How the world looks at commercial real estate is starting to evolve: while it may be necessary for the company, it may not be necessary for the employees. It’s important to consider whether or not owning commercial space is a good idea for you.
Leasing commercial space comes with a lot of flexibility. You are able to change locations or downsize and move as fast as you would like. Leasing commercial real estate also gives you access to prime property in a great location. It also dresses up your working capital, allowing you to grow your business, invest in opportunities, or otherwise use your money as you see fit and necessary. When leasing commercial space, you are also not responsible for repairs or maintenance work and if these spaces provide equipment, you’ll often have access to it for free or at a discounted price. On the contrary, leasing does not provide you with any equity potential and rates and renewals are not guaranteed.
Purchasing commercial space comes with the potential for property appreciation as well as subletting. Both of these things allow you to make additional money or see a greater return on your purchase. With interest rates so low, the cost to finance the purchase of commercial space is also low. The mortgage is a fixed payment every month, which makes it easier to budget your expenses. When purchasing the space, also qualify for multiple tax deductions (i.e. interest, property taxes, repairs, etc), and the space has the capacity to serve as collateral if you end up needing to apply for a business loan or line of credit.
One of the major things to consider when deciding whether or not to lease or purchase commercial space for your business to determine whether or not your business really needs the space. Is the business growing or is it in a decline? Can the business operate from a home? Does the business only need an address? Knowing the state and condition of your business will help you make the best decision possible.