Many of our tenant clients confess to us that they have wondered if they should buy or lease commercial real estate. It’s a common question you hear brokers often ask. “Why lease when you can own”, they ask? This is not a bad question. It’s just an oversimplification. It’s not apples to apples. Let’s take a quick look at the pros and cons to see if this is even something that is worth considering for your business.
Owning Commercial Real Estate
Some of the obvious benefits of owning commercial real estate would be that you’d be able to put that rent money toward paying off your mortgage instead of your landlord’s. You’d enjoy the tax advantages of being an owner. You wouldn’t have to get permission from a property manager to make modifications. And if you purchase a multi-unit building, you’d potentially receive rental income from your tenants.
Leasing Commercial Real Estate
However, with rights come responsibilities. As an owner, it’s not as easy to just pick up and move if you outgrow your space. Your upfront costs are far greater than leasing. You are responsible for things renters don’t have to consider. Renters do not think about mortgages, landscaping, security, utilities, deposits, taxes, insurance, maintenance, and possibly vacancies.
Of course, there is a whole lot more to this topic. In the final analysis, owning commercial real estate is a whole other business line. About 20% of US companies own the building they work in. The other 80% would argue they’d prefer to focus on their main business, and leasing makes it easier for them to do that.
Find out if Buying or Leasing is Best for Your Business
Since conventional wisdom holds that it takes about seven years for owning to outperform leasing, that’s probably the place to start your consideration. To discuss further whether owning makes sense for your business or if you’d like to look at space to lease, we certainly can help you with that. Check out our reviews and then ask us to help you today.