As a business owner, the decision to buy or lease office space is a crucial one. There are clear benefits and drawbacks to both choices, and it’s essential to closely evaluate which option is right for you.


The Benefits of Buying Office Space
One of the most significant advantages of buying office space is the freedom and flexibility that come along with ownership. A company that owns its office space is not bound to landlord contracts and leasing negotiations, meaning that the owner can do whatever they want with the space, whether that means a complete renovation, customization, or expansion. 

Additionally, buying office space can be a solid long-term investment. Like owning a home, the property’s market value is likely to appreciate over time, which means the owner has potential for significant returns on their investment. 


The Downsides of Buying Office Space

However, buying office space requires significant capital, often hundreds of thousands of dollars, to put money down and obtain financing for the purchase. Additionally, owning property also comes with responsibilities like property taxes and maintenance costs, which can be an extra expense for a small business. 


The Benefits of Leasing Office Space
Leasing offers chief advantages compared to buying. One benefit is lower upfront costs required and reduced overhead costs. Since business owners don’t have to make the same initial investment as when buying property, saving money on monthly rental fees and costs tends to be a lot easier, especially for small or new companies. 

Leasing is also ideal for firms that have a mobile workforce. Lease agreements tend to be shorter in duration, and moving after a few years is nonpermanent and straightforward, compared to selling a property. Additionally, commercial buildings often operate under similar or matched lease terms, expiring simultaneously, which allows businesses to assess whether to remain in the same structure or rent a new space.


The Cons of Leasing Office Space
Subsequently, there are always drawbacks, which come with renting commercial space. One of the most significant issues of renting is that all upgrades remain unused by the business. With Rental Property, a tenant likely needs to seek the consent of landlords on any alteration to the property, limiting flexibility and making it harder to invest in building out a space to meet changing business needs over time. 
Finally, there is no potential upside from the equity. Unlike when you hold a property, a rented property owner would have no equity build-up or asset value over time. This means that when rent is paid, that is money that is never recovered or seen again. 

In conclusion, evaluating whether to purchase or rent commercial property takes careful deliberation between current variables such as market conditions, costs, job aspects, tax implications, and the company’s view of its future during these conditions. For companies that are trying to find flexibility and cost savings, leasing may be the right choice. Those with significant capital, the need for flexibility and customization, and a continued investment in property to grow over time, buying  may be more suitable.

In conclusion, the decision to buy or lease office space for your business depends on your specific business needs and goals. Buying office space can be a good long-term investment if you plan to stay in the same location for many years and have the financial resources to do so. Leasing office space may be a better option if your company is still growing and has limited resources, as it can offer more flexibility and lower upfront costs. Ultimately, it’s important to analyze your budget, growth projections and operational needs to determine which option makes the most sense for your business.

Jen Balcom Holzwarth

Broker Blue Owl Properties