Your Thoughts on Investing in Office Space

[Jonathan Hayek]

The idea of owning office space right now is probably scary to many. I am wondering if there might be potential in smaller, more flexible office space, and I'd like to hear your thoughts. You know, the whole, "... be greedy when others are fearful...". idea.

I've invested in small multi for several years and am now looking for different options, particularly in the commercial space. I'm in a small market (60k people) with a large air force base that is getting a massive investment in the next decade that is expected to be huge for the local area. It's a capital city. Like most places, multi family is going crazy here.

I do not have tons of money or tons of investors, so I'm simply not ready to buy a big box store or huge commercial complex. I'd be using 1031 money.

There is an office building available in my small downtown area for what I believe is a fairly reasonable price (~$700k). It is mostly vacant. It's about 10,000 sq ft of office space, divided into about 20 individual suites (about 350-400 sq ft each). 3 floors, elevator and stairs, men/ women single bathrooms on each level, only street parking. Excellent downtown location, attractive building. Condition is good and needs minimal initial improvements (maybe freshen up the bathrooms). 3 out of 20 office suites are currently leased. I believe it would rent in the $10-$14 /sq ft range. My thoughts and questions, bearing in mind I am brand new to analyzing commercial deals:

- High vacancy, which is what I look for in multi family. Is there value add potential in buying vacant office space, leasing it, and selling at full occupancy?

-The layout is such that the offices could be occupied by single people needing a small office space or a company with several employees that could lease an entire floor. There are reception areas on each floor. This flexibility is what attracts me to this building.

- Am I delusional in thinking I can make money investing in office space right now?

Thank you for your insight!

[Russell Brazil]

I closed on some office space today. I was able to basically buy it at a 40% discount to what it would have sold for 2 years ago.

SFH residential is as hot as it has ever been. Ive been pivoting to the cold assets. Condos in the city and office space.