Filed pursuant to Rule 424(b)(5) File No. 333-169290
PROSPECTUS SUPPLEMENT (To prospectus dated September 27, 2010)

3,000,000 Shares in Primary Offering
500,000 Shares Pursuant to Distribution Reinvestment Plan

Senior Common Stock
________________

     We are offering 3,000,000 shares of Senior Common Stock at a price to the public of $15.00 per share and 500,000 shares of Senior Common Stock to be issued pursuant to our distribution reinvestment plan at a price of $15.00 per share to those stockholders who elect to participate in such plan as described in this prospectus supplement. We reserve the right, however, to reallocate shares between the primary offering and the offering pursuant to our distribution reinvestment plan in our sole and absolute discretion.

     Gladstone Securities, LLC, the Dealer Manager, is not required to sell any specific number or dollar amount of shares of Senior Common Stock but will use its “best efforts” to sell the shares offered by this prospectus supplement. The minimum permitted purchase of shares of Senior Common Stock is 200 shares having an aggregate minimum purchase price of $3,000. We reserve the right, however, to waive the minimum purchase requirement in our sole and absolute discretion.

     We will hold two closings per month for our primary offering. The closing dates were randomly selected prior to the commencement of the primary offering, are not subject to change and will occur once between the 1st and 15th of each month and once between the 16^th and last day of each month. We will place your subscription payment in an account held by our escrow agent, BB&T Corporation, which funds will be held in trust for your benefit until the next closing date. On any such subsequent closing date, we will either accept or reject your subscription, and (i) if accepted, we will transfer your funds to our general account, and you will receive a confirmation of your subscription, or (ii) if rejected, we will return your funds, without interest, within 10 business days thereafter. Subscriptions will be effective only upon our acceptance, and we reserve the right to reject any subscription either in whole or in part in our sole and absolute discretion.

     The primary offering will commence on the date of this prospectus supplement and will terminate on the earlier of (i) two years from the date of this prospectus supplement, unless earlier terminated or extended by our board of directors, or (ii) the date on which 3,000,000 shares of Senior Common Stock are sold hereunder. If we extend the primary offering period beyond two years from the date of this prospectus supplement, we will update this prospectus supplement accordingly. We may extend the offering period for the 500,000 shares of Senior Common Stock being offered hereby under our distribution reinvestment plan beyond the termination of the primary offering and until we have sold all of the shares allocated to the plan through the reinvestment of distributions. We reserve the right, however, to terminate the primary offering and the offering pursuant to our distribution reinvestment plan at any time in our sole and absolute discretion.

     Distributions paid on shares of Senior Common Stock (i) will be in an amount equal to $1.05 per share per annum, declared daily and paid at the rate of $0.0875 per share per month and (ii) must be paid before distributions are paid on shares of Listed Common Stock but after distributions are paid on shares of Series A Preferred Stock and Series B Preferred Stock.

     There currently is no market for shares of Senior Common Stock, and we do not expect to have the shares listed on any securities exchange or quoted on an automated quotation system. You may not be able to sell your shares of Senior Common Stock when you desire, or at all, and, if you are able to sell your shares, you may be forced to sell them at a substantial discount. Accordingly, if you invest in shares of Senior Common Stock, you will have limited liquidity. After the fifth anniversary from the date of issuance of the shares of Senior Common Stock, such shares, if not redeemed prior to that time, will be exchangeable by the holders thereof for shares of Listed Common Stock. Our Listed Common Stock is listed on the NASDAQ Global Select Market under the symbol “GOOD.”

     An investment in shares of Senior Common Stock involves substantial risks. See “Risk Factors” beginning on page S-23 of this prospectus supplement and in our most recent Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and other information that we file from time to time with the Securities and Exchange Commission which are incorporated by reference into this prospectus supplement and the accompanying prospectus.

     Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

		Primary Offering								Distribution Reinvestment Plan
		Per Share				Total				Per Share				Total
Public offering price (1)		$	15.00			$	45,000,000			$	15.00			$	7,500,000
Selling Commissions		$	1.05			$	3,150,000			$	—			$	—
Dealer Manager Fee		$	0.45			$	1,350,000			$	—			$	—
Net Proceeds (before expenses) (2)		$	13.50			$	40,500,000			$	15.00			$	7,500,000

________________

GLADSTONE SECURITIES, LLC

________________

The date of this prospectus supplement is March 28, 2011

		Corinthian Colleges, Inc. Austin and San Antonio, Texas
		JBT Corporation Chalfont, Pennsylvania
		Elster Electricity, LLC Raleigh, North Carolina

TABLE OF CONTENTS

Prospectus Supplement

		Page
About this Prospectus Supplement			S-1
Summary			S-2
Questions and Answers about this Offering			S-15
Risk Factors			S-23
Forward-Looking Statements			S-26
Estimated Use of Proceeds			S-29
Market Price and Distributions Paid in Respect of Listed Common Stock			S-31
Distribution Reinvestment Plan			S-32
Share Redemption Program			S-33
Certain Relationships and Related-Party Transactions			S-34
Additional Material U.S. Federal Income Tax Considerations			S-37
Plan of Distribution			S-38
Supplemental Sales Material			S-40
ERISA Considerations			S-41
Legal Matters			S-45
Experts			S-45
Where You Can Find More Information			S-45
Privacy Policy			S-46
Appendix A — Subscription Agreement			A-1
Appendix B — Distribution Reinvestment Plan			B-1

Accompanying Prospectus

		Page
About This Prospectus			1
Forward-Looking Statements			1
The Company			3
Risk Factors			3
Use of Proceeds			3
Consolidated Ratio of Earnings to Fixed Charges			4
Description of Capital Stock			4
Description of Debt Securities			11
Description of Depositary Shares			17
Description of Subscription Rights			19
Book Entry Procedures and Settlement			20
Certain Provisions of Maryland Law and of our Charter and Bylaws			20
Material U.S. Federal Income Tax Considerations			24
Plan of Distribution			47
Legal Matters			49
Experts			49
Where You Can Find More Information			50
Incorporation of Certain Documents by Reference			50

     

     You should rely only upon the information that is contained or incorporated by reference into this prospectus supplement, the accompanying prospectus and any related free writing prospectus that is required to be filed with the Securities and Exchange Commission, or SEC. We have not, and the Dealer Manager has not, authorized any other person to provide you with different or additional information. If anyone provides you with different or additional information, you should not rely upon it. You should assume that the information appearing in this prospectus supplement, the accompanying prospectus, any such free writing prospectus and the documents incorporated by reference herein or therein are accurate only as of the respective dates of such documents or such other dates as may be specified therein. Our business, financial condition, liquidity, results of operations, funds from operations and prospects may have changed since those dates.

ABOUT THIS PROSPECTUS SUPPLEMENT

     This document is presented in two parts. The first part is comprised of this prospectus supplement which describes the specific terms of this offering and certain other matters relating to us. The second part, the accompanying prospectus, contains a more detailed description of the shares of Senior Common Stock and provides more general information, some of which does not apply to this offering, regarding the securities that we may offer from time to time. To the extent that the information contained in this prospectus supplement differs or varies from the information contained in the accompanying prospectus or in the documents that we previously filed with the SEC, the information in this prospectus supplement will supersede such information. In addition, the information that we file subsequently with the SEC prior to the completion of this offering will automatically update and supersede the information in this prospectus supplement.

     This prospectus supplement is part of a registration statement that we filed with the SEC using a continuing offering process. This prospectus supplement does not contain all of the information that we have included in the registration statement and in the accompanying exhibits and schedules thereto in accordance with the rules and regulations of the SEC, and we refer you to the omitted information. It is important for you to read and consider all of the information contained in this prospectus supplement and the accompanying prospectus in making your investment decision. You should also read and consider the additional information incorporated by reference into this prospectus supplement and the accompanying prospectus. See “Where You Can Find More Information” in this prospectus supplement.

     Unless the context otherwise requires or indicates, all references in this prospectus supplement to (i) “we,” “our,” “us” and the “Company” mean Gladstone Commercial Corporation, a Maryland corporation, and its consolidated subsidiaries; (ii) “Operating Partnership” mean Gladstone Commercial Limited Partnership, a subsidiary of the Company and a Delaware limited partnership; (iii) “Adviser” mean Gladstone Management Corporation, a Delaware corporation and our external adviser; (iv) “Administrator” mean Gladstone Administration, LLC, a Delaware limited liability company and our external administrator; (v) “Dealer Manager” mean Gladstone Securities, LLC, a Connecticut limited liability company and the dealer manager for this offering; (vi) “Listed Common Stock” mean our common stock, par value $0.001 per share, which is listed on the NASDAQ Global Select Market under the symbol “GOOD;” (vii) “Senior Common Stock” mean our senior common stock, par value $0.001 per share; (viii) “Series A Preferred Stock” mean our 7.75% Series A Cumulative Redeemable Preferred Stock, par value $0.001 per share, which is listed on the NASDAQ Global Select Market under the symbol “GOODP;” and (ix) “Series B Preferred Stock” mean our 7.50% Series B Cumulative Redeemable Preferred Stock, par value $0.001 per share, which is listed on the NASDAQ Global Select Market under the symbol “GOODO.”

     This prospectus supplement does not constitute an offer to sell, nor is it seeking a solicitation of an offer to buy these securities, to any person in any jurisdiction where such an offer or solicitation would be unlawful.

SUMMARY

     This summary is not complete and may not contain all of the information that may be important to you in deciding whether to invest in shares of Senior Common Stock. To understand this offering fully prior to making an investment decision, you should carefully read this entire prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein and therein, including the sections captioned “Risk Factors” beginning on page S-23 of this prospectus supplement and in our most recent Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and other information that we file from time to time with the SEC which are incorporated by reference into this prospectus supplement and the accompanying prospectus.

The Company

     We were incorporated under the Maryland General Corporation Law on February 14, 2003 primarily for the purpose of investing in and owning net leased industrial and commercial real estate property and selectively making long-term industrial and commercial mortgage loans to creditworthy entities. We have elected to be treated as a real estate investment trust, or REIT, for federal income tax purposes. We are a publicly-traded REIT because shares of our Listed Common Stock, Series A Preferred Stock and Series B Preferred Stock trade on the NASDAQ Global Select Market, or NASDAQ, under the trading symbols “GOOD,” “GOODP” and “GOODO,” respectively.

     Most of the properties that we own are leased to a wide cross section of tenants ranging from small businesses to large public companies, many of which do not have publicly-rated debt. We have in the past entered into, and intend in the future to enter into, purchase agreements for properties that have triple net leases with terms of 10 to 15 years and built-in rental increases. Under a triple net lease, the tenant is required to pay all operating, maintenance and insurance costs and real estate taxes with respect to the leased property. We actively communicate with buyout funds, real estate brokers and other third parties to identify properties for potential acquisition, disposition or mortgage financing in an effort to build our portfolio. As of December 31, 2010, we owned 65 properties located in 21 states that contained approximately 6.8 million rentable square feet.

     We conduct substantially all of our activities, including the ownership of all of our properties, through our Operating Partnership. We control our Operating Partnership through our ownership of (i) GCLP Business Trust II, a subsidiary of the Company and a Massachusetts business trust that holds the sole general partnership interest in our Operating Partnership, and (ii) GCLP Business Trust I, a subsidiary of the Company and a Massachusetts business trust that holds all of the limited partnership interests in our Operating Partnership.

     Our Operating Partnership is also the sole member of Gladstone Commercial Lending, LLC, a subsidiary of the Company and a Delaware limited liability company that was formed to conduct all of our operations related to real estate mortgage loans. As of December 31, 2010, we had no mortgage loans outstanding.

     Our Adviser is an affiliated registered investment adviser under the Investment Advisers Act of 1940. Our Adviser is headquartered in McLean, Virginia, a suburb of Washington, D.C., and also has offices in New York, New York, Greenwich, Connecticut, Chicago, Illinois, Dallas, Texas and Atlanta, Georgia. Our Adviser is responsible for managing our business on a daily basis and for identifying and making acquisitions and dispositions that it believes satisfy our investment criteria.

     Our executive offices are located at 1521 Westbranch Drive, Suite 200, McLean, Virginia 22102, and our telephone number is (703) 287-5800. Our website address is http://www.GladstoneCommercial.com. However, the information located on, or accessible from, our website is not, and shall not be deemed to be, a part of this prospectus supplement or the accompanying prospectus or incorporated into any other filings that we make with the SEC.

Our Adviser

     We are externally advised by our Adviser and have entered into an amended and restated investment advisory agreement, or Advisory Agreement, with our Adviser pursuant to which our Adviser is responsible for managing our assets and liabilities, operating our business on a daily basis and identifying, evaluating, negotiating and consummating investment transactions consistent with our investment policies as determined by our Board of

Directors, or Board. The directors, officers and employees of our Adviser have significant experience in making investments in and lending to businesses of all sizes, including investing in real estate and making mortgage loans.

     Mr. David Gladstone, our Chairman and Chief Executive Officer, is also the Chairman, Chief Executive Officer and sole stockholder of our Adviser. Mr. Terry Lee Brubaker, our Vice Chairman, Secretary and Chief Operating Officer and a member of our Board, and Mr. George Stelljes III, our President and Chief Investment Officer and a member of our Board, also serve in the same capacities for our Adviser. For further discussion of the credentials of our executive officers, see “Proposal 1 — Election of Directors” in our Definitive Proxy Statement on Schedule 14A as filed with the SEC on March 25, 2011.

     Our Adviser maintains an investment committee that approves each of our investments, and this investment committee is currently comprised of Messrs. Gladstone, Brubaker and Stelljes. We believe that our Adviser’s investment committee review process provides us with a unique competitive advantage over other REITs because of the substantial experience and perspective that the members possess in evaluating the blend of corporate credit, real estate and lease terms that combine to provide an acceptable risk for our investments.

     Our Adviser’s board of directors has empowered its investment committee to authorize and approve our investments, subject to the terms of the Advisory Agreement. Before we acquire any property, the transaction is reviewed by our Adviser’s investment committee to ensure that, in its view, the proposed transaction satisfies our investment criteria and is within the parameters of our investment policies. Approval by our Adviser’s investment committee is generally the final step in the property acquisition approval process, although the separate approval of our Board is required in certain circumstances.

Our Advisory Agreement

     The Advisory Agreement provides for an annual base management fee equal to 2.0% of our total stockholders’ equity less the recorded value of any shares of preferred stock, and a performance-based incentive fee based upon funds from operations, or FFO. Our Adviser does not charge acquisition or disposition fees when we acquire or dispose of properties as is common with other externally-advised REITs. Furthermore, there are no fees charged when our Adviser secures long-term or short-term credit or arranges mortgage loans on our properties.

     For purposes of calculating the performance-based incentive fee, FFO includes any realized capital gains and capital losses, less any distributions paid on preferred stock and Senior Common Stock, but FFO does not include any unrealized capital gains or losses. The incentive fee would reward our Adviser if our quarterly FFO, before giving effect to any incentive fee, or the Pre-Incentive Fee FFO, exceeds 1.75%, or the Hurdle Rate, of total stockholders’ equity less the recorded value of any shares of preferred stock. We pay our Adviser an incentive fee with respect to our Pre-Incentive Fee FFO in each calendar quarter as follows:

	•		no incentive fee in any calendar quarter in which our Pre-Incentive Fee FFO does not exceed the Hurdle Rate (7% annualized);
	•		100% of the amount of the Pre-Incentive Fee FFO that exceeds the Hurdle Rate but is less than 2.1875% in any calendar quarter (8.75% annualized); and
	•		20% of the amount of our Pre-Incentive Fee FFO that exceeds 2.1875% in any calendar quarter (8.75% annualized).

Quarterly Incentive Fee Based upon FFO

Pre-incentive fee FFO
(expressed as a percentage of total common stockholders’ equity)

Percentage of pre-incentive fee FFO allocated to incentive fee

     The incentive fee may be reduced because of a covenant in our New Line of Credit (as defined below) which limits distributions to our stockholders to no more than 95% of our FFO.

Our Administrator

     Our external administrator is Gladstone Administration, LLC, and we have entered into an administration agreement, or Administration Agreement, with our Administrator pursuant to which we pay separately for our allocable portion of our Administrator’s overhead expenses in performing its obligations to us, including, but not limited to, rent and our allocable portion of the salaries and benefits expenses attributable to our Administrator’s employees including our chief financial officer, chief compliance officer, internal counsel, treasurer, investor relations and their respective staffs.

Our Affiliated Dealer Manager

     Gladstone Securities, LLC, our Dealer Manager is a securities broker-dealer registered with the SEC and a member firm of the Financial Industry Regulatory Authority, Inc., or FINRA, and the Securities Investor Protection Corporation, or SIPC. The Dealer Manager specializes in raising public and private equity funding for U.S. and European fund managers and performing various investment banking activities. Accordingly, the Dealer Manager will provide certain sales, promotional and marketing services to us in connection with the distribution of shares of Senior Common Stock in this offering.

     The Dealer Manager is affiliated with us and is owned by David Gladstone, our Chairman and Chief Executive Officer. Accordingly, you will not have the benefit of an independent due diligence review and investigation of the type normally performed by an independent underwriter in connection with an underwritten offering of securities. See “Risk Factors” in this prospectus supplement.

