Should I Lease or Buy Commercial Real Estate?

Answer: It’s complicated!

I have been asked this question many times over my 32 years in Commercial Real Estate. This seemingly simple question always elicits more questions and discussion.

The era of corporate ownership and occupation of large commercial properties has been declining for years. This is the former “edifice complex”. Large corporations are disposing of owned real estate and opting for lease back opportunities or resizing in a completely different location.

However for some businesses, ownership presents opportunity. If you want to consider a purchase, let’s review your situation, with some basic introductory thoughts.

What are your short and long term plans for growth and expansion?
If you want to sell the business in the future, will property ownership be a liability or an asset?
Can you allocate time, energy and money to managing the site?
Would buying the property in a different controlled entity offer advantages?
Does the cash down payment requirement cause a negative reallocation of funds?
What are your tax benefits of depreciation, interest deductions and implications of appreciation (May not always occur)?

Is leasing space a better option for you? Let’s briefly review the situation from this perspective.

Does the flexibility of lease term and/ or location impact your decisions for the future?
Are fully deductible lease payments important?
Do you prefer putting cash back into the business instead of real estate?
Is your business in a rapid growth mode?

For most of us, home ownership is a major and achievable goal. This resonates with the small business owner, and often impacts buy vs. lease decisions for the business. A complete review of goals and objectives with a cost-benefit analysis of buy or lease opportunities would be instrumental in the decision making process.

If you would like to discuss this topic as it related to your business,

Call T Square Properties @ 914-328-7511