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For Daniel Blinn and his Rocky Hill, Conn.-based Consumer Law Group, the search is over — and so are the rent payments. At long last, the three-lawyer firm finally owns its own office, and Blinn doesn’t have even a shred of buyer’s remorse. In weighing the pros and cons of owning against those of leasing, “as long as you are reasonably certain … of what your space needs are going to be, it’s not even a close decision — it’s better to buy,” Blinn readily advises. The savings alone can be particularly hard to pass up. It was for Blinn. Since his firm took up residence in an office condominium park off of Cromwell Avenue last December, Blinn estimates his mortgage installments and condo fees combined are 35 percent less than what he was paying to lease 2,600 square feet on the Silas Deane Highway. And that’s with owning two adjacent condominium units. When the tenant next door moves out next month, the firm will have a total of 2,700 square feet at its disposal, at a purchase cost of roughly $75 a foot, according to Blinn. In 10 years, the mortgage will be paid off and Blinn will have full equity in the property. Indeed, from an administrative standpoint, leasing has more than its share of drawbacks. For one, lists Altman Weil Principal James D. Cotterman in his online newsletter “Should You Continue Leasing or Buy Office Space?,” renters have a limited ability to control occupancy-related overhead costs. Landlords are pesky creatures and most of them insist on leases that provide for annual increases in operating expenses, which, Cotterman notes, can easily push up rent payments by 15 percent or more. Ownership, on the other hand, allows for more fiscal certainty. For Blinn, he has the comfort of knowing that, if he blows out a wall to make his firm’s two condo units a contiguous space, or re-carpets the floor, it’s not going to show up at a premium in the form of future lease increases. There’s also favorable tax considerations to ownership. Opportunities exist for businesses to reduce their taxable income through ownership, particularly through historical building tax credits, which are easier to qualify for as a property owner than as a mere lessee, Cotterman points out. That’s not to say the rigors and responsibilities of ownership should be taken lightly. Finding the right space requires homework, lots and lots of it, as Blinn is well-aware. He had scouted around for a new headquarters for his law firm for over five years until he chose its present location. Blinn left the cushy confines of Hartford’s Pepe & Hazard in 1997 to champion the causes of consumers through class action litigation. The Consumer Law Group now employs seven full-time legal professionals. Once he was in a position to buy, Blinn’s first choice was to remain in Rocky Hill, a central spot from which to serve its core clientele. But he was willing to relocate as far away as Middletown and West Hartford. Much of what was on the market were offices bigger than his firm needed, which would have required Blinn to lease out the additional space. Blinn says he considered it until he got some good advice. “My wife asked me, ‘Do you want to be Donald Trump or a lawyer.’” Property management, warns Altman Weil’s Cotterman, is a “full-time job. Maintenance, capital improvements, compliance with local tax and other regulatory matters will all be your responsibility.” The economic risks are also considerable. Most building operating budgets, Cotterman says, require occupancy of at least 90 percent to meet cash flow needs. Blinn, for one, didn’t want the bother of having to go searching for a new tenant each time a lessee decided not to re-up or went out of business. When a group of firm partners get together and decide to play landlord, it can lead to friction. “Many law firms,” Cotterman writes, “have experienced considerable internal turmoil as they have grown and ownership structures have diverged between the law firm and the real estate entity. Owners with less real estate ownership than law firm ownership may carry an overhead burden that exceeds their income benefit from the real estate … .” In addition, associates often “view ownership of the real estate investment as a right or benefit that accrues upon admission to partnership. Failure to attend to this expectation could yield serious problems,” Cotterman cautions. Blinn notes the potential hurdles office ownership places on his career path. “If I were … two years from now to take an in-house position, that would be a problem,” he surmised. As for a sudden firm expansion, Blinn could always go on the hunt for more spacious digs and hope this time he comes across the right piece of real estate a little quicker than before.

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