Our Structure

     Below is a chart showing our organizational structure and the entities that are affiliated with our Company.

Our Investment Objectives and Strategy

     Our principal investment objectives are to generate income from rental properties and, to a much lesser extent, mortgage loans, which we use to fund our continuing operations and to pay out monthly cash distributions to our stockholders. We intend to grow the distributions paid to our stockholders over time and to increase the value of our Listed Common Stock, Senior Common Stock, Series A Preferred Stock and Series B Preferred Stock. Our primary strategy to achieve our investment objectives is to invest in and own a diversified portfolio of net leased industrial and commercial real estate that we believe will produce stable cash flow and will increase in value. We expect to sell certain of our properties from time to time when our Adviser determines that doing so would be advantageous to us and our stockholders. We also expect to occasionally make mortgage loans that are secured by income-producing commercial or industrial real estate and that may have some form of equity participation.

     Our strategy includes the use of leverage so that we may make more investments than would otherwise be possible in order to maximize potential returns to stockholders. We are not limited with respect to the amount of leverage that we may use for the acquisition of any specific property. We intend to use non-recourse mortgage financing that will allow us to limit our loss exposure on any property to the amount of equity invested in such property. However, the market for long-term mortgages has been limited as the collateralized mortgage backed securities, or CMBS, market has experienced significant disruption. With the stresses upon the CMBS market, many banks are not lending on commercial real estate as they are no longer able to sell these loans to the CMBS market, and many banks are not willing or able to keep these loans on their balance sheets. In addition, many banks have significantly curtailed their general lending practices, as they are having difficulty valuing the underlying real estate in the current market. We are, however, beginning to see banks that are willing to issue medium-term mortgages, between two and five years, on substantially less favorable terms than were previously available. Consequently, we intend to continue to focus on using medium-term mortgages to finance our real estate activities until the market for long-term mortgages returns.

     In addition to the disruption of the CMBS market place, we expect that the number of commercial mortgage loans coming due over the next seven years will create a significant investment opportunity as these obligations mature. We believe that we will be well-positioned to provide liquidity in the form of sale-leasebacks to small- and medium-sized business owners as a solution for their maturing mortgages. We may also be able to purchase some mortgages at discount prices. The chart below illustrates the scheduled maturity of commercial real estate mortgages in the United States through 2017:

Commercial Real Estate Mortgage Maturities

Our Investment Approach and Track Record

     We will continue to utilize the same conservative investment approach for sale-leaseback transactions that we have employed since our inception. We provide real estate liquidity for small- and medium-sized companies. We use our existing deal flow from strategic relationships with leveraged buyout funds and senior lenders, as well as our extensive relationships in the real estate market, to identify triple net sale-leaseback opportunities. We concentrate on conventional real estate and seek to enter into leases with profitable companies in the light manufacturing, specialty manufacturing, software, business services, medical services, retail and data industries. We have not invested in hotels, but we may in the future if the economy improves. We have not invested in housing or other sectors, such as apartment buildings.

     We focus on acquiring properties, such as headquarters or key operating facilities, that are critical to the long-term success of a business, which we believe increases the likelihood that the tenants remain current on their rent payments. Prior to making an investment, we conduct reasonable due diligence investigations of both the tenant and the property.

     As of December 31, 2010, we had total gross and net investments of approximately $446 million and $384 million, respectively, in 65 properties. As of December 31, 2010, all tenants were paying as agreed. As of December 31, 2010, we had two buildings that were not occupied, and we are currently seeking tenants for those properties; however, our remaining properties were approximately 97% leased, and the weighted average yield on our occupied portfolio was approximately 9.6%. The weighted average yield on our occupied portfolio is calculated by taking the annualized straight-line rents, reflected as rental income on our consolidated statements of operations, or mortgage interest payments, reflected as interest income from mortgage notes receivable on our consolidated statements of operations, of each acquisition or mortgage loan as a percentage of the acquisition or loan price, as applicable. The weighted average yield does not take into account the interest expense incurred on the financings placed on our properties.

     Since inception, we have never reduced our per-share distributions nor have we missed making a scheduled distribution to our stockholders. Our Board has accepted our Adviser’s offer to unconditionally, irrevocably and

voluntarily waive on a quarterly basis a portion of the incentive fee which has allowed us to maintain this level of distributions to our stockholders. These waivers were applied through December 31, 2010, and any waived fees may not be recouped by our Adviser in the future. Our Adviser has indicated that it intends to continue to waive all or a portion of the incentive fee in order to support distributions to our stockholders; however, our Adviser is not required to issue any waiver, either in whole or in part. From inception through December 31, 2010, we have paid out a total of $73.3 million, or $8.40 per share, in distributions to holders of shares of Listed Common Stock. From inception through December 31, 2010 (the latest date for which such information is available), only 19.1% of the distributions paid to holders of shares of Listed Common Stock were deemed to be taxable dividends, in part because of the depreciation of the buildings that we own. The remaining 80.9% of the distributions paid to holders of shares of Listed Common Stock were deemed to be a return of capital to the extent of each individual stockholder’s tax basis in the shares, and any distribution in excess of this amount was deemed a capital gain (either long term or short term depending upon the holding period of the shares). We cannot, however, guarantee that past results will be replicated in future years. Additionally, because each investor’s tax considerations are different, we urge you to consult with your tax adviser prior to investing in shares of Senior Common Stock.

     Distributions paid in respect of shares of Senior Common Stock must be paid before distributions are paid on shares of Listed Common Stock but after distributions are paid on shares of Series A Preferred Stock and Series B Preferred Stock. For the year ended December 31, 2010, the distributions paid in respect of shares of Listed Common Stock were $12.9 million, and the total FFO available to holders of shares of Listed Common Stock was approximately $14.1 million. This means that $14.1 million would have been available to pay to holders of shares of Senior Common Stock before any payment to the holders of shares of Listed Common Stock. This further means that, if all of the shares of Senior Common Stock contemplated to be sold in this offering had been outstanding at the end of December 31, 2010, the indicated distribution of $3.2 million in respect of shares of Senior Common Stock would have been covered in payment by 4.4 times. However, we cannot guarantee that past results will be replicated in future years.

     Net loss to common stockholders for the three months ended December 31, 2010 was approximately $232,000, or $0.03 per share, and net income available to common stockholders for the year ended December 31, 2010 was approximately $814,000, or $0.09 per share. A reconciliation of FFO for the quarters and years ended December 31, 2010 and 2009 to net income, which the Company believes is the most directly comparable GAAP measure to FFO, and a computation of basic and diluted FFO per weighted average share of common stock and basic and diluted net income per weighted average share of common stock is set forth below:

		For the three months ended December 31,								For the year ended December 31,
		2010				2009				2010				2009
Net income		$	806,870			$	1,117,553			$	4,927,908			$	4,603,048
Less: Distributions attributable to preferred and senior common stock			(1,038,830	)			(1,023,439	)			(4,113,800	)			(4,093,750	)
Net (loss) income available to common stockholders			(231,960	)			94,114				814,108				509,298
Add: Real estate depreciation and amortization, including discontinued operations			3,271,403				3,286,133				13,263,814				13,171,703
Less: Gain on sale of real estate			—				—				—				(160,038	)
FFO available to common stockholders		$	3,039,443			$	3,380,247			$	14,077,922			$	13,520,963
Weighted average shares outstanding — basic			8,562,777				8,563,264				8,576,303				8,563,264
Weighted average shares outstanding — diluted			8,577,173				8,563,264				8,601,153				8,563,264
Basic net (loss) income per weighted average share of common stock		$	(0.03	)		$	0.01			$	0.09			$	0.06
Diluted net (loss) income per weighted average share of common stock		$	(0.03	)		$	0.01			$	0.09			$	0.06
Basic FFO per weighted average share of common stock		$	0.35			$	0.39			$	1.64			$	1.58
Diluted FFO per weighted average share of common stock		$	0.35			$	0.39			$	1.64			$	1.58
Distributions declared per share of common stock		$	0.375			$	0.375			$	1.50			$	1.50
Percentage of FFO paid per share of common stock			106	%			95	%			91	%			95	%

producing real estate historically has not depreciated on the basis determined under GAAP. FFO, as defined by NAREIT, is net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. FFO does not represent cash flows from operating activities determined in accordance with GAAP and should not be considered an alternative to net income as an indication of the Company’s performance or to cash flow from operations as a measure of liquidity or ability to make distributions. The Company believes that FFO per share provides investors with an additional context for evaluating the Company’s financial performance and as a supplemental measure to compare the Company to other REITs; however, comparisons of the Company’s FFO to the FFO of other REITs may not necessarily be meaningful due to potential differences in the application of the NAREIT definition used by such other REITs. To learn more about FFO, please refer to the Company’s Form 10-K for the year ended December 31, 2010, as filed with the SEC on March 8, 2011.

     FFO available to common stockholders is FFO adjusted to subtract preferred share and senior common share distributions.

Our Properties

     As of December 31, 2010, we owned 65 properties located in 21 states that contained approximately 6.8 million rentable square feet. The following table provides certain summary information about our 65 properties as of December 31, 2010. We own each of these properties in fee simple with the exception of our properties located in Tulsa Oklahoma and Fridley, Minnesota which are operated under ground leases:

																		Total Rental				Total Rental
																		Income for the				Income per
		Year Built/				Date of				Rentable								Year Ended				Occupied				Year of Lease
Property		Improvements				Purchase				Square Feet				Occupancy				December 31, 2010				Square Foot				Expiration
208 South Rogers Lane (Raleigh, NC)			1997				12/23/2003				58,926				100	%			624,118				10.59				2015
3874 Highland Park NW (Canton, OH)			1994				1/30/2004				54,018				100	%			337,625				6.25				2014
260 Springside Drive (Akron, OH) (2)			1968/1999				4/29/2004				83,891				100	%			1,026,692				12.24				2015
5815 Westpark Drive (Charlotte, NC)			1984/1995				6/30/2004				64,500				100	%			1,006,553				15.61				2019
171 Great Oak Drive (Canton, NC)			1998				7/6/2004				228,000				100	%			600,145				2.63				2024
Rt. 219, Tax Par. No. 33-251-0246 (Snyder Township, PA)			1991				8/5/2004				290,000				100	%			930,522				3.21				2014
9698 Old US Hwy. 52 (Lexington, NC)			1986				8/5/2004				154,000				100	%			424,964				2.76				2014
9100 Highway 290 East (Austin, TX)			2001				9/16/2004				51,933				100	%			751,333				14.47				2015
13 Industrial Park Drive (Mt. Pocono, PA)			1995/1999				10/15/2004				223,275				100	%			637,025				2.85				2021
6550 First Park Ten Blvd. (San Antonio, TX)			1999				2/10/2005				60,245				100	%			769,793				12.78				2014
4630 Journal Street (Columbus, OH)			1995				2/10/2005				39,000				100	%			308,105				7.90				2015
199 Sing Sing Road (Big Flats, NY)			2001				4/15/2005				120,000				100	%			644,252				5.37				2013
2525 North Woodlawn Ave. (Wichita, KS)			2000				5/18/2005				69,287				100	%			1,109,217				16.01				2012
725 & 737 Great Southwest Pkwy (Arlington, TX)			1966				5/26/2005				64,000				100	%			580,635				9.07				2013
4032 Linden Avenue (Dayton, OH)			1956				6/30/2005				59,894				100	%			268,042				4.48				2018
81 Corbett Way (Eatontown, NJ)			1991				7/7/2005				30,268				100	%			537,321				17.75				2024

																		Total Rental				Total Rental
																		Income for the				Income per
		Year Built/				Date of				Rentable								Year Ended				Occupied				Year of Lease
Property		Improvements				Purchase				Square Feet				Occupancy				December 31, 2010				Square Foot				Expiration
17 & 20 Veronica Avenue (Franklin Township, NJ)			1978				7/11/2005				183,000				100	%			975,229				5.33				2020
150 Ridgeview Center Drive (Duncan, SC)			1984/2001/2007				7/14/2005				222,670				100	%			1,539,286				6.91				2020
170 Ridgeview Center Drive (Duncan, SC)			1984/2001/2007				7/14/2005				55,350				100	%			382,627				6.91				2020
5656 Campus Parkway (Hazelwood, MO)			1977				8/5/2005				51,155				100	%			289,928				5.67				2012
914 Wohlert Street (Angola, IN)			1982				9/2/2005				52,080				100	%			125,202				2.40				2020
800 Growth Parkway (Angola, IN)			1998				9/2/2005				50,000				100	%			125,202				2.50				2020
802 East 11th Street (Rock Falls, IL)			1988				9/2/2005				52,000				100	%			125,202				2.41				2020
2 Opportunity Way (Newburyport, MA)			1994				10/17/2005				86,308				100	%			891,492				10.33				2015
255 Spring Street (Clintonville, WI)			1992				10/31/2005				291,142				100	%			575,006				1.98				2020
5700 Lee Road (Maple Heights, OH)			1974				12/21/2005				347,218				100	%			1,282,582				3.69				2015
7545 Midlothian Turnpike (Richmond, VA) (2)			1972				12/30/2005				42,213				0	%(2)			421,672				9.99				2010
3930 Sunforest Court (Toledo, OH)			1979				12/30/2005				23,368				100	%			327,152				14.00				2020
75 Canal Street (South Hadley, MA) (2)			1978				2/15/2006				150,000				0	%(2)			179,837				1.20				2010
2101 Fox Drive (Champaign, IL)			1996				2/21/2006				20,400				100	%			295,220				14.47				2013
2109 Fox Drive (Champaign, IL)			1996				2/21/2006				40,000				100	%			578,863				14.47				2013
2215 Fox Drive (Champaign, IL)			1996				2/21/2006				25,000				100	%			361,790				14.47				2013
2301 Fox Drive (Champaign, IL)			1996				2/21/2006				22,862				100	%			330,849				14.47				2013
2470 Highcrest Road (Roseville, MN)			1964				2/21/2006				359,540				100	%			3,030,458				8.43				2012
12000 Portland Avenue South (Burnsville, MN)			1984				5/10/2006				114,100				100	%			1,234,662				10.82				2015
14701 Anthony Avenue (Menomonee Falls, WI)			1986/2000				6/30/2006				125,692				100	%			775,274				6.17				2016
1025 Birdsong Drive (Baytown, TX)			1997				7/11/2006				12,000				100	%			254,121				21.18				2013
42400 Merrill Road (Sterling Heights, MI)			1979/1989				9/22/2006				532,869				100	%			1,166,654				2.19				2016
2150, 2200 Pinson Valley Pkwy (Birmingham, AL)			1961/1980				9/29/2006				63,514				100	%			271,173				4.27				2016
2325 West Fairview Avenue (Montgomery, AL)			1962/1989				9/29/2006				29,472				100	%			125,830				4.27				2016
5221 N Highway 763 (Columbia, MO)			1978				9/29/2006				16,275				100	%			69,486				4.27				2016
4690 Parkway Drive (Mason, OH)			2002				1/5/2007				60,000				100	%			681,270				11.35				2013
201 South Rogers Lane (Raleigh, NC)			1994				2/16/2007				115,500				100	%			717,203				6.21				2015

																		Total Rental				Total Rental
																		Income for the				Income per
		Year Built/				Date of				Rentable								Year Ended				Occupied				Year of Lease
Property		Improvements				Purchase				Square Feet				Occupancy				December 31, 2010				Square Foot				Expiration
1110 West Tenkiller (Tulsa, OK) (4)			2004				3/1/2007				238,310				100	%			1,565,794				6.57				2019
3725 East 10th Court (Hialeah, FL)			1956/1992				3/9/2007				132,337				100	%			995,048				7.52				2022
554 Clark Road (Tewksbury, MA)			1985/1989				5/17/2007				102,200				100	%			922,926				9.03				2017
5324 Natorp Boulevard (Mason, OH)			2007				7/1/2007				21,264				100	%			583,131				27.42				2027
7282 William Barry Boulevard (Cicero, NY)			2005				9/6/2007				71,880				100	%			529,743				7.37				2020
1515 Arboretum Drive SE (Grand Rapids, MI)			2001				9/28/2007				63,235				100	%			1,068,550				16.90				2025
4 Territorial Court (Bollingbrook, IL)			2002				9/28/2007				55,869				100	%			619,296				11.08				2014
2349 Lawrenceville Highway (Decatur, GA)			1989				12/13/2007				16,740				100	%			404,159				24.14				2026
2341 Lawrenceville Highway Decatur, GA)			1989				12/13/2007				4,372				100	%			105,555				24.14				2026
2339 Lawrenceville Highway (Decatur, GA)			1989				12/13/2007				5,488				100	%			132,498				24.14				2026
311 Phillip Boulevard (Lawrenceville, GA)			2005				12/13/2007				12,412				100	%			349,871				28.19				2026
2096 McGee Road (Snellville, GA)			1986				12/13/2007				3,800				100	%			90,815				23.90				2026
7174 Wheat Street (Covington, GA)			2000				12/13/2007				5,000				100	%			119,493				23.90				2026
1055 Haw Creek Parkway (Cumming, GA)			2004				12/13/2007				13,919				100	%			380,410				27.33				2026
1293 Wellbrook Circle (Conyers, GA)			1994				12/13/2007				6,400				100	%			152,951				23.90				2026
425 Gateway Drive (Reading, PA)			2007				1/29/2008				42,900				100	%			716,666				16.71				2028
6499 University Avenue NE (Fridley, MN) (4)			1985/2006				2/26/2008				74,160				100	%			890,432				12.01				2013
7528 Auburn Road (Concord Township, OH)			1957/2008				3/31/2008				273,300				100	%			1,724,133				6.31				2028
10021 Rodney Street (Pineville, NC)			1985				4/30/2008				74,950				100	%			431,424				5.76				2028
28305 State Route 7 (Marietta, OH)			1992/2007				8/29/2008				223,458				100	%			896,743				4.01				2028
400 Highpoint Drive (Chalfont, PA)			1987				8/29/2008				67,200				100	%			757,571				11.27				2016
1520 Albany Place SE (Orange City, IA) (3)			1990				12/15/2010				487,121				100	%			53,215				2.37				2026
Totals											6,791,280							$	41,180,036

     Diversity Across Industries

     Our Adviser seeks to diversify our portfolio to avoid dependence upon any one particular tenant, geographic market or tenant industry. By diversifying our portfolio, our Adviser intends to reduce the adverse effect on our portfolio of a single under-performing investment or a downturn in any particular industry or geographic market. Our largest tenant as of December 31, 2010 comprised approximately 7.4% of our total rental income, and our largest concentration of properties was located in Ohio, which accounted for approximately 18.1% of our total rental income.

