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To lease or own? Evaluating options for commercial property

On Behalf of | Dec 21, 2023 | Real estate transactions

You will likely have to decide whether to buy or lease commercial property when setting up shop or expanding your business. It is a pivotal decision that may impact the future of your business.

Both leasing and owning commercial property come with distinct advantages and disadvantages. As such, it is crucial to evaluate your options carefully and make the right choice. Below are some key considerations that can help you make an informed decision:

Your financial standing

Look at your financial standing and the impact of purchasing or leasing on your cash flow, capital reserves and overall financial stability. Leasing often requires less upfront capital, making it a more feasible option if you have limited initial investment capabilities. Evaluate your ability to handle lease payments comfortably without straining your finances.

On the other hand, purchasing a commercial property necessitates a more substantial initial investment. Assess whether you have the financial capacity to manage the down payment, ongoing mortgage payments, property taxes, insurance and maintenance costs. 

Projected business growth

Are you expecting rapid expansion in the near future? Leasing provides flexibility, allowing for quicker adaptation to changing space needs, while owning offers stability but may be less adaptable to sudden growth.

Location and market dynamics

The location of your business could as well be its lifeline. Consider factors like visibility, accessibility, proximity to customers or suppliers and overall market conditions when contemplating buying or leasing a commercial property. It can help you decide what is best for your business now and in the long term.

Safeguard your business interests

Whether you are leaning towards leasing or buying commercial property, getting legal assistance is important. Because real estate decisions get tricky, you should get legal guidance to help make the best decisions for your business’ interest. Lawyers that specialize in real estate can help you understand the legalese, handle the paperwork and avoid unpleasant surprises inherent in commercial real estate contracts.