The short and the long answer is that everything has some sort of affect on the office condominium market, but obviously I can’t get into how things like the box office returns of the newest Batman movie may affect the office condominium market, so I’m going to try to keep this to what I consider “The Big 5.”

1. Construction/Land Costs in Relation to Market Sales Prices

When developer’s decide to build and sell office condominiums, one of their main concerns is profitability. If they can’t build a complex with the reasonable expectation of selling that complex for a profit - they’re not going to sell it. I know that this is probably an obvious statement to many of you, but it’s worth saying because that’s the fundamental aspect of this business. Profits. So that means, if construction/land costs get too high, or sales rates get too low - most smart developers aren’t going to build.

2. Office Vacancy Rates, i.e., Demand

Developers look at vacancy rates when deciding whether and how much to build, and potential buyers/sellers and their agents look at vacancy rates when negotiating pricing. If vacancy rates are high, there probably won’t be new projects being developed. In terms of pricing, to simplify a fairly complicated negotiating tool, if vacancy rates are high, the buyer has more leverage, if they are low, the seller has more leverage.

3. Rental Rates

If rental rates are skyrocketing, businesses may consider hedging their bets long-term and buying with a fixed rate loan. Also, this can mean a good market to build in if vacancy rates are low and rental rates are high.

4. The Lending Climate

None of this matters if no one can get a loan to buy. Most business don’t have the capital to buy outright; they need a loan. If the lending climate is good and interest rates are low, businesses are in a good position to get the money they will need to buy an office condominium.

5. The Media, i.e., Perception of The Market

I think this is a big one. Any market is fragile, and perception of how strong that market is can make or break it. If the media overblows an insignificant statistic and has everybody running scared and pulling out of deals, well, of course there’s going to be a fall-out. On the other hand, if the media ignores truths about what’s going on in a particular market, everyone may overspend and overbuild until there’s a fall-out. It’s a fine-line, folks.

I’ve probably oversimplified and generalized quite a bit of this, but that’s because EVERY market is different. While there are national trends and general factors that affect us all, they take different turns in different markets, and there are a bajillion other factors that go into a real estate market. It’s a local thing, in many ways, I think. Talk to your agent to get the scoop on what’s going on in your neck of the woods.