     The table below reflects the breakdown of our total rental income by tenant industry classification for the year ended December 31, 2010:

						Percentage
		Rental				of Rental
Industry Classification		Income				Income
Electronics		$	6,165,788				15.0	%
Healthcare, Education & Childcare			6,145,415				14.9	%
Telecommunications			5,447,365				13.3	%
Diversified/Conglomerate Manufacturing			3,664,686				8.9	%
Chemicals, Plastics & Rubber			3,130,133				7.6	%
Machinery			2,332,672				5.7	%
Containers, Packaging & Glass			2,330,715				5.7	%
Beverage, Food & Tobacco			2,188,793				5.2	%
Printing & Publishing			2,187,504				5.3	%
Buildings & Real Estate			2,075,103				5.0	%
Oil and Gas			1,282,582				3.1	%
Personal & Non-Durable Consumer Products			1,228,100				2.9	%
Automobile			1,166,654				2.8	%
Personal, Food & Miscellaneous Services			575,006				1.4	%
Home and Office Furnishings			529,743				1.3	%
Insurance			421,672				1.0	%
Diversified/Conglomerate Services			308,105				0.9	%
		$	41,180,036				100.0	%

     Diversity in Location

     The Company has properties located in 21 states. The following table summarizes the geographic locations of our properties for leases in place as of December 31, 2010:

										Rental Revenue for
						Number of				the Year Ended				% of Annualized
State		Square Feet				Leases				December 31, 2010				Base Rent
Ohio			1,185,411				11			$	7,435,475				18.1	%
Minnesota			547,800				3				5,155,552				12.5	%
North Carolina			695,876				6				3,804,407				9.2	%
Pennsylvania			623,375				4				3,041,784				7.4	%
Texas			188,178				4				2,355,882				5.7	%
Michigan			596,104				2				2,235,204				5.4	%
Illinois			164,131				2				2,186,018				5.3	%
Massachusetts			338,508				3				1,994,255				4.8	%
All Other States			2,451,897				17				12,971,459				31.6	%
Total			6,791,280				52			$	41,180,036				100.0	%

Our Leases

     We have in the past entered into, and intend in the future to enter into, purchase agreements for real estate that have triple net leases with terms of 10 to 15 years and with lease escalations that are tied to the Consumer Price

Index (with minimums) or that have fixed escalations. Under a triple net lease, the tenant is responsible for the cost of repairs, maintenance, property taxes, utilities, insurance and other operating costs with respect to the leased property. In accordance with certain of our lease agreements, however, we may be responsible for the replacement of specific structural components of a property such as the roof of the building or the parking lot. We seek to secure leases with tenants that our Adviser deems to be creditworthy prior to or at the time of the acquisition of a property.

     The following table summarizes the lease expirations by year for our properties for leases in place as of December 31, 2010:

														Percentage of
										Rental Revenue for				Annualized Base
Year of Lease						Number of				the Year Ended				Rental Revenue as of
Expiration		Square Feet				Leases				December 31, 2010				December 31, 2010
2010			192,213				2			$	601,509				1.5	%
2011			—				0				—				0.0	%
2012			479,982				3				4,429,603				10.8	%
2013			438,422				6				4,617,432				11.2	%
2014			614,132				5				3,082,200				7.5	%
2015			896,876				8				6,836,187				16.6	%
2016			835,022				4				3,165,988				7.7	%
2017			102,200				1				922,926				2.2	%
2018			59,894				1				268,042				0.7	%
2019+			3,172,539				22				17,256,149				41.8	%
Total			6,791,280				52			$	41,180,036				100.0	%

Our Mortgage Loans

     Although we expect such investments to be made sparingly, we may elect to structure our investment in a particular property as a mortgage loan secured by the property in situations where a standard net lease transaction would have an adverse tax impact on the seller of a property or would otherwise be inappropriate for us. We anticipate that most of our lending transactions will be loans secured by industrial or commercial property. We have not in the past, and we do not anticipate that we will in the future, invest in residential mortgages. Our Adviser will attempt to structure mortgage loans in a manner that would provide us with current income substantially similar to that which we could expect to receive had the investment been structured as a net lease transaction.

     To the extent that we invest in mortgage loans, we will generally originate those loans. However, we may also purchase mortgage loans from other lenders if such transactions are consistent with our investment objectives. Our Adviser will service the mortgage loans in our portfolio by monitoring the collection of monthly principal and interest payments on our behalf.

     On April 15, 2005, we originated a mortgage loan in the amount of $10.0 million that was collateralized by an office building located in McLean, Virginia in which our Adviser and Administrator are subtenants. The mortgage loan was originally set to mature in May 2017, though, on July 22, 2010, it was fully repaid. We received $3.3 million of additional income and prepayment fees in connection with the early payment and the proceeds were used to repay a portion of our line of credit. As of December 31, 2010, we had no mortgage loans outstanding.

Our New Line of Credit

     In December 2010, we procured a new line of credit, or the New Line of Credit, with Capital One, N.A. serving as a revolving lender, a letter of credit issuer and as an administrative agent and Branch Banking and Trust Company serving as a revolving lender and a letter of credit issuer. The New Line of Credit replaced our prior $50 million senior secured revolving credit facility which was scheduled to mature on December 29, 2010, or the Prior Line of Credit. The New Line of Credit provides for a senior secured revolving credit facility of up to $50 million, with a standby letter of credit sublimit of up to $20 million. The New Line of Credit is subject to a maximum borrowing base calculation which may, from time to time, affect the maximum amount available to be drawn. The New Line of Credit may, upon satisfaction of certain conditions, be expanded up to $75 million.

     The New Line of Credit has a term of three years and is scheduled to mature on December 28, 2013. The interest rate per annum applicable to the New Line of Credit is equal to the London InterBank Offered Rate, or LIBOR, plus an applicable margin of up to three hundred basis points depending upon our leverage. Our leverage ratio used in determining the applicable margin for interest on the New Credit Line is recalculated quarterly. We paid an upfront fee of seventy-five basis points, and will be charged an annual fee of twenty-five basis points, on the $50 million commitment, which takes the place of an unused fee. We are required to pay a commission on all outstanding letters of credit at a per annum rate equal to the applicable margin for LIBOR loans under the New Line of Credit. Such letter of credit commission is payable quarterly in arrears. With respect to each letter of credit, we are also required to pay to the bank issuing such letter of credit a fronting fee equal to twenty basis points per annum times the face amount of the letter of credit.

     In connection with procuring the New Line of Credit, we repaid the $29.8 million outstanding balance of the Prior Line of Credit with funds drawn from the New Line of Credit and with existing cash. We incurred no early termination penalties or fees in connection with the repayment of outstanding balance of the Prior Line of Credit.

     The New Line of Credit currently has an outstanding balance of $5.2 million.

Our Employees

     We do not currently have any employees and do not expect to have any employees in the foreseeable future. Currently, services necessary for our business are provided by individuals who are employees of our Adviser and our Administrator pursuant to the terms of the Advisory Agreement and the Administration Agreement, respectively. Each of our executive officers is an employee or officer, or both, of our Adviser or our Administrator. No employee of our Adviser or our Administrator will dedicate all of his or her time to us. In addition, our Adviser maintains a team of 50 investment professionals and support staff. To the extent that we acquire more investments, we anticipate that the number of employees of our Adviser and our Administrator who devote time to our matters will increase.

Our Independent Directors

     As required under the NASDAQ Global Select Market listing standards, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by the board of directors. Our Board consults with our chief compliance officer and chief financial officer to ensure that its determinations are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent listing standards of NASDAQ Global Select Market, as in effect from time to time.

     Consistent with these considerations, after review of all relevant transactions or relationships between each director, or any of his or her family members, and us, our senior management and our independent auditors, our Board has affirmatively determined that the following five directors are independent directors within the meaning of the applicable NASDAQ Global Select Market listing standards: Messrs. Adelgren, Mead, Outland, Parker and Reilly and Ms. English. In making this determination, our Board found that none of these directors had a material or other disqualifying relationship with us. Mr. David Gladstone, our Chairman and Chief Executive Officer, Mr. Terry Lee Brubaker, our Vice Chairman, Chief Operating Officer and Secretary, Mr. George Stelljes III, our President and Chief Investment Officer, and Mr. Dullum, a Senior Managing Director of our Adviser, are not independent directors, however, as each is an employee of our Adviser.

     Our Board has four standing committees, which include an Audit Committee, a Compensation Committee, an Executive Committee and an Ethics, Nominating and Corporate Governance Committee. The directors who serve on each of these committees are each independent directors. See “Information Regarding the Board of Directors and Corporate Governance — Corporate Leadership Structure” in our Definitive Proxy Statement on Schedule 14A as filed with the SEC on March 25, 2011. The charters of each of these respective committees are posted on our corporate website at http://www.GladstoneCommercial.com.

Conflicts of Interest

     We are subject to various potential conflicts of interest arising out of our relationship with our Adviser, our Administrator and our other affiliates. Accordingly, we have adopted policies that are designed to reduce potential conflicts of interest. In addition, our directors are subject to certain provisions of Maryland law that are designed to minimize conflicts. For more information regarding potential conflicts of interest, see “Certain Relationships and Related Transactions — Conflicts of Interest” in this prospectus supplement.

ERISA Considerations

     The section captioned “ERISA Considerations” in this prospectus supplement describes some of the effects the purchase of shares of Senior Common Stock may have on IRAs, retirement plans subject to The Employee Retirement Income Security Act of 1974, or ERISA, and the Internal Revenue Code of 1986, as amended, or the Code, or similar entities. ERISA is a federal law that regulates the operation of certain tax-favored retirement plans. Any retirement plan trustee or individual considering purchasing shares of Senior Common Stock for a retirement plan, an individual retirement account, or similar entities should carefully read and consider the “ERISA Considerations” section of this prospectus supplement.

Our REIT Status

     We have historically operated and intend to continue to operate in a manner that will allow us to qualify as a REIT for federal income tax purposes. As a REIT, we generally will not be subject to federal income tax on income that we distribute to our stockholders. Under the Code, a REIT is subject to numerous organizational and operational requirements, including a requirement that it distribute at least 90% of its annual taxable income to its stockholders. If we fail to qualify for taxation as a REIT in any year, our income will be taxed at regular corporate rates, and we may be precluded from qualifying for taxation as a REIT for the four-year period following the taxable year in which we fail to so qualify. Even if we qualify as a REIT for federal income tax purposes, we may still be subject to state and local taxes on our income and property and to federal income and excise taxes on our undistributed income. For more information regarding our REIT status, see “Material U.S. Federal Income Tax Considerations” in the accompanying prospectus.

Restrictions on Stock Ownership

     Our charter contains restrictions on ownership of the shares that prevent any one person from owning (directly or under constructive ownership rules relevant for purposes of our qualification as a REIT) more than 9.8% of our outstanding capital stock (which includes Listed Common Stock, Senior Common Stock, Series A Preferred Stock and Series B Preferred Stock). These restrictions are designed to enable us to comply with ownership restrictions imposed on REITs by the Code.

Our Distribution Policy

     To maintain our qualification as a REIT, we are required to make aggregate annual distributions to our stockholders of at least 90% of our annual taxable income (which does not necessarily equal net income as calculated in accordance with generally accepted accounting principles in the United States of America). Our Board may authorize distributions in excess of those required for us to maintain our REIT status depending upon our financial condition and such other factors as our Board deems relevant from time to time.

     Because we own and depreciate real estate, the depreciation expense reduces our net income. As a result, we have in the past elected to pay distributions to our Listed Common Stockholders in excess of our net income.

QUESTIONS AND ANSWERS REGARDING THIS OFFERING

Q:		How is this offering being conducted?
A:		Through the Dealer Manager, we are offering 3,000,000 shares of Senior Common Stock at a price to the public of $15.00 per share in our primary offering on a “best efforts” basis. We are also offering 500,000 shares of Senior Common Stock to be issued pursuant to our distribution reinvestment plan at a price of $15.00 per share to those stockholders who elect to participate in such plan as described in this prospectus supplement. We reserve the right, however, to reallocate shares between our primary offering and our offering pursuant to our distribution reinvestment plan in our sole and absolute discretion.
Q:		How does a “best efforts” offering work?
A:		When shares are offered on a “best efforts” basis, a dealer manager and participating broker-dealers are only required to use their best efforts to sell the shares and have no firm commitment or obligation to purchase any of the shares. Therefore, we may not sell all or any of the shares of Senior Common Stock that we are offering pursuant this prospectus supplement.
Q:		How long will this offering last?
A:		The primary offering will commence on the date of this prospectus supplement and will terminate on the earlier of (i) two years from the date of this prospectus supplement, unless earlier terminated or extended by our Board, or (ii) the date on which 3,000,000 shares of Senior Common Stock are sold hereunder. If we extend the primary offering period beyond two years from the date of this prospectus supplement, we will update this prospectus supplement accordingly. We may extend the offering period for the 500,000 shares of Senior Common Stock being offered hereby under our distribution reinvestment plan beyond the termination of the primary offering and until we have sold all of the shares allocated to the plan through the reinvestment of distributions. We may terminate this offering at any time in our sole and absolute discretion.
Q:		What is “Senior Common Stock?”
A:		Senior Common Stock is a separate class of our capital stock that has priority over Listed Common Stock with respect to the payment of distributions and is pari passu with Listed Common Stock with respect to distributions upon liquidation. Senior Common Stock, however, is junior to our Series A Preferred Stock and our Series B Preferred Stock with respect to the payment of distributions, including distributions upon liquidation. Senior Common Stock is not listed or traded on a national securities exchange or listed for quotation on a national market, but Listed Common Stock, Series A Preferred Stock and Series B Preferred Stock are each listed on the NASDAQ Global Select Market under the trading symbols “GOOD,” “GOODP” and “GOODO,” respectively.
		For more information about our Senior Common Stock, Listed Common Stock, Series A Preferred Stock and Series B Preferred Stock, see “Description of Capital Stock” in the accompanying prospectus.
Q:		What are the main benefits of investing in shares of Senior Common Stock?
A:		We believe that an investment in shares of Senior Common Stock will provide the following benefits to investors:

	•		Distribution rate of $1.05 per share per annum, declared daily and paid at the rate of $0.0875 per share per month;
	•		Distributions paid on shares of Senior Common Stock must be paid before distributions are paid on shares of Listed Common Stock but after distributions are paid on shares of Series A Preferred Stock and Series B Preferred Stock;
	•		Distributions paid on shares of Senior Common Stock cannot be decreased and are cumulative;

	•		Shares of Senior Common Stock are generally not callable prior to five years after the completion of this offering;
	•		Holders of shares of Senior Common Stock have the option to convert such shares into shares of Listed Common Stock after five years;
	•		A valuation of shares of Senior Common Stock will be published every quarter beginning 18 months after the completion of this offering; and
	•		Quarterly repurchase of shares of Senior Common Stock from cash available from the sale of shares of Senior Common Stock under the distribution reinvestment plan.

