Renting

Should You Buy or Rent Your Next Commercial Property

Commercial Property

When it comes to making a move in the commercial real estate (CRE) segment, you have plenty of factors to consider at once. But perhaps the most significant dilemma comes in the form of deciding whether to buy or lease your commercial property.

The answer is especially tricky when you are making such a transaction for the first time. But seeing that the wrong option can derail your savings and growth alike, it is critical to make a choice that garners long-term benefits for you.

To support you through the process and make it easier for you, click here is how to decide between buying and leasing your next commercial property.

How Long Do You Want to Retain Control of the Property?

Retain Control of the Property

One of the first factors that you need to consider in your commercial real estate decision is the length of ownership or acquisition for your property. Since this aspect can become the main driver behind your investment, you must make up your mind before looking for related listings.

When you buy a commercial property, it provides you with permanent rights over the land and related structure. But when you enter into a CRE lease, your rights over the property are only limited for the lease period, typically ranging from 3-10 years.

If you plan to stay in the same property on a permanent basis and want to retain complete ownership rights, including subleasing, buying your CRE is a better choice. On the other hand, if you want to have the flexibility to move out after a few years without an extensive need for subleasing, renting your property is a more suitable option. You may click here to learn more about these options and their overall compatibility for your operations.

What’s Available in the Size You Need?

Another primary consideration in commercial real estate decisions is to see what type of property is available in the size you need.

It’s because CRE can often run on limited inventory in any given region. Even when you have plenty of listings open in an area, most of them often refer to properties that are available for lease instead of the sale. Curiously enough, this might go the opposite way in some scenarios, where specific sizes of properties are available mostly for sale than lease.

If the area you have selected tends to experience the same phenomenon, you may need to reconsider your priorities. In such situations, you can look into properties that are of different sizes and specifications than your original requirement. Otherwise, you can rework your initial plans and finances to fit the CRE availability of sale or lease.

Do You Expect Your Size Needs to Grow?

Whether you are the owner of a budding startup or an established business, the possibility of growing your operations is always in the cards. However, it does not always translate into tangible plans for every organization.

When you are on the hunt for a commercial property, you need to be pragmatic about these future opportunities. For instance, if you have just started your business or have plans to shift it to a fast-growth mode, it is more than likely that your property size requirements will grow over time. But if you already have an established business that may not expand rapidly, your square footage requirements may stay in place for the foreseeable future.

If you purchase a commercial property as a growing business, it’s important that you do so with your future size requirements in mind. On the other hand, if you have no plans for massive expansion, you can easily buy it for the long haul while considering your current size needs.

However, when you lease a property, you can start with your current size requirements as a budding or established business alike. You can then upgrade to other options according to your lease agreement, if and when you are about to execute your plans for growth.

How Much Can You Afford to Buy vs. Lease?

When choosing between buying and leasing, perhaps the most significant deciding factor is your budget.

Whenever you are purchasing commercial real estate, you need to have massive capital at hand. In addition to footing the costs for your property during the initial transaction, you also need to cover maintenance and other related expenses for as long as you own the asset.

But when you are leasing CRE, the requirements for funding are dialed down by a significant margin. You can essentially obtain your commercial space for a fraction of its original cost, with the stipulation of vacating it according to your lease agreement.

With that, purchasing your own commercial real estate property adds to your assets. It also allows you to grow your investment over time. Whereas paying for a lease does not contribute anything of tangible value than commercial space for your operations. It may also increase your overhead expenses with rent increments. You may click here to learn more about these options and their overall compatibility for your operations.

By considering your company’s overall funding and its future expenses, you can determine which of these options fit your needs in a better manner. Keeping these factors in mind can help you make an informed decision while moving forward with your CRE plans.

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Diana Williamson

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