The case for office condos as replacement property
- Professional tenants with multi-year leases and strong renewal rates
- Fee-simple ownership — no landlord, no master lease, no ground rent
- Condo association handles the exterior, roof, and common areas
- Price points from roughly $1M–$3M fit typical exchange budgets
- Simple diligence: one lease, one estoppel, clean title
What to underwrite
Focus on the remaining lease term, the tenant's business stability, and the building's location quality. A Class A building in a walkable downtown — where office supply is constrained and demand is durable — will re-lease well even at the end of the current term.
Also review the condo association's reserves and budget. A well-capitalized association protects you from surprise special assessments during your hold.
Pairing the exchange with cost segregation
An office condo's buildout — partitions, finishes, lighting, dedicated systems — contains significant personal-property components. A cost segregation study on your replacement property can accelerate depreciation into the early years of ownership, improving after-tax cash flow from day one. See our cost segregation guide for the details.
A current example: Suite 200 at 599 Tamiami Trail N
This fully built-out executive office condo in the heart of Old Naples is offered at $1,500,000 with a 4.67% cap rate and $70,000 in net operating income. The tenant is in place on a lease running through 2029, so a buyer steps directly into stabilized income with no lease-up risk.
Fee-simple title, a prestigious downtown address, and a turn-key buildout make it a clean, quick close — important for anyone working inside a 1031 exchange timeline or placing capital before year-end.