Q:		Are there risks involved in an investment in shares of our Senior Common Stock?
A:		Yes. An investment in shares of Senior Common Stock involves substantial risks. In consultation with your financial and legal advisers, you should carefully consider, among other matters, the factors set forth in the section captioned “Risk Factors” on page S-23 of this prospectus supplement as well as in our most recent Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and other information that we may subsequently file from time to time with the SEC which are incorporated by reference into this prospectus supplement and the accompanying prospectus before deciding whether an investment in shares of Senior Common Stock is suitable for you.
Q:		Who can buy shares of Senior Common Stock?
A:		An investment in shares of Senior Common Stock involves substantial risks and is suitable only for persons of substantial financial means who have no need for immediate liquidity in or from this investment. Shares of Senior Common Stock will be sold to you only if you purchase a minimum of 200 shares having an aggregate minimum purchase price of $3,000. We reserve the right, however, to waive the minimum purchase requirement in our sole and absolute discretion.
Q:		For whom is an investment in shares of Senior Common Stock recommended?
A:		An investment in shares of Senior Common Stock may be appropriate if you (i) seek to diversify your personal portfolio with a real estate-based investment, (ii) seek to receive current income, (iii) seek to preserve capital, (iv) wish to obtain the benefits of potential long-term capital appreciation, and (v) are able to hold your investment for an extended period of time. Conversely, we caution persons who require near-term liquidity or guaranteed income or who seek a short-term investment to read this prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein before deciding whether an investment in shares of Senior Common Stock is suitable for you. See “Risk Factors” in this prospectus supplement.
Q:		Is there an established set of investor suitability standards that must be met in order to invest in shares of Senior Common Stock?
A:		No. Because of its status as a “covered security,” Senior Common Stock is not subject to the various state regulations that require specific suitability standards for purchasers of common stock of non-traded REITs. However, shares of Senior Common Stock may not be a suitable investment for all investors. The term “covered security” applies to securities exempt from state registration because of their oversight by federal authorities and national-level regulatory bodies pursuant to Section 18 of the Securities Act of 1933, as amended, or Securities Act. Generally, securities listed on national exchanges are the most common type of covered security exempt from state registration. A non-traded security can also be a covered security if it has a seniority greater than or equal to other securities from the same issuer that are listed on a national exchange such as the NASDAQ Global Select Market. Senior Common Stock is a covered security because it is senior to Listed Common Stock and, therefore, is exempt from state registration. Typically, securities issued by non-traded REITs do not meet the requirements necessary to be classified as covered securities, and, therefore, they are subject to state registration.

Q:		How do I subscribe for shares of Senior Common Stock?
A:		If you choose to purchase shares of Senior Common Stock in this offering, you must complete a Subscription Agreement, a form of which is appended to this prospectus supplement as Appendix A, specify the number of shares that you wish to purchase and pay for the shares at the time you subscribe.
		You should pay for your shares by check made payable to “BB&T, as escrow agent for Gladstone Commercial Corporation” or as otherwise instructed by the Dealer Manager or any participating broker-dealer. We will place your subscription payment in an account held by our escrow agent, BB&T Corporation, which funds will be held in trust for your benefit until the next closing date. We will hold two closings per month for our primary offering. The closing dates were randomly selected prior to the commencement of the primary offering, and will occur once between the 1st and 15th of each month and once between the 16th and last day of each month. On any such closing date, we will either accept or reject your subscription and (i) if accepted, we will transfer your funds to our general account, and you will receive a confirmation of your subscription, or (ii) if rejected, we will return your funds, without interest, within 10 business days thereafter. Subscriptions will be effective only upon our acceptance, and we reserve the right to reject any subscription either in whole or in part in our sole and absolute discretion.
Q:		May I make an investment through my IRA, simplified employee pension plan or other tax-favored account?
A:		Yes. You may make an investment through your individual retirement account, or IRA, a simplified employee pension plan, or SEP, or other tax-favored account. In making these investment decisions, you should consider, at a minimum, (i) whether the investment is in accordance with the documents and instruments governing your IRA, SEP or other account, (ii) whether the investment satisfies the fiduciary requirements associated with your IRA, SEP or other account, (iii) whether the investment will generate unrelated business taxable income, or UBTI, to your IRA, SEP or other account, (iv) whether there is sufficient liquidity for such investment under your IRA, SEP or other account, (v) the need to value the assets of your IRA, SEP or other account annually or more frequently, and (vi) whether the investment would constitute a prohibited transaction under applicable law. In addition, you should verify that the IRA or SEP trustee or custodian is willing to hold non-publicly traded securities. For more information regarding investments through an IRA, SEP or other tax-favored account, see “ERISA Considerations — Exception for Insignificant Participation by Benefit Plan Investors” in this prospectus supplement.
Q:		Will I receive a stock certificate?
A:		No. Shares of Senior Common Stock will be issued and maintained in book-entry form and registered in the name of the stockholder. You will not receive a stock certificate in respect of your shares of Senior Common Stock.
Q:		Is there any minimum investment required?
A:		Yes. Generally, you must purchase 200 shares of Senior Common Stock having an aggregate minimum purchase price of $3,000. We reserve the right, however, to waive the minimum purchase requirement in our sole and absolute discretion. Investors who already own shares of our Senior Common Stock can make additional purchases for less than the minimum investment. See “Plan of Distribution — Minimum Purchase Requirements” in this prospectus supplement.
Q:		How was the share price per share of the Senior Common Stock determined?
A:		Our Board arbitrarily determined the selling price of $15.00 per share for shares of Senior Common Stock, and such price bears no relationship to our book or asset values, our projections of book or asset values or any other established criteria for valuing issued or outstanding shares. Because the offering price is not based upon any independent valuation, the offering price may not be indicative of the proceeds that you would receive upon liquidation.

Q:		Do shares of Senior Common Stock have any voting rights?
A:		Except as set forth below or as otherwise required by law, holders of shares of Senior Common Stock will not have any voting rights. As long as any shares of Senior Common Stock remain outstanding, we will not, without the affirmative vote or consent of the holders of a least a majority of the shares of Senior Common Stock outstanding at the time, given in person or by proxy, either in writing or at a meeting (voting separately by class), amend, alter or repeal the provisions of our charter, whether by merger, consolidation or otherwise, so as to materially and adversely affect any right, preference, privilege or voting power of shares of Senior Common Stock or the holders thereof. Shares of Listed Common Stock issued upon conversion of shares of Senior Common Stock will have all voting rights associated with Listed Common Stock.
Q:		What is the distribution rate payable on shares of Senior Common Stock?
A:		Holders of shares of Senior Common Stock will be entitled to receive, subject to the preferential rights of the holders of Series A Preferred Stock and Series B Preferred Stock, when and as declared by our Board, distributions in an amount equal to $1.05 per share per year, declared daily and paid at the rate of $0.0875 per share per month.
Q:		When will I begin accruing distributions and how often will I receive them?
A:		You will begin accruing distributions immediately on a daily basis upon your investment in shares of Senior Common Stock. We expect to pay distributions monthly on or about the fifth business day of the month following the month in which such distributions are earned, with such payments beginning with the first calendar month after you purchase shares of Senior Common Stock. Your first distribution payment may include a partial accrued distribution payment. Although we generally intend to pay distributions on shares of Senior Common Stock monthly, because such distributions are cumulative, they will accrue, if not paid, and they must be paid before distributions are paid on shares of Listed Common Stock but after distributions are paid on shares of Series A Preferred Stock and Series B Preferred Stock.
Q:		Will the distributions that I receive be taxable as ordinary income?
A:		Generally, distributions that you receive, including distributions that are reinvested pursuant to our distribution reinvestment plan, will be taxed as ordinary income to the extent that they are attributable to our current or accumulated earnings and profits. As long as we qualify as a REIT, distributions made out of our current or accumulated earnings and profits generally will be taxable to our stockholders as ordinary dividend income. In determining the extent to which a distribution with respect to shares of our capital stock constitutes a dividend for federal income tax purposes, our earnings and profits will be allocated first to distributions with respect to our Series A Preferred Stock and Series B Preferred Stock, then to our Senior Common Stock, and then to our Listed Common Stock. As a result of certain noncash expenses, such as depreciation, our aggregate distributions for Senior Common Stock generally are expected to exceed our earnings and profits in future taxable years; however, no assurances can be given that this will be the case in any given year. In 2010, our aggregate distributions paid in respect of shares of our Listed Common Stock were approximately $12.9 million and our earnings and profits after dividend payments for Preferred Stock and Senior Common Stock were approximately $2.0 million. Accordingly, 100% of our distributions in respect of our Preferred Stock and Senior Common Stock was treated as taxable dividends, 16% of our distributions in respect of our Listed Common Stock was treated as taxable dividends, and 84% of our distributions in respect of our Listed Common Stock was treated as other than taxable dividends.
		Any distribution that is not made out of our current or accumulated earnings and profits will be deemed to be a return of capital to the extent of each individual stockholder’s tax basis in the stockholder’s shares. Any distribution in excess of an individual stockholder’s tax basis would, however, be deemed to be a capital gain. You will not have to pay taxes on the portion of your distribution that is treated as a return of capital. Such distributions will, however, reduce the tax basis of your investment and will not be subject to tax until your investment is sold or we are liquidated, at which time you would be taxed at capital gains rates (assuming the applicable holding period is met). Because each investor’s tax considerations are

		different, we suggest that you consult with your tax adviser prior to investing in shares of Senior Common Stock. Additionally, we cannot guarantee that past results will be replicated in future years.
		For more information regarding the tax consequences of purchasing shares of Senior Common Stock, see “Additional Material U.S. Federal Income Tax Considerations” in this prospectus supplement and “Material U.S. Federal Income Tax Considerations” in the accompanying prospectus.
Q:		May I reinvest my distributions?
A:		Yes. Holders of shares of Senior Common Stock will have the option of participating in our distribution reinvestment plan by checking the appropriate box on the Subscription Agreement or by filling out an enrollment form that we will provide to you upon your request. You may purchase shares of Senior Common Stock under our distribution reinvestment plan for $15.00 per share, subject to certain limitations. A copy of our Senior Common Stock distribution reinvestment program is appended to this prospectus supplement as Appendix B.
Q:		Can you call my shares of Senior Common Stock for redemption?
A:		Yes; however, we may not call your shares of Senior Common Stock for redemption prior to five years after the completion of this offering except in certain limited circumstances relating to maintaining our ability to qualify as a REIT. After the fifth anniversary of the completion of this offering, the Senior Common Stock will be callable for redemption for cash at our option, in whole or part, at a redemption price equal to $15.30 per share plus accrued and unpaid distributions. You may exchange your shares of Senior Common Stock for shares of Listed Common Stock at any time after you have held them for at least five years and before we call them. See “Questions and Answers Regarding This Offering — May I exchange my shares of Senior Common Stock for shares of Listed Common Stock?” below.
Q:		May I exchange my shares of Senior Common Stock for shares of Listed Common Stock?
A:		Yes, after you have held them for at least five years. Holders of shares of Senior Common Stock will have the right, but not the obligation, following the fifth anniversary of the issuance of such shares proposed to be exchanged to exchange any or all of such shares of Senior Common Stock for shares of Listed Common Stock. The exchange ratio, or the Exchange Ratio, will be calculated by dividing $15.00 (the value assigned to each share of Senior Common Stock) by the greatest of (i) the Closing Trading Price of Listed Common Stock on the date on which such shares of Senior Common Stock were originally issued, (ii) the Book Value Per Share of Listed Common Stock as determined as of the date on which such shares of Senior Common Stock were originally issued, or (iii) $13.68.
		For example, the Closing Trading Price and the Book Value Per Share of the Listed Common Stock as of December 31, 2010 were $18.83 and $6.50, respectively. If you purchased shares of Senior Common Stock on December 31, 2010, the Exchange Ratio for the shares of Senior Common Stock that you purchased would be $15.00 divided by the greatest of $18.83, $6.50 or $13.68 per share. In this example, you would receive 0.79660 shares of Listed Common Stock for each share of Senior Common Stock ($15.00 divided by $18.83) upon electing to exchange your shares (at least five years after your purchase).
		For this purpose, “Book Value Per Share” means, as of a given date, the common stockholders’ equity (as reflected in our most recent periodic SEC filing) divided by the number of outstanding shares of common stock as of the same date. “Closing Trading Price” means, on any date of determination, (i) the most recently reported closing price per share of Listed Common Stock as of such date on the NASDAQ Global Select Market, or (ii) if, as of such date, Listed Common Stock is not traded on the NASDAQ Global Select Market, the most recently reported closing price per share of Listed Common Stock on the primary stock exchange on which Listed Common Stock is then listed for trading, or (iii) if, as of such date, Listed Common Stock is not listed for trading on any stock exchange, the closing bid price per share for Listed Common Stock on the Over-the-Counter Bulletin Board, over-the-counter market or on the Pink Sheets, or (iv) if there is no longer any public market for Listed Common Stock as of such date, the fair market value of a share of Listed Common Stock as determined in good faith by our Board.

Q:		Can I sell or redeem my shares of Senior Common Stock before they become exchangeable in five years?
A:		Our Board has adopted a share redemption program to provide holders of shares of Senior Common Stock with limited interim liquidity until shares of Senior Common Stock become exchangeable for shares of Listed Common Stock. The redemption price will be $13.80 per share. Redemptions under the program will be made quarterly on a pro rata basis subject to the following restrictions and limitations:

	•		shares of Senior Common Stock must be held for a minimum of one year;
	•		holders of shares of Senior Common Stock must present at least 25% of their outstanding shares for redemption;
	•		redemptions will be limited to the amount of cash available from the sale of shares of Senior Common Stock under our distribution reinvestment plan;
	•		redemptions will also not exceed 5% of the weighted average number of shares of Senior Common Stock outstanding during the prior calendar year;
	•		our Board may choose to amend, suspend or terminate our share redemption program at any time upon 30 days’ notice; and
	•		shares of Senior Common Stock will not be eligible for the share redemption program once those shares become exchangeable for shares of Listed Common Stock.

		Senior Common Stock will not be listed for trading on any national securities exchange or quotation on a national market system. As a result, if you wish to sell your shares, you may not be able to do so promptly or at all, or you may only be able to sell them at a substantial discount from the price that you originally paid.
Q:		Do shares of Senior Common Stock have any anti-dilution protection?
A:		If the outstanding number of shares of Listed Common Stock is increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company or of any other company by reason of any reclassification, recapitalization, share split, combination of shares, or share distribution, appropriate adjustment will be made to the number and relative terms of the shares of Senior Common Stock. There will be no anti-dilution adjustment upon the future sale of additional shares of Listed Common Stock, regardless of the price at which the Senior Common Stock is sold.
Q:		What would happen to my shares of Senior Common Stock upon the occurrence of a merger or sale of the Company?
A:		Shares of Senior Common Stock will automatically be converted into shares of Listed Common Stock in accordance with the Exchange Ratio upon the occurrence of any of the following events:

	•		an acquisition of the Company by another company by means of any transaction or series of related transactions to which we are a party (including, without limitation, any stock acquisition, reorganization, merger or consolidation but excluding any sale of stock for purposes of raising equity capital) other than a transaction or series of transactions in which the holders of our voting securities outstanding immediately prior to such transaction continue to retain at least 50% of the total voting power represented by our voting securities or those of such other surviving entity outstanding immediately after such transaction or series of transactions;
	•		a sale of all or substantially all of our assets; or
	•		a liquidation, dissolution or winding up of the Company.

Q:		Do shares of Senior Common Stock have a liquidation preference?
A:		No. Upon our liquidation, each share of Senior Common Stock will be automatically converted to a number of shares of Listed Common Stock in accordance with the Exchange Ratio. Therefore, Senior Common Stock will rank pari passu with Listed Common Stock upon a liquidation, dissolution or winding up of the Company. Holders of shares of Series A Preferred Stock and Series B Preferred Stock will be entitled to receive their liquidation preference in full before we can pay distributions of remaining proceeds to all holders of shares of Senior Common Stock and Listed Common Stock. As of December 31, 2010, we had 1,000,000 shares of Series A Preferred Stock and 1,150,000 shares of Series B Preferred Stock outstanding. Therefore, upon liquidation, we would have to pay $53,750,000 in the aggregate to redeem these shares of Series A Preferred Stock and Series B Preferred Stock before we could pay distributions of remaining proceeds to all holders of shares of Senior Common Stock and Listed Common Stock.
Q:		How will the Company apply the proceeds raised in this offering?
A:		If we sell 3,000,000 shares of Senior Common Stock in our primary offering at a price of $15.00 per share, we estimate that approximately 89% of the money that you invest will be used for one or more of the following purposes:

	•		to invest in additional net leased industrial, commercial and other real properties in accordance with our investment objectives and to pay real estate related acquisition expenses; or
	•		to pay down borrowings under our line of credit or other debt.

