Why You Should Lease, Not Buy Office Space

Why You Should Lease, Not Buy Office Space

Budding entrepreneurs and existing business owners are often faced with a difficult decision around whether to buy or lease commercial property. At first glance, the obvious choice would be to buy property, but this may not be what’s right for your business. Here are some reasons why you should consider leasing office space in Barrie.

Diverting Gains
Business owners most often cite equity as a primary reason for buying property. While it’s true that purchasing will build equity, it will also divert any gains from renting. In other words, that extra money going to the mortgage payment might be put to better use expanding the business.

Property Taxes
Owning property means you have to pay property taxes. It’s rare that property taxes decrease on commercial property; in fact, an increase in property value is the norm. With increased property values come increased taxes – and taxes on commercial property are far more expensive than residential.

Growth
If a business continues to grow (as any owner would hope) the space might become too small. The owner must then find new accommodations, while disturbing the operation as little as possible. This can present a very stressful situation, having to sell a property, as well as, acquire new space through lease or purchase. Expanding your business while leasing office space is much simpler. Larger property can be planned for and acquired at the end of your current lease.

Front-Loading
Every business owner knows the dangers of front-loading, i.e. putting in too much money on the front-end only to struggle to make it on the back-end. Purchasing commercial property is very expensive and might exhaust capital needed elsewhere. Leasing has no such monetary commitment. In some cases, a lessee may even be able to negotiate on the rent, leaving more capital for purchasing fixtures, equipment, inventory and other costs of doing business.

Prime Location
Buying means having to choose what is affordable. More particularly, what the lender states is affordable. Leasing is a great alternative to get the most coveted spaces without the encumbrance of a hefty mortgage. For what is paid in a monthly mortgage, often a business can actually get more space for less money when leasing.

Freedom
Owning a building means being the landlord, regardless if the space is or isn’t rented to tenants. Any problems with the office space fall on the shoulders of the mortgagor. On the flip side, leasing commercial property allows you to task property issues to responsible parties, while allowing you to keep focused on your business.

Leasing can be the preferred option for conducting business. While it’s true the tenant doesn’t own the space, that fact is often a blessing in disguise.

Business owners should carefully consider their options before deciding between leasing and buying commercial property. While buying commercial property may be right for some, leasing may be right for your particular business needs.  Be sure to consult with a commercial real estate broker in Barrie who can further help you to understand what is best for your business.

 

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