Shacking up

Entrepreneur, Feb, 1999 by Jacqueline Lynn

Office condos: The middle ground between paying rent and dealing with property

You don't need a freestanding building, and you don't want the hassles of maintaining a property, but you'd still prefer to own - rather than rent - your business location. The solution? An office condominium.

Office condos are not for everyone, but many entrepreneurs have discovered that buying office space rather than renting it saves money and adds to their asset base, says Neil Barone, president of Barone Commercial Resources Inc., a commercial real estate brokerage company in Brielle, New Jersey.

On the plus side, an office condo lets you build equity and enjoy a number of tax advantages. Drawbacks include little or no room for expansion, the possibility of difficulties when you want to sell the property, and the risk that the property could depreciate significantly in value in a depressed real estate market.

Barone says office condos were a great investment back in the mid-1980s, when properties were appreciating significantly every year. Although the market crashed in the late '80s, it now appears reasonably stable again. "Office condominiums are not appreciating as much as they once did," Barone says. "So if you buy a condo, it should be because you want to save on rent and build equity, not because you see it as an investment that you can sell for a quick profit."

Just about any type of established business that can predict its space needs with reasonable certainty is a candidate for an office condo. Barone advises consulting your accountant first to determine whether you will benefit financially from owning rather than leasing.

Finding a business condo can take a bit of work. New projects are generally well-marked, but most established business complexes don't let owners post signs for resales. Check commercial real estate classified ads or contact a real estate broker to start your search.

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Are bad bosses behind your employee turnover?

If you're having trouble keeping good people, you may have a "people churner" in your organization, says John A. Challenger, executive vice president of Challenger, Gray & Christmas Inc., an international outplacement firm based in Chicago. Challenger says a people-churner is basically a bad boss who can't be dislodged because of a strong political connection or because he or she is considered a star performer.

If turnover is a problem in your company, Challenger recommends doing an honest review of the circumstances under which people have left, whether it was a voluntary departure or not. Is turnover especially prevalent in a particular department? Are there certain people, or maybe just one person, people just don't want to work for or with?

If you can identify a people-churner, Challenger says, "Think through what your organization is losing." At the same time, consider the value the offending manager brings to the table. If the manager is too valuable to let go, develop a plan to help him or her recognize and correct the problem. "Nobody really wants to be a bad boss; Challenger says. He suggests providing counseling or executive coaching. If that doesn't work, consider putting someone with strong interpersonal skills between the people-churner and the people he or she manages. As an absolute last resort, recognize that sometimes you may have to terminate the manager if the damage he or she is doing outweighs the positive contributions he or she makes.

If your review of turnover patterns reveals that you're a people-churner, Challenger recommends finding someone to manage the people side of your business. It may be an ego-bruising process, but it's the only way your company will grow.