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Costs drive biz condo demand

By ROALD HAASE
rhaase@kcchronicle.com

GENEVA - Nick Pantazopoulos thinks he may know why people are buying business condominiums.

It's not necessarily because of the costs of the individual condo units, when compared to constructing standalone business buildings. It's something else, he believes.

It's the cost of land that's driving the biz condo demand, Pantazopoulos suggested. For Pantazopoulos, it's a key reason he's building his own business condo development, for which he broke ground two weeks ago in Geneva.

"They're great value for the money because the land cost has gotten too expensive," said the Bartlett developer.

Too expensive, he added, for the owner of a small business to invest in land on which to build only a 2,000- to 4,000-square-foot building. It's getting too costly to lease space, too, in his opinion.

"When you are looking at rental costs of $17 to $27 a square foot, you can own your own building [unit] for less than renting, and then five to 10 years down the road you have something you can sell," he said.

Together with Rick McGee of Byron, he has begun building two buildings, each containing about 20,000 square feet, along Kirk Road in the Geneva Business Park.

The structures, to be subdivided into six units each, are expected to be completed in the summer.

Business condominiums follow much the same pattern as residential condos: unit owners defray such common costs as snow removal and lawn care through monthly assessments, while each maintains the interior of his own unit.

Usually, each unit consists of a front door that leads to offices, with the back end of the units devoted to storage and-or light manufacturing operations.

But it's not just in Geneva and elsewhere in the Tri-Cities where condominiums are sprouting, to hear Pantazopoulos and McGee.

"They actually are very big in the Chicagoland area right now," Pantazapoulos said.

Another theory was espoused by Chris Aiston, economic development director for Geneva. Aiston noted that two separate condo developments are in the offing for Geneva Business Park, including the Pantazopoulos-McGee project.

"People want to own [their space], but they don't want to build their own building," Aiston said. "They'd rather be part of an existing project. ... [and] they don't want to rent, either."

Aiston said another major business condominium park will be in Geneva Business Park, south of Peacock Engineering Co. There, developers have proposed four buildings, totaling about 144,000 square feet, Aiston said. Developers Chuck Lucchese and Leo Lenahan are awaiting final city approval of their plan, Aiston said.

The same firm recently completed a similar project on St. Charles' east side, he said.

One area real estate specialist, Jim Hopkins of St. Charles, has made business condos the central focus of his business, Glen Ellyn-based Real Estate Consultants Inc. Currently, the firm represents developers that have about two million square feet of business condominiums on the market or in the process of being built, Hopkins said.

And now, Hopkins said, the business condominium phenomenon includes stores, too.

"We are doing retail and have done retail, already," Hopkins said. "It's very, very important and emerging."

Among his retail projects have been Campton Square, on the east side of New LaFox Road at Route 64, near Wasco. There, many business owners also own their own stores or service businesses, he said.

"The reason [retail] is going to become an extremely successful sector is that retailers, more than industrial or offices, make an extremely high investment in their location," Hopkins said. "Who is more interested in [where they are located] than a person spending tens of thousands of dollars to advertise their presence at that location."

One of his newest retail projects using the condo approach is at Randall and Bowes roads in Elgin, which when completed will consist of both stores and offices.

One of Hopkins' satisfied condo unit buyers is Marcia Dingman, who with her husband Mike owns MED Surgical Imaging Inc. at the new Courtyards of St. Charles on Dunham Road, north of Main Street. The couple formerly leased elsewhere in St. Charles, but decided they wanted to build up equity in something they could own.

"We did a little research," Marcia Dingman said. "It seems to be more of a thing we saw in other parts of the country, but a number of developers seemed to be going in that direction [here]."

Their 1,400-square-foot space includes three private offices, a conference room, storage room and a reception area. It even includes a coffee bar.

The first owners in their building, the Dingmans have operated there now for about two months.

"Again, we saw it as an investment, hopefully it will be a good investment," Dingman said.

And for developers, business condominiums often represent a quicker return on investment, to hear Hopkins. It can take longer sometimes to lease out a new building than to sell individual units of such buildings, Hopkins said.

In fact, his firm has been retained by Hamilton Partners to convert an office building in Itasca from a leasing situation to condominiums, Hopkins said. Turning the units into individually owned condos should double the value of the building, Hopkins predicted.

Hopkins has seen his 30-year-old business grow in the past five years from only a handful of employees to the present 17 associates. By June, the firm may have 20 associates, as it moves to much larger quarters in Itasca.

And where is it moving? You guessed it - into a business condominium created by Hopkins' own company.