		The remaining 11% will be used to pay sales commissions, Dealer Manager fees and other offering expenses.
		Based upon current market conditions, we anticipate that it may take several months to fully invest the net proceeds that we receive in connection with the primary offering, depending upon the availability of acquisition opportunities that are consistent with our investment objectives and strategies. There can be no assurance we will be able to sell all of the shares of Senior Common Stock that we are offering. If we sell only a portion of the shares that we are offering, we may be unable to achieve our investment objectives. Pending the application of the net proceeds of this offering, all or substantially all of such net proceeds may be invested in interest-bearing accounts and short-term, interest-bearing securities as is consistent with our intention to maintain our qualification for taxation as a REIT. Such investments may include, for example, obligations of the Government National Mortgage Association, other government and governmental agency securities, certificates of deposit and interest-bearing bank deposits or other authorized investments that we determine. We anticipate that all or substantially all of the proceeds from the sale of 500,000 shares of Senior Common Stock pursuant to our distribution reinvestment plan will be used to fund repurchases of shares of Senior Common Stock under our share redemption program. See “Estimated Use of Proceeds” in this prospectus supplement.
Q:		Will the Company provide a periodic share valuation?
A.		Yes. Beginning 18 months after the completion of this offering, we will determine the value per share of Senior Common Stock on a quarterly basis. This value will be determined as of the last day of each quarter and will be published in our periodic SEC filings.
Q:		Will I have access to periodic updates regarding the performance of the Company?
A:		Yes. Because we are a reporting company, we are required to make certain filings with the SEC regarding our business, financial condition and results of operations; accordingly, you will have access to periodic updates regarding the performance of the Company which include, but are not limited to, the following sources:

	•		annual and quarterly reports, proxy statements and other information which are filed with the SEC and which are publicly available on the SEC’s website at http://www.sec.gov;
	•		quarterly telephone conference calls with stockholders which are conducted by our management;
	•		periodic press releases; and
	•		full-scale investor relations department that utilizes a publicly-available investor relations website at http://www.GladstoneCommercial.com.

		Because we are conducting this offering pursuant to our effective shelf registration statement on Form S-3 (File No. 333-169290), we are allowed to “incorporate by reference” into this prospectus supplement and the accompanying prospectus the information that we file with the SEC, which means that we can disclose important information to you by referring you to those previously filed documents. Information that we subsequently file with the SEC will automatically update and may supersede information contained in this prospectus supplement, the accompanying prospectus and information that we previously filed with the SEC.
		Our filings with the SEC are available to the public on the SEC’s website at http://www.sec.gov. Any information that we file with the SEC after the date of this prospectus supplement will be considered to be part of this prospectus supplement and the accompanying prospectus automatically.
Q:		Will I get detailed tax information and, if so, when?
A:		Yes. Your IRS Form 1099 will be mailed on or before January 31 of each year.
Q:		Is there a transfer agent for shares of Senior Common Stock?
A:		Yes. ACS Securities Services, Inc. will act as our transfer agent, distribution paying agent and registrar for this offering. Set forth below is the principal business address of and telephone number for ACS Securities Services, Inc.:

3988 N. Central Expressway
Building 5, Floor 6,
Dallas, Texas 75204
(877) 588-5596

Q:		Is there a publicly-available website with information regarding this offering?
A:		Yes. The website address is http://www.GladstoneCommercial.info.
Q:		Who can help answer my questions?
A:		If you have more questions about this offering or if you would like additional copies of this prospectus supplement and the accompanying prospectus, you should contact your registered representative or contact:

Gladstone Securities, LLC
22 Oak Drive
Riverside, Connecticut 06878
(203) 570-7950
Attn: David Geske
Email: info@gladstonesecurities.com

RISK FACTORS

     An investment in shares of Senior Common Stock involves substantial risks. In consultation with your financial and legal advisers, you should carefully consider, among other matters, the factors set forth below as well as in our most recent Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and other information that we file from time to time with the SEC which are incorporated by reference into this prospectus supplement and the accompanying prospectus before deciding whether an investment in shares of Senior Common Stock is suitable for you. If any of the risks contained in or incorporated by reference into this prospectus supplement or the accompanying prospectus develop into actual events, our business, financial condition, liquidity, results of operations, FFO and prospects could be materially and adversely affected, the market price of our securities could decline and you may lose all or part of your investment.

Risks Related to our Tenants, Borrowers and Properties

     Our properties may be subject to impairment charges, which could adversely affect our results of operations and FFO.

     We are required to periodically evaluate our properties for impairment indicators. A property’s value is considered impaired if management’s estimate of the aggregate future cash flows (undiscounted and without interest charges) to be generated by the property, based upon its intended use, is less than the carrying value of the property. These estimates of cash flows are based upon factors such as expected future operating income, trends and prospects, as well as the effects of interest and capitalization rates, demand and occupancy, competition and other factors. Ongoing adverse market and economic conditions and market volatility make it difficult to value our properties. These factors may result in uncertainty in valuation estimates and instability in the estimated value of our properties which, in turn, could result in a substantial decrease in the value of the properties and significant impairment charges.

     We continually assess our properties to determine if any impairments are necessary or appropriate. No assurance can be given that we will be able to recover the current carrying amount of our properties in the future. Our failure to do so would require us to recognize additional impairment charges for the period in which we reached that conclusion, which could materially and adversely affect us and our results of operations and FFO.

Risks Related to this Offering

     There is no public market for shares of Senior Common Stock.

     There is no established public trading market for shares of Senior Common Stock, and we currently have no plans to list these shares on a national securities exchange or to include these shares for quotation on any national securities market. Additionally, our charter contains restrictions on the ownership and transfer of shares of our capital stock, and these restrictions may inhibit your ability to sell your shares of Senior Common Stock promptly, or at all. If you are able to sell your shares, you may only be able to sell them at a substantial discount from the price which you paid for them. Therefore, you should purchase shares of Senior Common Stock only as a long-term investment. After five years from the date of issuance, shares of Senior Common Stock will be exchangeable at your option for shares of Listed Common Stock which are currently traded on the NASDAQ Global Select Market under the symbol “GOOD.”

     We would be required to terminate this offering if Listed Common Stock is no longer listed on the NASDAQ Global Select Market or another national securities exchange.

     Senior Common Stock is a “covered security” and is therefore not subject to registration in the various states due to its seniority to Listed Common Stock, which is listed on the NASDAQ Global Select Market under the symbol “GOOD.” In the event that Listed Common Stock is no longer listed on the NASDAQ Global Select Market or another national securities exchange, we would be required to register the offering in any state in which we subsequently offered shares of Senior Common Stock. Such deregistration from the NASDAQ Global Select Market (i) would require the termination of this offering, (ii) could result in our raising gross proceeds in an amount that is

substantially less than if we sold 3,000,000 shares of Senior Common Stock, and, consequently, (iii) would reduce our ability to purchase additional properties and limit the further diversification of our portfolio.

     Our Dealer Manager is one of our affiliates, and, therefore, an investor in shares of Senior Common Stock would not have the benefit of an independent underwriter who has performed an independent due diligence review.

     Our Dealer Manager is one of our affiliates. Because our Dealer Manager is an affiliate of the Company, its due diligence review and investigation of us and this prospectus supplement cannot be considered to be an independent review. Therefore, although certain participating broker-dealers may elect to conduct or obtain an independent due diligence review of us prior to offering shares of Senior Common Stock, you may not have the benefit of an independent review and investigation of us and this offering of the type normally performed by an unaffiliated, independent underwriter in a public securities offering.

     Your ability to redeem shares of Senior Common Stock pursuant to our share redemption program is limited to the proceeds generated by our distribution reinvestment plan, and the share redemption program may be amended, suspended or terminated by our Board at any time without stockholder approval.

     Our share redemption program is designed to provide holders of Senior Common Stock with limited interim liquidity by providing them with a limited opportunity to have their shares redeemed after they have held them for a period of one year. However, holders should understand that our share redemption program is limited to the amount of funds generated by our distribution reinvestment plan and is subject to certain other restrictions. The redemption price for shares of Senior Common Stock will be $13.80 per share. However, our Board may limit, suspend or terminate our share redemption program upon 30 days’ notice without stockholder approval. In addition, we will have no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency, or if our Board determines that such redemption could prevent us from qualifying as a REIT for federal income tax purposes. See “Share Redemption Program” in this prospectus supplement.

     We will be able to call your shares of Senior Common Stock for redemption under certain circumstances without your consent.

     We will have the ability to call the outstanding shares of Senior Common Stock after the fifth anniversary of the completion of this offering and at any time under certain circumstances relating to maintaining our ability to qualify as a REIT. At any such time, we will have the right to redeem, at our option, the outstanding shares of Senior Common Stock, in whole or in part, at a redemption price of $15.30 per share, plus any accrued and unpaid distributions.

     If Listed Common Stock fails to meet all applicable listing requirements, it could be delisted from the NASDAQ Global Select Market, which could adversely affect the market price and liquidity of Listed Common Stock and Senior Common Stock and harm our financial condition and business.

     Listed Common Stock currently is listed and traded on the NASDAQ Global Select Market under the symbol “GOOD.” If we fail to meet any of the continued listing standards of the NASDAQ Global Select Market, Listed Common Stock could be delisted from the exchange. The NASDAQ Global Select Market will consider the removal of a listed security on the exchange when, in its opinion, (i) the financial condition or operating results of an issuer appear to be unsatisfactory, (ii) it appears that the extent of public distribution or the aggregate market value of the security has become so reduced as to make further dealings on the NASDAQ Global Select Market inadvisable, (iii) the issuer has sold or otherwise disposed of its principal operating assets or has ceased to be an operating company, (iv) the issuer has failed to comply with its listing agreements with the NASDAQ Global Select Market or (v) any other event occurs or any condition exists which makes further dealings on the NASDAQ Global Select Market unwarranted.

     If Listed Common Stock were to be delisted from the NASDAQ Global Select Market, it could be traded in the over-the-counter market or on an automated quotation system, such as the OTC Bulletin Board or the Pink Sheets.

Any delisting could adversely affect the market price and the liquidity of Listed Common Stock and Senior Common Stock and negatively impact our financial condition and business.

     We established the offering price of shares of Senior Common Stock on an arbitrary basis, and, as a result, the actual value of your investment may be substantially less than what you pay.

     Our Board has arbitrarily determined the selling price of the shares of Senior Common Stock, and such price bears no relationship to our book or asset values, our projections of book or asset values or any other established criteria for valuing issued or outstanding shares. Because the offering price is not based upon any independent valuation, the offering price may not be indicative of the proceeds that you would receive upon liquidation.

     The calculation of the Exchange Ratio could result in a deterrent to your exchanging shares of Senior Common Stock for shares of Listed Common Stock if shares of Listed Common Stock are trading at lower levels at the time that you desire to exchange your shares.

     There is no prohibition on your ability to exchange your shares of Senior Common Stock for shares of Listed Common Stock after you have held them for five years. The Exchange Ratio, however, will be calculated by dividing $15.00 by the greatest of (i) the Closing Trading Price of Listed Common Stock on the date on which such shares of Senior Common Stock were originally issued, (ii) the Book Value Per Share of Listed Common Stock as determined as of the date on which such shares of Senior Common Stock were originally issued, or (iii) $13.68. If the trading price of shares of Listed Common Stock on the date of your exchange is less than the conversion price of your shares of Senior Common Stock at the time you propose to exchange your shares of Senior Common Stock for shares of Listed Common Stock, you would receive shares of Listed Common Stock with an aggregate fair market value that is less than the price you paid to purchase the shares of Senior Common Stock being exchanged. In such a situation, if you decided to exchange your shares of Senior Common Stock for shares of Listed Common Stock at such time and immediately liquidate your investment by selling your shares of Listed Common Stock, you would likely recognize a loss on your investment.

     For example, the Closing Trading Price and the Book Value Per Share of the Listed Common Stock as of December 31, 2010 were $18.83 and $6.50, respectively. If you purchased shares of Senior Common Stock on December 31, 2010, the Exchange Ratio for the shares of Senior Common Stock that you purchased would be $15.00 divided by the greatest of $18.83, $6.50 or $13.68 per share. In this example, you would receive 0.79660 shares of Listed Common Stock for each share of Senior Common Stock ($15.00 divided by $18.83) upon electing to exchange your shares (at least five years after your purchase).

     If you do not agree with the decisions of our Board, then you will not be able to influence changes in our policies and operations because holders of shares of Senior Common Stock will generally have no voting rights.

     Our Board determines our major policies, including our policies regarding investments, financing, growth, REIT qualification and distributions. Because holders of shares of Senior Common Stock will have no voting rights (other than the right to consent to an amendment to our charter materially and adversely affecting the rights and preferences of shares of Senior Common Stock), you will have virtually no ability to change our policies and operations.

     If you fail to meet the fiduciary and other standards under ERISA or the Code as a result of an investment in shares of Senior Common Stock, you could be subject to criminal and civil penalties.

     There are special considerations that apply to employee benefit plans subject to ERISA (such as profit sharing, section 401(k) or pension plans) and other retirement plans or accounts subject to Section 4975 of the Code (such as an IRA) that invest in shares of Senior Common Stock. If you invest the assets of such a plan or account in shares of Senior Common Stock, you should satisfy yourself that:

	•		your investment is consistent with your fiduciary obligations under ERISA and the Code;
	•		your investment is made in accordance with the documents and instruments governing your plan or IRA, including your plan’s or account’s investment policy;

	•		your investment satisfies the prudence and diversification requirements of Sections 404(a)(1)(B) and 404(a)(1)(C) of ERISA and other applicable provisions of ERISA and the Code;
	•		your investment will not impair the liquidity of the plan or IRA;
	•		your investment will not produce UBTI for the plan or IRA;
	•		you will be able to value the assets of the plan annually in accordance with ERISA requirements and applicable provisions of the plan or IRA; and
	•		your investment will not constitute a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code.

     Failure to satisfy the fiduciary standards of conduct and other applicable requirements of ERISA and the Code may result in the imposition of civil and criminal penalties and could subject the fiduciary to equitable remedies. In addition, if an investment in shares of Senior Common Stock constitutes a prohibited transaction under ERISA or the Code, the fiduciary that authorized or directed the investment may be subject to the imposition of excise taxes with respect to the amount invested.

     If our assets are deemed to be ERISA plan assets, we and our Adviser may be exposed to liabilities under Title 1 of ERISA and the Code.

     In certain circumstances where an ERISA plan holds an interest in an entity, both the equity interest and an undivided interest in the underlying assets of the entire entity are deemed to be ERISA plan assets unless an exception applies. Under those circumstances, any person that exercises authority or control with respect to the management or disposition of the assets is an ERISA plan fiduciary, and the obligations and other responsibilities of plan sponsors, plan fiduciaries and plan administrators, and of parties in interest and disqualified persons, under Title I of ERISA and Section 4975 of the Code, as applicable, may apply. There may be liability under these and other provisions of ERISA and the Code. If our Adviser or we are exposed to liability under ERISA or the Code, our performance and results of operations could be adversely affected. Prior to making an investment in shares of Senior Common Stock, you should consult with your legal and other advisers concerning the impact of ERISA and the Code on your investment and our performance.

FORWARD-LOOKING STATEMENTS

     This prospectus supplement and the accompanying prospectus, including the documents incorporated by reference into this prospectus supplement and the accompanying prospectus, contain “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements provide our current expectations or forecasts of future events and are not statements of historical fact. These forward-looking statements include information about possible or assumed future events, including, among other things, discussion and analysis of our future financial condition, results of operations and FFO, our strategic plans and objectives, cost management, occupancy and leasing rates and trends, liquidity and ability to refinance our indebtedness as it matures, anticipated capital expenditures (and access to capital) required to complete projects, amounts of anticipated cash distributions to our stockholders in the future and other matters. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and/or could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. Statements regarding the following subjects, among others, are forward-looking by their nature:

	•		our business and financing strategy;
	•		our ability to implement our business plan;

	•		pending transactions;
	•		our projected operating results;
	•		our ability to obtain future financing arrangements;
	•		estimates relating to our future distributions;
	•		our understanding of our competition and our ability to compete effectively;
	•		market and industry trends;
	•		interest and insurance rates;
	•		estimates of our future operating expenses, including payments to our Adviser under the terms of our Advisory Agreement;
	•		projected capital expenditures; and
	•		the use of the proceeds of our New Line of Credit, mortgage notes payable and other future capital resources, if any.

     Forward-looking statements involve inherent uncertainty and may ultimately prove to be incorrect or false. You are cautioned to not place undue reliance on forward-looking statements. Except as otherwise may be required by law, we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or actual operating results. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to:

	•		the loss of any of our key employees, such as Mr. David Gladstone, our Chairman and Chief Executive Officer, Mr. Terry Lee Brubaker, our Vice Chairman and Chief Operating Officer, or Mr. George Stelljes III, our President and Chief Investment Officer;
	•		general volatility of the capital markets and the market price of Listed Common Stock;
	•		risks associated with negotiation and consummation of pending and future transactions;
	•		changes in our business strategy;
	•		the adequacy of our cash reserves and working capital;
	•		our failure to successfully integrate and operate acquired properties and operations;
	•		defaults upon or non-renewal of leases by tenants;
	•		decreased rental rates or increased vacancy rates;
	•		the degree and nature of our competition;
	•		availability, terms and deployment of capital, including the ability to maintain and borrow under our New Line of Credit, arrange for long-term mortgages on our properties, secure one or more additional long-term credit facilities and raise equity capital;
	•		our ability to identify, hire and retain highly-qualified personnel in the future;
	•		changes in our industry or the general economy;

	•		changes in real estate and zoning laws and increases in real property tax rates;
	•		changes in governmental regulations, tax rates and similar matters; and
	•		environmental uncertainties and risks related to natural disasters.

     This list of risks and uncertainties, however, is only a summary of some of the most important factors to us and is not intended to be exhaustive. You should carefully review the risks and information contained, or incorporated by reference, in this prospectus supplement and in the accompanying prospectus, including, without limitation, the “Risk Factors” incorporated by reference herein from our most recent Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and other reports and information that we file with the SEC. New factors may also emerge from time to time that could materially and adversely affect us.

