With rents rising and interest rates still near historic lows, the balance might seem to favor purchasing. However, leasing remains a strong option for many companies. Let’s explore key factors to help you decide which option is best for your business.
Reasons to Purchase
Purchasing becomes more attractive when your company’s needs are stable and predictable for the long term. If you know what your business requires now and won’t need changes for a decade or more, purchasing might be a wise choice. Owning the space gives you total control over its use and provides long-term certainty.
Additionally, purchasing allows you to benefit from potential property appreciation. While appreciation can be valuable, tying up capital in real estate may outweigh the benefits for many businesses. However, if you plan to use appreciated property as an exit strategy or need to control prime real estate, purchasing could make sense.
Benefits of Leasing
Many of America’s most successful companies choose to lease for several reasons. Leasing is generally more flexible, less capital intensive, and provides more options.
Leasing offers flexibility in several ways. Although you can technically sell a building you own, finding a buyer can take months or even years. On the other hand, with a lease, you can move out once it expires. You also leave any necessary building work to the landlord. Additionally, if you have a lease with renewal options, you gain more control by extending the lease.
Leasing Conserves Capital
Leasing helps businesses conserve capital in three primary ways:
- Lower upfront costs: Leasing typically requires a smaller initial investment compared to purchasing. Rent and security deposits are usually less than loan costs and down payments.
- Lower payments: Lease payments are often cheaper than mortgage payments.
- Balance sheet benefits: Even with accounting changes, leases still offer advantages compared to building ownership when considering your business’s balance sheet.
Need Help Deciding?
If you’re weighing the lease vs. purchase decision or need commercial space, contact us anytime. We’re here to help! Reach out to us at (480) 330-8897 or via email at request@leveragedcre.com.
Even after outlining all the information above, writing a letter of intent (LOI) can still seem daunting. That’s why the Leveraged CRE Team at Commercial Properties, Inc. is here to help locate commercial space for lease and assist in using a letter of intent to land such space. Contact us at (480) 330-8897 or send us an email at request@leveragedcre.com.
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Meet The LeveragedCRE Investment Team
Phill Tomlinson and Eric Butler are seasoned commercial real estate brokers with over 44 years of combined experience. They lead the LeveragedCRE Investment Team at Commercial Properties, Inc. (CPI) in Scottsdale, Arizona, specializing in investment sales and tenant/landlord representation across the Phoenix and Scottsdale submarkets.
The team leverages their extensive knowledge and expertise to help investors and property owners maximize their returns and navigate complex real estate transactions with confidence.
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