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If you have the capital to buy a commercial property to run your business from, you might assume that purchasing it is the natural next best step. After all, you won’t need to pay a lease to anyone else or abide by their rules.
While there are certainly advantages to commercial building ownership, there are also several key benefits to leasing. For many businesses, it can make sense to lease a commercial property, rather than buy one for these reasons:
Lower Upfront Costs
Search Investa commercial real estate, and you’ll find commercial properties in various locations waiting for their new tenants to move in. Rather than paying hundreds of thousands of dollars before that can happen, your upfront costs before relocation are far lower.
While buying commercial real estate requires a large deposit, financing costs, and legal fees, leasing typically requires only a bond and an initial rent. You can keep your business capital free for investment in your business, like staff, inventory, and marketing.
Flexibility to Move or Grow
Businesses change. There may come a time when your product offering expands, so your need for space expands with it. Alternatively, you may be ready to downsize, and you need less space. Matching your space to your needs is far easier when you don’t own your building.
Rather than trying to sell or repurpose your building to suit your new needs, you can relocate at the end of your lease and work from somewhere that’s more fitting.
Better Cash Flow Management
It’s only natural to think that if you have a significant sum of money, you can buy a building to run your business from. However, this means tying up a huge amount of money in your property that you won’t be able to easily access if you need it. Leasing spreads out your costs over time and helps you maintain liquidity. You then have funds available at the drop of a hat to handle your daily operations or unexpected costs.
Fewer Maintenance Responsibilities
Maintenance requirements vary from one commercial space to the next. This is because typical obligations are outlined in specific lease agreements. However, generally, more of the maintenance falls on the property owner.
A tenant may be required to maintain the plumbing, electrical, and interior systems, but the landlord often takes care of the more fundamental and, often, expensive parts, like the roof, exterior, and foundation. Many landlords simply include a ‘make good’ clause in their rental agreement, requiring them to return the property to its original condition at the end of a lease.
Reduced Risk
You already face risks as a business owner, especially when you must ensure your business earns enough to cover its costs. Buying a property to run your business from adds even more risk.
Not only must you consider your operational costs, but you now face additional risks, such as declining property values, that could make selling difficult in the future. By leasing, that’s your landlord’s concern, not yours.
There’s no denying that owning your own building to run your business from can be beneficial, but so can leasing. Fewer risks, lower upfront costs, more flexibility, and better cash flow management make this option attractive for many growing businesses.