ESTIMATED USE OF PROCEEDS

     The following table (i) estimates the use of the proceeds raised in this offering by assuming that we will sell 3,000,000 shares of Senior Common Stock in our primary offering at a price to the public of $15.00 per share and (ii) assumes that we do not sell any shares of Senior Common Stock pursuant to our distribution reinvestment plan. We anticipate that all or substantially all of the proceeds from the sale of such shares pursuant to our distribution reinvestment plan will be used to fund repurchases of shares of Senior Common Stock under our share redemption program rather than real estate-related investments.

     The amounts in this table assume that the full selling commissions and Dealer Manager fees are paid on all shares of Senior Common Stock offered to the public on a best efforts basis. We have not given effect to any special sales or volume discounts that could reduce the sales commissions or Dealer Manager fees for sales pursuant to our primary offering. Reduction in these fees will be accompanied by a corresponding reduction in the per share purchase price but will not materially affect the amounts available to us for investment. See “Plan of Distribution” in this prospectus supplement.

     Certain of the figures set forth below represent management’s best estimate as such figures cannot be precisely calculated at this time. If we were to sell 3,000,000 shares of Senior Common Stock in our primary offering at a price to the public of $15.00 per share, we estimate that approximately 89% of the proceeds that you invest will be available for one or more of the following purposes:

	•		to invest in additional net leased industrial, commercial and other real properties in accordance with our investment objectives and to pay real estate related acquisition expenses; or
	•		to pay down borrowings under our New Line of Credit or other debt.

     The remaining 11% of the proceeds will be used to pay sales commissions, Dealer Manager fees and other offering expenses.

		Primary Offering
		Amount				Percent
Gross Proceeds		$	45,000,000				100	%
Less:
Selling Commissions(1)			3,150,000				7	%
Dealer Manager Fee(1)			1,350,000				3	%
Offering Expenses(2)			450,000				1	%
Net Proceeds Available for Investment		$	40,050,000				89	%

     Based upon current market conditions, we anticipate that it may take several months to fully invest the net proceeds that we receive in connection with the primary offering, depending upon the availability of acquisition opportunities that are consistent with our investment objectives and strategies. There can be no assurance we will be

able to sell all of the shares of Senior Common Stock that we are registering. If we sell only a portion of the shares that we are registering, we may be unable to achieve our investment objectives. Pending the application of the net proceeds of this offering, all or substantially all of such net proceeds may be invested in interest-bearing accounts and short-term, interest-bearing securities as is consistent with our intention to maintain our qualification for taxation as a REIT. Such investments may include, for example, obligations of the Government National Mortgage Association, other government and governmental agency securities, certificates of deposit and interest-bearing bank deposits or other authorized investments that we determine.

MARKET PRICE AND DISTRIBUTIONS PAID IN RESPECT OF LISTED COMMON STOCK

     Our Listed Common Stock is traded on the NASDAQ Global Select Market under the symbol “GOOD.” The following table reflects, by quarter, the high and low sales prices per share of Listed Common Stock on the NASDAQ Global Select Market and the distributions per share by quarter. Distributions are declared quarterly and paid monthly. Amounts presented represent the cumulative amount of the distributions declared for the months composing such quarter.

		Sales Price Per Share								Distributions Paid
Quarter Ended		High				Low				Per Share
03/31/08		$	18.50			$	14.81			$	0.375
06/30/08		$	18.50			$	15.36			$	0.375
09/30/08		$	17.38			$	13.96			$	0.375
12/31/08		$	15.89			$	6.37			$	0.375
03/31/09		$	10.20			$	5.36			$	0.375
06/30/09		$	16.21			$	8.20			$	0.375
09/30/09		$	14.50			$	11.26			$	0.375
12/31/09		$	14.19			$	11.85			$	0.375
03/31/10		$	14.87			$	13.05			$	0.375
06/30/10		$	17.79			$	14.36			$	0.375
09/30/10		$	17.30			$	15.61			$	0.375
12/31/10		$	19.50			$	17.00			$	0.375

     The closing price per share of Listed Common Stock on NASDAQ Global Select Market on March 25, 2011 was $18.21. As of February 7, 2011, there were approximately 7,921 beneficial holders of Listed Common Stock. There is no established public trading market for shares of Senior Common Stock, nor do we expect such a market for shares of Senior Common Stock to develop.

     Continuous Private Offering of Senior Common Stock

     In November 2009, we commenced a continuous private offering for a maximum of 3,333,333 shares of its then newly-designated, unregistered Senior Common Stock at $15.00 per share. The private offering of Senior Common Stock was made on a “best efforts” basis by Halcyon Capital Markets, LLC, acting as the dealer manager. On October 19, 2010, the Company terminated the continuous private offering, including the distribution reinvestment plan with respect to such unregistered shares of senior common stock.

     As of October 19, 2010, the date that the private offering was terminated, we had sold a total of 58,776 shares of unregistered Senior Common Stock, and 117 shares of unregistered Senior Common Stock were issued pursuant to the distribution reinvestment plan. No shares of Senior Common Stock have been issued since the private offering was terminated in October 2010. Total net proceeds from the sale of shares of the unregistered Senior Common Stock in the private offering, after commissions and the dealer manager fees, were approximately $787,200. The issuance of shares of Senior Common Stock in the private offering was exempt from registration under the Securities Act of 1933, as amended, pursuant to Rule 506 thereunder, among other exemptions, on the basis that the securities were sold in a private offering not involving general solicitation and that the purchasers of the securities in the private offering were accredited investors.

     Distributions

     In order to qualify as a REIT, we are required to make certain distributions to our stockholders. The amount of these distributions must equal at least the sum of (i) 90% of our “REIT taxable income” (computed without regard to the distributions paid deduction and net capital gain) and (ii) 90% of the net income (after tax), if any, from foreclosure property, less the sum of certain non-cash items.

     For federal income tax purposes, our distributions generally consist of ordinary income, capital gain, nontaxable return of capital or a combination thereof. Distributions that exceed our current and accumulated earnings and profits (calculated for federal income tax purposes) constitute a return of capital, which reduces the stockholder’s

basis in its shares of our stock and will not be taxable to the stockholder to the extent of the stockholder’s basis in its shares of our stock. To the extent that a distribution exceeds the stockholder’s share of current and accumulated earnings and profits and the stockholder’s basis in its shares of our stock, that distribution will be treated as a capital gain from the sale or exchange of that stockholder’s shares of our stock. Every year, we notify stockholders of the taxability of distributions paid during the preceding year. See “Material U.S. Federal Income Tax Considerations” in the accompanying prospectus.

DISTRIBUTION REINVESTMENT PLAN

     Our distribution reinvestment plan allows you to have distributions that would otherwise be distributable to you invested in additional shares of Senior Common Stock. We are offering 500,000 shares of Senior Common Stock under our distribution reinvestment plan which are not included in the 3,000,000 shares being sold in the primary offering. As noted above, the primary offering will terminate at the end of the offering period. However, we may extend the offering period for our distribution reinvestment plan beyond the termination of the primary offering and until we have sold all of the shares allocated to the plan through the reinvestment of distributions. The following discussion summarizes the principal terms of our distribution reinvestment plan, a copy of which is appended to this prospectus supplement as Appendix B.

     Participation in our distribution reinvestment plan is limited to investors who have purchased shares of Senior Common Stock in the primary offering. We may elect to deny your participation in our distribution reinvestment plan if you reside in a jurisdiction or foreign country where, in our sole and absolute discretion, the burden or expense of compliance with applicable securities laws makes your participation impracticable or inadvisable or if your participation in the distribution reinvestment plan could cause 25% or more of any class of our equity securities to be held by “benefit plan investors.” See “ERISA Considerations — Exception for Insignificant Participation by Benefit Plan Investors.” Assuming that you are eligible, you may elect to participate in our distribution reinvestment plan by completing the relevant portion of the Subscription Agreement or other approved enrollment form available from the Dealer Manager or a participating broker-dealer.

     Your participation in our distribution reinvestment plan will begin with the next distribution made after receipt of your enrollment form. Once enrolled, you may continue to purchase shares of Senior Common Stock under our distribution reinvestment plan until we have terminated such plan. You can choose to have all or a portion of your distributions reinvested through our distribution reinvestment plan. You may also change the percentage of your distributions that will be reinvested at any time if you complete a new enrollment form or other form provided for that purpose. Any election to increase your level of participation must be made through your participating broker-dealer or, if you purchased shares of Senior Common Stock in this offering other than through a participating broker-dealer, through the Dealer Manager.

     Shares of Senior Common Stock will be purchased under our distribution reinvestment plan on our distribution payment dates. The purchase of fractional shares is a permissible and likely result of the reinvestment of distributions under our distribution reinvestment plan.

     During our primary offering, the purchase price per share of Senior Common Stock will be $15.00. The offering price for shares purchased under our distribution reinvestment plan may increase after the closing of our primary offering. Fees are included in the price, and we will not charge you any other fees in connection with your purchase of shares under our distribution reinvestment plan. The price for shares purchased under our distribution reinvestment plan bears little relationship to, and will likely exceed, what you might receive for your shares if you tried to sell them or if we liquidated our portfolio. Purchases of shares of Senior Common Stock under our distribution reinvestment plan may effectively lower the total return on your investment with us. Our Board reserves the right to designate that certain cash or other distributions attributable to net sale proceeds will be excluded from distributions that may be reinvested in shares under our distribution reinvestment plan.

     Within 90 days after the end of each calendar year, we will provide you with an individualized report regarding your investment, including the purchase dates, purchase price, number of shares owned, and the amount of distributions in the prior year.

     We will not pay a commission in connection with your purchase of Senior Common Stock in our distribution reinvestment plan. No Dealer Manager fees or due diligence expense allowance will be paid in respect of shares of Senior Common Stock sold under the plan. We will not receive a fee for selling stock under our distribution reinvestment plan. See “Plan of Distribution” in this prospectus supplement.

     Shares of Senior Common Stock acquired through our distribution reinvestment plan, like all other shares of Senior Common Stock, will not have voting rights, except as set forth in “Description of Capital Stock—Common Stock—Senior Common Stock—Voting Rights” or as otherwise from time to time may required by law.

     If you elect to participate in our distribution reinvestment plan and are subject to federal income taxation, you may incur a tax liability for distributions allocated to you even though you have elected not to receive the distributions in cash but rather to have the distributions withheld and reinvested pursuant to our distribution reinvestment plan.

     Specifically, you will be treated as if you have received the distribution in cash and then applied such distribution to the purchase of additional shares of Senior Common Stock. You will be taxed on the amount of such distribution as a dividend to the extent such distribution is from current or accumulated earnings and profits, unless we have designated all or a portion of the distribution as a capital gain distribution. We will withhold 28% of the amount of distributions paid if you fail to furnish a valid taxpayer identification number, fail to properly report interest or distributions or fail to certify that you are not subject to withholding.

     You may terminate your participation in our distribution reinvestment plan at any time by providing us with written notice. Any transfer of your shares of Senior Common Stock will effect a termination of the participation of those shares in our distribution reinvestment plan. Moreover, we will terminate your participation to the extent that a reinvestment of your distributions in shares of Senior Common Stock would cause you to exceed the ownership limitation contained in our charter. We will also terminate your participation to the extent that your continued participant could cause 25% or more of any class of our equity securities to be held by “benefit plan investors.” See “ERISA Considerations — Exception for Insignificant Participation by Benefit Plan Investors” in this prospectus supplement.

     We may amend or terminate our distribution reinvestment plan in our sole and absolute discretion at any time upon ten days’ prior written notice to participants, but no such amendment will add compensation to the plan or remove the opportunity for you to terminate your participation in the plan, as specified above.

SHARE REDEMPTION PROGRAM

     Our Board has adopted a share redemption program that enables our stockholders to sell their shares of Senior Common Stock to us after they have held them for at least one year, subject to the conditions and limitations described below.

     Senior Common Stock is currently not listed on a national securities exchange, or included for quotation on a national securities market, and we do not intend to seek to list Senior Common Stock. In order to provide stockholders with the benefit of interim liquidity, stockholders who have held their shares of Senior Common Stock for at least one year may present all or a portion consisting of at least 25% of their shares to us for redemption at any time in accordance with the procedures outlined below. At that time, we may, subject to the conditions and limitations described below, redeem the shares presented for redemption for cash to the extent that we have sufficient funds available to us to fund such redemption. The redemption price for shares of Senior Common Stock will be $13.80 per share. We will not pay to our Board, our Advisor or their affiliates any fees to complete any transactions under our share redemption program.

     You generally must hold your shares of Senior Common Stock for one year before redeeming your shares under the share redemption program; however, we may waive the one-year holding period in the event of the death, disability or bankruptcy of a stockholder. Shares redeemed in connection with the death or disability of a stockholder may be repurchased at a purchase price equal to the price actually paid for the shares.

     During any calendar year, we will not redeem in excess of 5% of the weighted average number of shares of Senior Common Stock outstanding during the prior calendar year. The cash available for redemption will be limited to the proceeds from the sale of shares of Senior Common Stock pursuant to our distribution reinvestment plan.

     We will redeem shares of Senior Common Stock on the last business day of the month following the end of each quarter. Requests for redemption would have to be received at or prior to the end of the quarter in order for us to repurchase the shares as of the end of the next month. You may withdraw your request to have your shares redeemed at any time prior to the last day of the applicable quarter.

     If we cannot purchase all shares presented for redemption in any quarter, based upon insufficient cash available and the limit on the number of shares of Senior Common Stock that we may redeem during any calendar year, we would attempt to honor redemption requests on a pro rata basis. We would treat the unsatisfied portion of the redemption request as a request for redemption for the following quarter. At such time, you may then (i) withdraw your request for redemption at any time prior to the last day of the new quarter or (ii) ask that we honor your request at such time, if, any, as sufficient funds become available. Such pending requests will generally be honored on a pro rata basis. We will determine whether we have sufficient funds available as soon as practicable after the end of each quarter but, in any event, prior to the applicable payment date.

     Our Board may choose to amend, suspend or terminate our share redemption program in its sole and absolute discretion upon 30 days’ notice at any time. Because the redemption of shares will be funded with the net proceeds that we receive from the sale of shares of Senior Common Stock under our distribution reinvestment plan, the discontinuance or termination of our distribution reinvestment plan will adversely affect our ability to redeem shares under our share redemption program. We would notify you of such developments (i) in our annual or quarterly reports filed with the SEC or (ii) by means of a separate mailing to you.

     Our share redemption program is only intended to provide interim liquidity for stockholders. Shares of Senior Common Stock will not be eligible for redemption under our share redemption program commencing on the date such shares become exchangeable for shares of Listed Common Stock (i.e., five years after the issuance of such shares of Senior Common Stock).

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Advisory and Administration Agreements

     Pursuant to the Advisory Agreement, our Adviser is responsible for our daily operations, record keeping and regulatory compliance functions. Specifically, these responsibilities include (i) identifying, evaluating, negotiating and consummating all investment transactions consistent with our investment objectives and criteria, (ii) providing us with all required records and reporting regularly to our Board concerning our Adviser’s efforts on our behalf, and (iii) maintaining our compliance with all regulatory requirements that are applicable to us. The Advisory Agreement provides for an annual base management fee equal to 2% of our total stockholders’ equity (including equity attributable to shares of Senior Common Stock) less the recorded value of any shares of preferred stock, and a performance-based incentive fee based upon our FFO, which rewards our Adviser if our quarterly FFO (before giving effect to any incentive fee) exceeds 1.75% (7% annualized) of our total stockholders’ equity (less the recorded value of any preferred stock). Our Adviser has the ability to issue a full or partial waiver of the incentive fee and may do so in order that we may maintain the current level of distributions to holders of our capital stock. For the years ended December 31, 2010, 2009 and 2008, an unconditional and irrevocable voluntary waiver was issued by our Adviser for approximately $0.2 million, $0.7 million and $2.2 million, respectively. These waivers were applied through December 31, 2010, and any waived fees may not be recouped by our Adviser in the future.

     Pursuant to the Administration Agreement, we pay separately for our allocable portion of our Administrator’s overhead expenses in performing its obligations to us, including, but not limited to, rent and our allocable portion of the salaries and benefits expenses attributable to our Administrator’s employees including our chief financial officer, chief compliance officer, internal counsel, treasurer, investor relations and their respective staffs.

     David Gladstone, Terry Lee Brubaker, George Stelljes III and Gary Gerson are all officers or directors, or both, of our Adviser and Administrator. David Gladstone is the sole stockholder of our Adviser. Although we believe that the terms of the Advisory Agreement and the Administration Agreement are no less favorable to us than those that could be obtained from unaffiliated third parties in arms’-length transactions, our Adviser, its officers and its directors have a material interest in the terms of these agreements.

     As of December 31, 2010, we owed our Adviser approximately $710,000 in fees pursuant to the Advisory Agreement and owed our Administrator approximately $255,000 in fees pursuant to the Administration Agreement.

