot roughly around the size of 2,000 square meters and the lot price is Php 300,000 per square meter, that’s gonna amount already at Php 600,000,000 without even the building. Say for example you wanna build a building, so that it could be useful for you. Just a rough approximate if you double that it’s already Php 1.2 billion and we’re not even talking about the permits, doing all of these things, you know, managing, hiring, training, all of those things, that’s gonna incur additional cost.

What I’m saying is if you wanna own a prime commercial space in the business district in the old days, you have to be that heavily invested so that you’ll be able to start leasing out the potential office tenants.

Nowadays, given the rise of these condominium spaces, when we are selling you a 100 square meters, 200 square meters, 400 square meters of office space we actually have this rare opportunity to own a prime piece of real estate within the business district on the commercial grade level.

So, what does this mean? This means opportunity for you to able to select the size you prefer and then to be able to just lease it out, if you buy this office condominium property, they will actually automatically have a management team. Of course, there are fees involved on a monthly basis, but at least you don’t have to have your own management team, get your security team, manage them, train them, all of these things. It’s just already there, what’s left for you to do is just to buy the property and start leasing it out, it’s that easy.

So, about this first point, it is an easy way in to owning a piece of prime real estate and then that is a commercial piece of prime real estate at that.

The second reason why office space is a good investment is, it is a basic need in the city.

Again, this is not a luxury but a basic need. If a house is a residential space for a person, the office is the residential space of the business, and in the business district this is a basic need that every business needs to have naturally.

In the central business district like Makati or Global City, office spaces are a basic need where businesses could be found. It is something that anyone can always use and what always need, having a kind of real estate that anyone would always need provides you a timeless rare piece of real estate that pays you perpetually. How good is that? It could pay you back on a monthly basis as long as it’s there. So, for example, if your office space is being leased out at Php 100,000 per month in 12 months it’s Php 1.2 million pesos of passive income.

It’s really amazing! It’s gonna keep on going, going, going and paying back every single month as long as it’s there for you.

The third reason why investing in office space is such a good idea is because of, long term lease contract.

As supposed to residential real estate when most of your lease contract are on a yearly basis, office space contracts are usually at the minimum of 3-5 years. Sometimes, even longer depending on the negotiatied terms.

What does this mean? Say for example you have a home, if you’re able to lease a residential space that you own and you lease it on for year basis reality is you’re gonna have to find the tenant next year and that’s gonna result to probably around of 1 or 2 months of you know, looking for a tenant, negotiating, drafting the contract and letting them to move in, and then next year if that happen again it’s another 2 months of loss income in your part.

So, what are we saying? In a residential development every single year, you may have 1 or 2 months of vacancy, provided that the tenant doesn’t renew. As opposed to office spaces when you actually put down the lease contract, since it’s a minimum of 3-5 years,s you already have a consistent stream of income for the next 3 years. You don’t have to renew in the next, you know, next year. Depending on your lease contract, it is a 3-5 years of probably even 10-year lease contract you’re just gonna have a continuous flow of income going to your bank account. And this is very standard for commercial leases because the company will be heavily invested in your office space, and it’s gonna be impractical for them to pull out all of the renovations, and improvements that they place in your office.

Which leads me to my next point, the fourth advantage why office space is an amazing investment is, there is no fit-outs needed.

What does this mean? Fit out is the improvement that you put in real estate, upon acquiring it cause normally when you buy real estate it’s usually blank, like when you buy a lot it’s empty, when you buy a condominium space usually empty, when you buy an office space, yes it’s gonna turn over a bare cement finish, you’re gonna have provision site for the aircon, you’re gonna have these provisions ready for you. But there will be no furniture, no partitions, nothing but that’s an advantage by itself.

When you’re leasing out office spaces to these companies it usually becomes more of an advantage because each company has a different organizational structure, so in that light, it would be beneficial for them to have their own different type of setup. So, it’s better if you have, you know, an empty space where they can build it from scratch, and they can actually customize it to their needs. Since you will not be the one building it if you own the space, this is gonna translate in to savings for your account cause unlike a residential home wherein you have to furnished it so that you can get a higher rates, and you know the unit’s gonna be more attractive, it’s gonna look nicer when you advertise it. Office space you just have to lease out the empty space and then that’s it, and the companies even like it that way because they can customize it to their needs.

So, this is a win-win situation, number 1: you’re leasing it without the need to spend an extra for the fit-out, number 2: since your tenant will be heavily invested also in the interior design, in the fit-outs, in the details of the unit, they’re gonna be there for longer term because it’s gonna be impractical for them to pull out after just a year.

The fifth reason why you’ll love to invest in an office space is, there is no panoramic view needed.

Normally when you buy a condominium a good view sometimes closes the deal whether it’s a buyer or a tenant, and when in comes to office space it is not really the case. Yes, it’s essential in the unit most especially if you’re gonna be talking on the nice view from the corner office of the boss but it’s not necessarily a deal clincher.

What is a deal breaking is the location, the lease rate, the parking slot, the proximity to commercial areas and that’s it? But as far as panoramic view is involved, it’s not exactly a necessity for you to be able to close the deal. It’s truly more of the location, the rate and the size that your current tenant really needs.

The sixth advantage of investing in office space is, you have a super wide market.

Normally if you invested lots in the Philippines, the Philippines law states that only Filipinos can buy the lot, or if it will have to be a foreigner it will have to be a corporation with 60% Filipino origin so that they ensure that the lot goes to a Filipino. Since the condominium office could be offered to locals and foreigners alike this opens the opportunities to a whole new level. You’re selling a prime piece of real estate that anyone, practically anyone can own.

As long as they like it, it’s a prime location, it has the returns of necessary and most especially if you were able to get it for a good price, you can sell it for a good premium later on if it’s located on the right areas.

The seventh and last advantage that we will share with you as far as investing in office spaces is concerned is, these office spaces are usually located in the prime business district areas.

Having this natural flow of demand wherein the big companies, you know when the big bucks and the funding choose to be in the business district as where anywhere else in the world. Normally, big companies choose to be in New York or to be in San Francisco, in other countries they call the business district the FiDi or the financial district. In the Philippines if were talking about you owning a prime piece of office space within the business district there will be a natural flow of demand for these offices to be attracted to the area, it’s only a matter of choosing which building, how big is the size, is the rate okay, are the parking slots are enough for the executives of the office who will be renting that for you, are there commercial areas nearby that’s gonna benefit in their employees, you know all of these things. There’s a natural influx of demand, and the more you are in the center of the business district, the more people are establishing businesses nearby.

So, it’s also easier for you relatively to rent it out, because outside you’re gonna have restaurants, hotels, commercial areas, all of these things which makes life very very very convenient.

So, what did we learned today? Today we learned that owning a condominium office space could be really advantageous for you. It’s not like in the old days where you have to purchase a huge commercial lot, build your own building, hire an entire team, you know, you don’t have to do that anymore in this stage all you have to do is purchase an office space and then upon turn over you can start talking to the management company and you know you can start leasing it out. Hopefully you’re able to collect rent on a monthly basis in long term manner and hopefully you’re able to lease out the unit and collect your returns.