David Nesbit spent most of his career as a developer working for others, telling people why they should rent office space and not own it.
Now he works for himself, and he's a champion of ownership.
"Why lease when you can afford to own?" is the marketing mantra of Mountain View Office Park being developed along Route 15 in Upper Allen Twp. by Nesbit Development LLC.
The park sells office condominium suites ranging from 1,500 square feet to 8,000 square feet.
Nesbit's product is rare in the Harrisburg-area office market. Many office condos are conversions of existing space, such as a house or office building where space had been leased.
And most office space in the area is for lease, not sale. That's typical, said Elizabeth Sherrod with the National Association of Industrial & Office Properties.
"Most people don't have the cash to support the purchase, and they get a better deal on a lease," Sherrod said.
However, a growing small company or a business that needs more space or a second location might want to buy. If so, they're typically seeking 10,000 square feet or less and can have a hard time finding that kind of office space for sale in the midstate, said Jeremy Shyk, a commercial real estate broker and director of the Office Services Group at Landmark Commercial Realty Inc.
Many existing buildings are owner-occupied by the people who constructed the buildings, Shyk said. The number of good vacant sites for office buildings of 10,000 square feet or less is dwindling, and that size building is often considered too small to be profitable.
"There's no economy of scale in a 5,000-square-foot building," Shyk said. "You have fixed costs in these projects, and [with a bigger building] you can spread them over more square feet."
A smaller building means the cost per square foot is higher.
Nesbit's park is approved for up to five buildings, each no bigger than 8,000 square feet. Each buyer gets a shell, which amounts to walls, a ceiling and a stone base floor. The buyer is responsible for completing the building, using Nesbit's contractor or one the buyer selects.
Nesbit said Mountain View offers the benefits of luxury office ownership without the hassles of development and being a landlord. Property maintenance is through an association, similar to a residential condo development. Constructing an office building in the midstate takes at least 18 months to two years, mostly because of requirements imposed by state and local governments, Nesbit said.
Unless you're a developer, the building process "takes your eye off the ball of your primary business," Shyk said. "If you are a physician working 60 hours a week, do you want to go through the township approval process and engineering process, when someone else is already doing it and all you have to do is buy what they have done?"
Nesbit has sold three office condo suites. Two are finished and occupied by Cumberland Orthopedic & Spine physical therapy and West Eye Associates, an optometry practice.
China Outreach Ministries, a nonprofit organization, purchased a 4,000-square-foot suite for $550,000 in a second building, according to records filed in the Cumberland County Courthouse.
China Outreach Ministries is raising money to complete its suite as part of a $700,000 capital campaign. The group hopes to move in later this year, said the Rev. Gary Osborn, president of the ministry that works with Chinese scholars studying in universities nationwide.
A few years ago, the group moved its base from outside Washington, D.C., to central Pennsylvania. The move was made to cut costs and benefit from Harrisburg's strategic location near cities such as Philadelphia, New York and the nation's capital.
The group has rented office space but wanted to own. As a nonprofit organization, China Outreach Ministries gets no tax benefit from renting.
"We're kind of paying that money out without any advantage," Osborn said.
The group sought to build equity but didn't want to rent to others or be a landlord.
"It was pretty difficult to find a place that we could purchase that was in a good location and that had the qualities that we desired," Osborn said.
Shyk, the real estate broker working with China Outreach Ministries, introduced the group to Nesbit.
Jose Dominguez, owner of Cumberland Orthopedic & Spine, learned of Mountain View from a targeted mailing from Nesbit.
The practice owns one office near the Carlisle Pike in Hampden Twp., but the business was growing enough to merit a second location in the Mechanicsburg area.
Dominguez said owning instead of leasing means he can build equity "so when I retire, I can sell the location and the practice. It's a better investment than renting for all those years."
Spreading the word
Nesbit convinced the National Association of Industrial & Office Properties to create a forum devoted to the office condo market.
"He's really been key in getting that off the ground," said Kathryn Hamilton, an association spokeswoman.
Nesbit cites benefits of office ownership: Owners build equity and see their property appreciate over time, while receiving tax breaks for gradual depreciation of the property.
But renting still is the choice of most people who want office space, said Thomas Posavec, a broker with Landmark who does a quarterly report on the Harrisburg-area office market.
With renting, a business can move into the space right away. The lease can be structured to allow for expansion later. "They don't need $1 million to buy a building, they don't have to pay real estate taxes or invest in an expensive build-out. They can put capital into other parts of the business," Posavec said.
Many companies doing business in the midstate are in the area to handle contracts for a fixed period, such as five years. Still, Posavec said a segment of the midstate market, such as doctors and other professionals, are looking for the kind of product Nesbit offers.
"Anytime you can add office space for sale that's a good thing, because our market is in short supply of office properties to buy and that's been the case for the last three or four years," he said.
DAN MILLER: 255-8440 or danmiller@patriot-news.com