Allocation of our Adviser’s Time

     We will rely, in part, upon our Adviser to manage our day-to-day activities and to implement our investment strategy. Our Adviser and Administrator are currently the external investment adviser and administrator, respectively, for Gladstone Capital Corporation, or GLAD, a NASDAQ-listed business development company, or BDC, that primarily makes mezzanine and second lien loans to small businesses; Gladstone Investment Corporation, or GAIN, a NASDAQ-listed BDC active in buying small businesses; Gladstone Land Corporation, or LAND, a private company that owns farm land in California; and Gladstone Partners Fund, L.P., or PARTNERS, a private fund formed primarily to co-invest with GAIN and GLAD; and Gladstone Lending Corporation, or LENDING, a public, non-listed BDC, currently in registration that intends to invest in term loans secured by first or second lien security interests. As a result of these activities, our Adviser, its employees and certain of its affiliates will have conflicts of interest in allocating their time between us and other activities in which they are or may become involved.

     Our Adviser and its employees will devote only as much of its time to our business as our Adviser and its employees, in their judgment, determine is reasonably required, which may be substantially less than their full time. Therefore, our Adviser, its personnel, and certain affiliates may experience conflicts of interest in allocating management time, services, and functions among us and any other business ventures in which they or any of their key personnel, as applicable, are or may become involved. This could result in actions that are more favorable to other affiliated entities than to us. However, our Adviser believes that it and its affiliates have sufficient personnel to discharge fully their responsibilities to all activities in which they are involved.

Affiliated Dealer Manager

     We have engaged Gladstone Securities, LLC, which is owned by David Gladstone, our Chairman and Chief Executive Officer, as our dealer manager and will pay fees to such entity pursuant to the dealer management agreement. Under the terms of the dealer manager agreement, the Dealer Manager is expected to act as our exclusive dealer manager until the end of the offering period or until the dealer manager agreement is terminated by us or them. Because the Dealer Manager is affiliated with us you will not have the benefit of an independent due diligence review and investigation of the type normally performed by an independent underwriter in connection with an underwritten offering of securities. See “Plan of Distribution” in this prospectus supplement.

Loan to Affiliate

     As of December 31, 2010, we had a loan outstanding in the principal amount of $375,000 to Laura Gladstone, a managing director of the Adviser and the daughter of Mr. David Gladstone, our Chairman and Chief Executive Officer. This loan was made in connection with the exercise of stock options under the 2003 Equity Incentive Plan by Ms. Gladstone and was made on terms available to all eligible participants of the 2003 Equity Incentive Plan. The 2003 Equity Incentive Plan was terminated on December 31, 2006. The interest rate on the loan is 8.15% and the outstanding principal amount of the loan is due and payable in cash on November 21, 2015. Mr. Gladstone has not received, nor will he receive in the future, any direct or indirect benefit from this loan.

Conflict of Interest Policy

     We have adopted policies to reduce potential conflicts of interest. In addition, our directors are subject to certain provisions of Maryland law that are designed to minimize conflicts. Under our current conflict of interest policy, without the approval of a majority of our independent directors, we will not:

	•		acquire from or sell to any of our directors, officers or employees, or any entity in which any of our officers, directors or employees has an interest of more than 5%, any assets or other property;
	•		borrow from any of our directors, officers or employees, or any entity in which any of our directors, officers or employees has an interest of more than 5%; or
	•		engage in any other transaction with any of our directors, officers or employees, or any entity in which any of our directors, officers or employees has an interest of more than 5% (except that our Adviser may lease office space in a building that we own, provided that the rental rate under the lease is determined by our independent directors to be at a fair market rate).

     When allowed by applicable rules and regulations, from time to time, we may enter into transactions with our Adviser or one or more of its affiliates. A majority of our independent directors and a majority of our directors not otherwise interested in a transaction with our Adviser must approve all such transactions with our Adviser or its affiliates.

     It is our current policy that we will not purchase any property from or co-invest with our Adviser, any of its affiliates or any business in which our Adviser or any of its subsidiaries have invested, except that we may make leases to existing and prospective portfolio companies of entities advised by our Adviser as long as any such portfolio company is not controlled by that entity and if approved by the boards of directors of both companies. If we decide to change this policy on co-investments with our Adviser or its affiliates, we will seek approval of this decision from our independent directors.

Indemnification

     Pursuant to our charter and bylaws, we have agreed to indemnify our directors and certain of our officers by providing that, among other things, we will indemnify such officer or director, under the circumstances and to the extent provided for therein, for expenses, damages, judgments, fines and settlements that he or she may be required to pay in respect of actions or proceedings in which he or she is or may be made a party by reason of his or her position as a director, officer or other agent of the Company, and otherwise to the fullest extent permitted under Maryland law and our charter and bylaws. Notwithstanding the foregoing, the indemnification provisions shall not indemnify any officer or director from liability to us or our stockholders as a result of any action that would constitute willful misfeasance, bad faith or gross negligence in the performance of such officer’s or director’s duties, or reckless disregard of his or her obligations and duties.

     Each of the Advisory and Administration Agreements provide that, absent willful misfeasance, bad faith or gross negligence in the performance of their duties or by reason of the reckless disregard of their duties and obligations, our Adviser, our Administrator and their respective officers, managers, agents, employees, controlling persons, members and any other person or entity affiliated with them are entitled to indemnification from us for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendition of services pursuant to the Advisory or Administration Agreements, respectively, or otherwise as an investment adviser of the Company.

ADDITIONAL MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

     The following summary of certain material U.S. federal income tax considerations supplements the discussion set forth under the caption “Material U.S. Federal Income Tax Considerations” in the accompanying prospectus, is for general information purposes only and is not tax advice. This discussion does not purport to deal with all aspects of taxation that may be relevant to particular holders of shares of Senior Common Stock in light of their personal investment or tax circumstances.

     We urge you to consult your own tax advisor regarding the specific tax consequences to you of acquisition, ownership and disposition of shares of Senior Common Stock and of our election to be taxed as a REIT. Specifically, you should consult your own tax advisor regarding the federal, state, local, foreign, and other tax consequences of such acquisition, ownership, disposition and election, and regarding potential changes in applicable tax laws.

     The current federal income tax treatment of REITs may be modified, possibly with retroactive effect, by legislative, judicial or administrative action at any time. The REIT rules are under review constantly by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury Department which may result in statutory changes as well as revisions to regulations and interpretations. The recently enacted Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, or the 2010 Tax Relief Act, postponed the sunset of the provisions referred to in “Material U.S. Federal Income Tax Considerations — Sunset of Reduced Tax Rate Provisions” in the accompanying prospectus. The 2010 Tax Relief Act extends the 2001 and 2003 federal income tax rates through 2012 for taxpayers that are taxable as individuals, trusts or estates, including the maximum 35% tax rate on ordinary income and the maximum 15% tax rate for long-term capital gains and qualified dividend income. As noted in the accompanying prospectus, dividends paid by REITs generally will not constitute qualified dividend income eligible for the 15% tax rate for stockholders that are taxable as individuals, trusts or estates and generally will be taxable at the higher ordinary income tax rates. The 2010 Tax Relief Act also extends the reduced 28% backup withholding rate through 2012.

PLAN OF DISTRIBUTION

     We are offering 3,000,000 shares of our Senior Common Stock at a price to the public of $15.00 per share and 500,000 shares of our Senior Common Stock to be issued pursuant to our distribution reinvestment plan at a price of $15.00 per share to those stockholders who elect to participate in such plan as described in this prospectus supplement. We reserve the right to reallocate shares between our primary offering and our offering pursuant to our distribution reinvestment plan in our sole and absolute discretion. The Dealer Manager is not required to sell any specific number or dollar amount of shares of Senior Common Stock but will use its “best efforts” to sell the shares offered by this prospectus supplement. The minimum permitted purchase of shares of Senior Common Stock is 200 shares having an aggregate minimum purchase price of $3,000. We reserve the right, however, to waive the minimum purchase requirement in our sole and absolute discretion.

     The primary offering will commence on the date of this prospectus supplement and will terminate on the earlier of (i) two years from the date of this prospectus supplement, unless earlier terminated or extended by our Board, or (ii) the date on which 3,000,000 shares of Senior Common Stock are sold hereunder. If we extend the primary offering period beyond two years from the date of this prospectus supplement, we will update this prospectus supplement accordingly. We may extend the offering period for the 500,000 shares of Senior Common Stock being offered hereby under our distribution reinvestment plan beyond the termination of the primary offering and until we have sold all of the shares allocated to the plan through the reinvestment of distributions. We may, however, terminate this offering at any time in our sole and absolute discretion.

     The Dealer Manager is a securities broker-dealer registered with the SEC and a member firm of FINRA and the Securities Investor Protection Corporation, or SIPC. The Dealer Manager, which is owned by Mr. David Gladstone, our Chairman and Chief Executive Officer, specializes in raising public and private equity funding for U.S. and European fund managers and performing various investment banking activities.

Compensation of Dealer Manager and Participating Broker-Dealers

     We will pay the Dealer Manager selling commissions of 7% of the gross offering proceeds generated by the primary offering. We will pay the Dealer Manager 3% of the gross offering proceeds generated by the primary offering as compensation for acting as dealer manager and for expenses incurred in connection with the marketing for, and due diligence of, the primary offering. We will not pay selling commissions or any Dealer Manager fees with respect to shares purchased pursuant to our distribution reinvestment plan nor will we pay referral or similar fees to any accountants, attorneys or other persons in connection with the distribution of shares of Senior Common Stock.

     We expect that the Dealer Manager will authorize other broker-dealers that are members of FINRA to sell shares of Senior Common Stock. The Dealer Manager will reallow all of its selling commissions attributable to a participating broker-dealer and may also reallow a portion of its Dealer Manager fee earned in respect of the proceeds generated by the participating broker-dealer to such participating broker-dealer as a non-accountable marketing allowance. The amount of the reallowance to any participating broker-dealer will be determined by the Dealer Manager in its sole and absolute discretion.

     Any reduction in commissions in instances where lesser or no commissions or Dealer Manager fees are paid by us in connection with the sale of shares of Senior Common Stock will reduce the effective purchase price per share to the investor involved but will not materially alter the net proceeds payable to us as a result of such sale. Distributions will be the same with respect to all shares whether or not the purchaser received a discount. Investors for whom we pay reduced commissions or Dealer Manager fees will receive higher returns on their investments in shares of Senior Common Stock as compared to investors for whom we do not pay reduced commissions and Dealer Manager fees.

     The table below sets forth the nature and estimated amount of all items that are viewed as “underwriting compensation” by FINRA, assuming that we sell all of the shares of Senior Common Stock offered pursuant to this prospectus supplement.

Dealer Manager and Participating Broker-Dealer Compensation

		Per Share				Amount				Percent
Selling Commissions (1)		$	1.05			$	3,150,000				7	%
Dealer Manager Fee (1)		$	0.45			$	1,350,000				3	%
Total		$	1.50			$	4,500,000				10	%

     We will also reimburse the Dealer Manager for reimbursements it may make to participating broker-dealers for bona fide accountable due diligence expenses presented on detailed and itemized invoices.

     We or our affiliates also may provide permissible forms of non-cash compensation to registered representatives of our Dealer Manager and any participating broker-dealers, including gifts. In no event shall such gifts exceed an aggregate value of $100 per annum per participating salesperson or be pre-conditioned upon the achievement of a sales target. The value of any such items will be considered underwriting compensation in connection with this offering.

     To the extent permitted by law and our charter, we will indemnify the Dealer Manager and any participating broker-dealers against certain civil liabilities, including certain liabilities arising under the Securities Act and liabilities arising from breaches of our representations and warranties contained in the Dealer Manager Agreement. However, the SEC takes the position that indemnification against liabilities arising under the Securities Act is against public policy and is not enforceable.

     The total amount of underwriting compensation, including selling commissions and Dealer Manager fees paid or reimbursed by us, our Adviser or any other source in connection with this offering, will not exceed 10% of the gross proceeds of our primary offering. All organization and offering expenses, including selling commissions and Dealer Manager fees, will be capped at 15% of the gross proceeds of the offering.

Subscription Procedures

     If you choose to purchase shares of Senior Common Stock in this offering, you must complete a Subscription Agreement, a form of which is appended to this prospectus supplement as Appendix A, specify the number of shares that you wish to purchase and pay for the shares at the time you subscribe. You should pay for your shares by check made payable to “BB&T, as escrow agent for Gladstone Commercial Corporation” or as otherwise instructed by the Dealer Manager or any participating broker-dealer. We will place your subscription payment in an account held by our escrow agent, BB&T Corporation, which funds will be held in trust for your benefit until the next closing date. We will hold two closings per month for our primary offering. The closing dates were randomly selected prior to the commencement of the primary offering, and will occur once between the 1st and 15th of each month and once between the 16th and last day of each month. On any such closing date, we will either accept or reject your subscription and (i) if accepted, we will transfer your funds to our general account, and you will receive a confirmation of your subscription, or (ii) if rejected, we will return your funds, without interest, within 10 business days thereafter. Subscriptions will be effective only upon our acceptance, and we reserve the right to reject any subscription either in whole or in part for whatever reason.

     The Dealer Manager and any participating broker-dealer who sells shares of Senior Common Stock on our behalf has the responsibility to make every reasonable effort to determine that the purchase of shares is appropriate for the investor. In making this determination, the Dealer Manager and any participating broker-dealer will rely upon relevant information provided by the investor, including information as to the investor’s age, investment objectives, investment experience, income, net worth, financial situation, other investments and other pertinent information. Each investor should be aware that the Dealer Manager and any participating broker-dealer will be responsible for determining whether this investment is appropriate for your portfolio. However, you are required to represent and warrant in the Subscription Agreement that you have received a copy of this prospectus supplement and have had sufficient time to review this prospectus supplement.

     The Dealer Manager and any participating broker-dealer shall maintain records of the information used to determine that an investment in shares of Senior Common Stock is suitable and that an investment in shares is suitable and appropriate for an investor. These records are required to be maintained for a period of at least six years.

Minimum Purchase Requirements

     The minimum permitted purchase of shares of Senior Common Stock is 200 shares having an aggregate minimum purchase price of $3,000. We reserve the right, however, to waive the minimum purchase requirement in our sole and absolute discretion. In order to satisfy the minimum purchase requirement for retirement plans, unless otherwise prohibited by state law, a husband and wife may jointly contribute funds from their separate IRAs, provided that each such contribution is made in increments of $100. You should note that an investment in shares of Senior Common Stock will not, in itself, create a retirement plan and that, in order to create a retirement plan, you must comply with all applicable provisions of the Code.

     Stockholders who desire to purchase additional shares of Senior Common Stock after their initial investment may do so by obtaining an Additional Investment Form from the Dealer Manager or any participating broker-dealer, and completing, executing and delivering the Additional Investment Form, along with a check for the subscription amount, payable to “BB&T, as escrow agent for Gladstone Commercial Corporation” to the Dealer Manager’s address set forth above. See “Questions and Answers about this Offering — Who can help answer my questions?” in this prospectus supplement. The terms, conditions, representations and warranties in the holder’s Subscription Agreement executed upon the holder’s initial investment in shares of Senior Common Stock shall be applicable to the additional investment. Any questions about subscriptions or additional contributions should be directed to the Dealer Manager at the contact information set forth above. See “Questions and Answers about this Offering — Who can help answer my questions?” in this prospectus supplement.

     You may not transfer your shares of Senior Common Stock in a manner that causes you or your transferee to own fewer than the number of shares that are required for the minimum purchase described above, except in the following circumstances: transfers by gift; transfers by inheritance; intrafamily transfers; family dissolutions; transfers to affiliates; and transfers by operation of law.

SUPPLEMENTAL SALES MATERIAL

     In addition to this prospectus supplement, we may utilize additional sales materials in connection with the offering of shares of Senior Common Stock although we will do so only when accompanied by or preceded by the delivery of this prospectus supplement and the accompanying prospectus. These supplemental sales materials may include information relating to this offering, property brochures and articles and publications concerning real estate.

     We are offering shares of Senior Common Stock only by means of this prospectus supplement and the accompanying prospectus. Although the information contained in our supplemental sales materials will not conflict with any of the information contained in this prospectus supplement and the accompanying prospectus, the supplemental materials do not purport to be complete and are not, and shall not be deemed to be, except as described below, a part of this prospectus supplement or the accompanying prospectus or incorporated into any other filings that we make with the SEC.

ERISA CONSIDERATIONS

     The following is a summary of material considerations associated with an investment in our shares by a qualified employee pension benefit plan or an IRA. This summary is based upon provisions of ERISA and the Code, as of the date of this prospectus supplement, and the relevant regulations, opinions and other authority issued by the Department of Labor and the IRS. We cannot assure you that there will not be adverse tax or labor decisions or legislative, regulatory or administrative changes that would significantly modify the statements expressed in this prospectus supplement. Any such changes may apply to transactions entered into prior to the date of their enactment. This discussion does not purport to deal with all aspects of ERISA or the Code that may be relevant to particular investors in light of their particular circumstances and a prospective investor is advised to consult its financial and legal advisers.

