A common question we often get from clients… “Is it possible to buy the building?”
First off, we must identify your business’ long-term needs and goals. If you are in an industry that is very stable and you don’t plan to expand or relocate, you should consider buying. Most businesses over time will continue to grow, while others are seasoned and at their full potential. Purchasing a location that fits your needs long term prevents the worry of ever needing to relocate due market conditions. Often with a lease, the rent will increase annually between 2-3%.
Having a fixed mortgage payment can be beneficial for many companies, as they can depend on consistency in their overhead. There are tax benefits to owning your own building as well. In order to achieve the right space for your business, sometimes one must purchase an entire building that is larger than they will occupy themselves. In this case, you will need to find tenants to fill the rest of the space and contribute to the costs of the property. This will require you to become a landlord yourself, but there are management companies that can handle all the work for you, if needed.
Let’s look at reasons to lease your office space. Many businesses will grow and eventually need more space. Leasing gives you the ability to grow or to downsize, depending on the economic conditions at the time of your lease expiration. When you lease an office, you do not need much up-front capital compared to purchasing. As a business, your money is vital to continuing to grow, and may not be as effective to invest in real estate.
Most landlords will provide a new tenant with an allowance to remodel or reconfigure a space. They are willing to put up their own money in order to secure their rental income for the years to come. Typically, the longer a tenant commits to leasing a space, the more a landlord will spend to improve the space.
In closing, aquiring real estate is essential for any business. Whether you are leasing or buying, having a roof over your head and a place to work will always be necessary. The question to ask yourself as a tenant is, “Do I see our business here for a few years, or a few decades?” At Pirie Properties, we are here to guide you through the process in making these decisions.