     Each fiduciary of an employee pension benefit plan subject to ERISA (such as a profit sharing, Section 401(k) or pension plan) or any other retirement plan or account subject to Section 4975 of the Code, such as an IRA, seeking to invest plan assets in shares of Senior Common Stock must, taking into account the facts and circumstances of each such plan or IRA, consider, among other matters:

	•		whether the investment is consistent with the applicable provisions of ERISA and the Code;
	•		whether, under the facts and circumstances pertaining to the benefit plan at issue, the fiduciary’s responsibility to the plan has been satisfied;
	•		whether the investment will produce an unacceptable amount of UBTI to the benefit plan; and
	•		the need to value the assets of the benefit plan at least annually.

     Under ERISA, a plan fiduciary’s responsibilities include the following duties:

	•		to act solely in the interest of plan participants and beneficiaries and for the exclusive purpose of providing benefits to them, as well as defraying reasonable expenses of plan administration;
	•		to invest plan assets prudently;
	•		to diversify the investments of the plan, unless it is clearly prudent not to do so;
	•		to ensure sufficient liquidity for the plan;
	•		to ensure that plan investments are made in accordance with plan documents; and
	•		to consider whether an investment would constitute or give rise to a prohibited transaction under ERISA or the Code.

     ERISA also requires that, with certain exceptions, the assets of an employee benefit plan be held in trust and that the trustee, or a duly authorized named fiduciary or investment manager, have exclusive authority and discretion to manage and control the assets of the plan.

Prohibited Transactions

     Generally, both ERISA and the Code prohibit benefit plans from engaging in certain transactions involving plan assets with specified parties, such as sales or exchanges or leasing of property, loans or other extensions of credit, furnishing goods or services, or transfers to, or use of, plan assets. The specified parties are referred to as “parties-in-interest” under ERISA and as “disqualified persons” under the Code. These definitions generally include both parties owning threshold percentage interests in an investment entity and “persons providing services” to the benefit plan, as well as employer sponsors of the benefit plan, fiduciaries and other individuals or entities affiliated with the foregoing. A person generally is a fiduciary with respect to a benefit plan if, among other things, the person has discretionary authority or control with respect to plan assets, has any discretionary responsibility in the benefit

plan’s administration or provides investment advice for a fee with respect to plan assets. Under current Department of Labor, or DOL, regulations, a person shall be deemed to be providing investment advice if that person renders advice as to the advisability of investing in shares of Senior Common Stock, that person regularly provides investment advice to the benefit plan pursuant to a mutual agreement or understanding that such advice will serve as the primary basis for investment decisions, and that the advice will be individualized for the benefit plan based upon its particular needs. Under proposed DOL regulations, persons who receive a fee for providing individualized investment advice or recommendations pursuant to an understanding that the advice may be considered in connection with investment or management decisions may be deemed to provide investment advice, even if the advice is not provided on a regular basis or does not serve as the primary basis for investment decisions. The proposed regulation would include persons who receive a fee for providing an appraisal of assets in an individual account plan for which there is no generally recognized market.

     If we are deemed to hold plan assets, our management could be characterized as fiduciaries with respect to such assets, and each would be deemed to be a party-in-interest under ERISA and a disqualified person under the Code with respect to investing benefit plans. Whether or not we are deemed to hold plan assets, if we or our affiliates are affiliated with a benefit plan investor, we might be a disqualified person or party-in-interest with respect to such benefit plan investor, resulting in a prohibited transaction merely upon investment by such benefit plan in shares of Senior Common Stock.

Plan Asset Considerations

     In order to determine whether an investment in shares of Senior Common Stock by a benefit plan creates or gives rise to the potential for either prohibited transactions or a commingling of assets as referred to below, a fiduciary must consider whether an investment in our shares will cause our assets to be treated as assets of the investing benefit plan. ERISA Section 3(42) generally provides that “plan assets” means plan assets as defined in regulations issued by the DOL (the Plan Assets Regulation). Those regulations provide guidelines as to whether, and under what circumstances, the underlying assets of an entity will be deemed to constitute assets of a benefit plan when the plan invests in that entity. Under the Plan Assets Regulation, the assets of an entity in which a benefit plan makes an equity investment will generally be deemed to be “plan assets,” unless one of the exceptions to this general rule applies.

     In the event that our underlying assets were treated as plan assets, our management would be treated as fiduciaries with respect to each benefit plan stockholder and an investment in shares of Senior Common Stock might constitute an ineffective delegation of fiduciary responsibility to our Adviser, and expose the fiduciary of the benefit plan to co-fiduciary liability under ERISA for any breach by our Adviser of the fiduciary duties mandated under ERISA. Further, if our assets are deemed to be “plan assets,” an investment by an IRA in shares of Senior Common Stock might be deemed to result in an impermissible commingling of IRA assets with other property.

     If our Adviser or its affiliates were treated as fiduciaries with respect to benefit plan stockholders, the prohibited transaction restrictions of ERISA and the Code would apply to any transaction involving our assets. These restrictions could, for example, require that we avoid transactions with persons that are affiliated with or related to us or our affiliates or require that we restructure our activities in order to obtain an administrative exemption from the prohibited transaction restrictions. Alternatively, we might have to provide benefit plan stockholders with the opportunity to sell their shares to us or we might dissolve.

     If a prohibited transaction were to occur, the Code imposes an excise tax equal to 15% of the amount involved and authorizes the IRS to impose an additional 100% excise tax if the prohibited transaction is not “corrected” in a timely manner. These taxes would be imposed on any disqualified person who participates in the prohibited transaction. In addition, our Adviser and possibly other fiduciaries of Benefit Plan stockholders subject to ERISA who permitted the prohibited transaction to occur or who otherwise breached their fiduciary responsibilities (or a non-fiduciary participating in a prohibited transaction) could be required to restore to the benefit plan any profits they realized as a result of the transaction or breach and repay any losses incurred by the benefit plan as a result of the transaction or breach. With respect to an IRA that invests in shares of Senior Common Stock, the occurrence of a prohibited transaction involving the individual who established the IRA, or his or her beneficiary, would cause the IRA to lose its tax-exempt status under Section 408(e)(2) of the Code.

     The Plan Assets Regulation provides that the underlying assets of an entity such as a REIT will be treated as assets of a benefit plan investing therein unless the entity satisfies one of the exceptions to the general rule.

     Exception for “Publicly-Offered Securities.” If a benefit plan acquires “publicly-offered securities,” the assets of the issuer of the securities will not be deemed to be “plan assets” under the Plan Assets Regulation. A publicly-offered security must be “freely transferable” and part of a class of securities that is “widely held” and either:

	•		sold as part of a public offering registered under the Securities Act and be part of a class of securities registered under the Exchange Act within a specified time period; or
	•		part of a class of securities registered under section 12(b) or 12(g) of the Exchange Act.

     For these purposes, a class of securities is “widely held” only if it is a class of securities that is owned by 100 or more persons who are independent of the issuer and one another

     Shares of Senior Common Stock are being sold as part of an offering of securities to the public pursuant to an effective registration statement under the Securities Act and are part of a class that will be registered under the Exchange Act within the specified period.

     Whether a security is “freely transferable” depends upon the particular facts and circumstances. The Plan Assets Regulation provides several examples of restrictions on transferability that, absent unusual circumstances, will not prevent the rights of ownership in question from being considered “freely transferable” if the minimum investment is $10,000 or less. Where the minimum investment in a public offering of securities is $10,000 or less, the presence of the following restrictions on transfer will not ordinarily affect a determination that such securities are “freely transferable:”

	•		any restriction on, or prohibition against, any transfer or assignment that would either result in a termination or reclassification of the entity for federal or state tax purposes or that would violate any state or federal statute, regulation, court order, judicial decree or rule of law;
	•		any requirement that not less than a minimum number of shares or units of such security be transferred or assigned by any investor, provided that such requirement does not prevent transfer of all of the then remaining shares or units held by an investor;
	•		any prohibition against transfer or assignment of such security or rights in respect thereof to an ineligible or unsuitable investor; and
	•		any requirement that reasonable transfer or administrative fees be paid in connection with a transfer or assignment.

     We have been structured with the intent to satisfy the “freely transferable” requirement set forth in the Plan Asset Regulation with respect to shares of Senior Common Stock, although there is no assurance that the shares will meet such requirement or the exception in the Plan Assets Regulation for publicly-offered securities. Shares of Senior Common Stock are subject to certain restrictions on transfer intended to ensure that we continue to qualify for federal income tax treatment as a REIT. The minimum investment in our shares is less than $10,000; thus, these restrictions should not cause the shares to be deemed not “freely transferable.”

     If our Listed Common Stock is held by 100 or more independent stockholders, and assuming that no other facts and circumstances other than those referred to in the preceding paragraphs exist that restrict transferability of shares of Listed Common Stock and the offering takes place as described in this prospectus supplement, shares of Listed Common Stock should constitute “publicly-offered securities.”

     Exception for Insignificant Participation by Benefit Plan Investors. The Plan Assets Regulation provides that the assets of an entity will not be deemed to be plan assets if equity participation in the entity by employee benefit plans is not significant. The Plan Asset Regulation provides that equity participation in an entity by benefit plan investors is “significant” if at any time 25% or more of the value of any class of equity interest is held by benefit

plan investors. The term “benefit plan investors” is defined for this purpose under ERISA Section 3(42) and includes any employee benefit plan subject to Part 4 of Title I of ERISA, any plan subject Section 4975 of the Code, and any entity whose underlying assets include plan assets by reason of a plan’s investment in such entity. In calculating the value of a class of equity interests, the value of any equity interests held by us or any of our affiliates must be excluded as must any equity interests held by a person (other than a benefit plan) who has discretionary authority or control with respect to our assets or any person who provides investment advice for a fee (direct or indirect) with respect to our assets, or any affiliate of such persons. It is not clear whether we will qualify for this exception since we do expect to have equity participation by “benefit plan investors” that may be in excess of 25%, which would be deemed to be significant, as defined above.

Other Prohibited Transactions

     Regardless of whether shares of Senior Common Stock qualify for the “publicly-offered security” exception of the Plan Assets Regulation, a prohibited transaction could occur if we, our Adviser, the Dealer Manager, any participating broker-dealer, any of their affiliates or any other person listed in ERISA Section 3(14) or Section 4975(e)(2) of the Code is a party-in-interest or disqualified person (within the meaning of such sections) with respect to any benefit plan purchasing shares of Senior Common Stock. Accordingly, unless an administrative or statutory exemption applies, shares of Senior Common Stock should not be purchased by a benefit plan with respect to which any of the above persons is a party-in-interest or disqualified person.

Valuation

     A fiduciary of an employee benefit plan subject to ERISA is required to determine annually the fair market value of each asset of the plan as of the end of the plan’s fiscal year and to file a report reflecting that value with the Department of Labor. When the fair market value of any particular asset is not available, the fiduciary is required to make a good faith determination of that asset’s fair market value assuming an orderly liquidation at the time the determination is made. In addition, a trustee or custodian of an IRA must provide an IRA participant with a statement of the value of the IRA each year. In discharging its obligation to value assets of a plan, a fiduciary subject to ERISA must act consistently with the relevant provisions of the plan and the general fiduciary standards of ERISA.

     To assist fiduciaries in fulfilling their valuation and annual reporting responsibilities with respect to ownership of shares of Senior Common Stock, beginning 18 months after the completion of this offering, we will determine the value per share of Senior Common Stock on a quarterly basis. This value will be determined as of the last day of each quarter and will be published in our periodic SEC filings.

LEGAL MATTERS

     Certain legal matters will be passed upon for us by Bass, Berry & Sims PLC, Memphis, Tennessee. Certain matters of Maryland law, including the validity of the shares of Senior Common Stock to be issued in connection with this offering, will be passed upon for us by Venable LLP, Baltimore, Maryland.

EXPERTS

     The financial statements and management’s assessment of the effectiveness of internal control over financial reporting (which is included in Management’s Report on Internal Control over Financial Reporting) incorporated in this prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 2010 have been so incorporated in reliance on the report(s) of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

     We are a public company and file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document that we file at the SEC’s public reference room at 100 F Street, NE, Washington, D.C. 20549. You may request copies of these documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the public reference room. Our SEC filings are also available to the public at the SEC’s website at http://www.sec.gov. We also make available free of charge through our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as well as the definitive proxy statement and Section 16 reports on Forms 3, 4 and 5. Our website address is http://www.GladstoneCommercial.com. However, the information located on, or accessible from, our website is not, and shall not be deemed to be, except as described below, a part of this prospectus supplement or the accompanying prospectus or incorporated into any other filings that we make with the SEC.

     The SEC allows us to “incorporate by reference” the information that we file with it which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus supplement and the accompanying prospectus, and the information that we file subsequently with the SEC prior to the completion of this offering will automatically update and supersede this information.

     We previously filed the following documents with the SEC, and such filings are incorporated by reference into this prospectus supplement:

	•		Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed March 8, 2011 (including portions of our definitive Proxy Statement for the 2011 Annual Meeting of Stockholders incorporated therein by reference);
	•		Current Reports on Form 8-K filed on January 1, 2011 and February 1, 2011 (excluding the information furnished under Item 7.01 and Exhibit 99.1);
	•		The description of our Listed Common Stock contained in our Registration Statement on Form 8-A filed August 12, 2003, as updated through subsequently filed reports;
	•		The description of our 7.75% Series A Cumulative Redeemable Preferred Stock contained in our Registration Statement on Form 8-A filed January 19, 2006, as updated through subsequently filed reports; and
	•		The description of our 7.50% Series B Cumulative Redeemable Preferred Stock contained in our Registration Statement on Form 8-A filed October 19, 2006, as amended in our Registration Statement on Form 8-A/A filed on October 23, 2006, as updated through subsequently filed reports.

     All documents that we file pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus supplement and before all of the securities offered by this prospectus supplement are sold are incorporated by reference into this prospectus supplement from the date of the filing of such documents, except for information “furnished” under Item 2.02 or Item 7.01 of Form 8-K or other information “furnished” to the SEC which is not deemed filed and not incorporated by reference into this prospectus supplement and the accompanying prospectus. Information that we subsequently file with the SEC as aforesaid will automatically update and may supersede information in this prospectus supplement, the accompanying prospectus and information previously filed with the SEC.

     You may request a copy of these filings (other than exhibits, unless the exhibits are specifically incorporated by reference into these documents) at no cost by writing or calling Investor Relations at the following address and telephone number:

Investor Relations
Gladstone Commercial Corporation
1521 Westbranch Drive, Suite 200
McLean, Virginia 22102
(703) 287-5893

PRIVACY NOTICE

     We are committed to protecting your privacy. This privacy notice explains our privacy policies and supersedes any other privacy notice that you may have previously received from us.

     We will safeguard, according to strict standards of security and confidentiality, all information that we receive about you. The only information that we collect from you is your name, address, ownership of our capital stock and social security number. This information is used only so that we can send you information about us voluntarily or as may be required by law.

     We do not share this information with any non-affiliated third party except as described below.

	•		Authorized Employees of our Adviser. It is our policy that only authorized employees of our Adviser who need to know your personal information will have access to it.
	•		Service Providers. We may disclose your personal information to companies that assist us with certain activities, such as record keeping, processing and mailing services. These companies are required to protect your information and use it solely for the purpose for which they received it.
	•		Courts and Government Officials. If required by law, we may disclose your personal information in accordance with a court order or at the request of government regulators. Only that information which is required by law, subpoena or court order will be disclosed.

Appendix A

SUBSCRIPTION AGREEMENT

1. INVESTMENT

State of Sale:           Amount of Subscription: $                                                           

•		Minimum investment is 200 shares having an aggregate minimum purchase price of $3,000
•		Money Orders, Traveler’s Checks, Starter Checks, Foreign Checks, Counter Checks, Third-Party Checks or Cash cannot be accepted.

2. INVESTMENT TYPE (CHECK ONE BOX ONLY)

Non-Qualified		Qualified
o Individual (If TOD, attach application)		o Traditional (Individual) IRA
o Joint Tenant (1) (If TOD, attach application)		o Simple IRA
o UGMA/UTMA: State of		o SEP IRA
o Tenants in Common (1)		o ROTH
o Community Property (1)		o Profit Sharing Plan (2)
o Trust (2)		o Pension Plan (2)
o Corporation or Partnership (2)		o KEOGH Plan (2)

o Other (Specify):

3. INVESTOR INFORMATION          (SSN REQUIRED)

Investor 1
Name				SSN/Tax ID:				DOB:
Investor 2
Name				SSN/Tax ID:				DOB:

Street Address:

City:

State:

Zip Code:

Optional Mailing Address:

City:

State:

Zip Code:

Phone (day):				Phone (evening):

E-mail:

o US Citizen      o US Citizen residing outside the US
o Foreign citizen, country
o Check here if you are subject to backup withholding

4. INVESTMENT TITLE                    (SSN OR TIN REQUIRED)

Please print names in which shares of common stock are to be registered. Include trust name if applicable. If IRA or qualified plan, include both custodian and investor names and Tax ID Numbers. If same as above, write same.

Title Line 1
Title Line 2

Social Security No. or Tax Identification No.				Secondary Tax Identification Number

5. CUSTODIAN/TRUSTEE INFORMATION

Trustee Name

Trustee Address 1

Trustee Address 2

Trustee City				State				Zip Code