Commercial Real Estate: Buy or Lease?

CM Commercial Real Estate's Client California Bank & Trust posted an insightful article on issues to consider when deciding whether to buy or lease commercial property. Below are a few of their bullet points:


Reasons to own

  • Real estate can be used by the business as a long-term vehicle to build equity in an appreciable asset.

  • Owning helps avoid exposure to rental expense increases.

  • Owning allows businesses to control the portion of operating costs that pertain to occupancy expenses.

  • Owning can provide a tax deferral thanks to the depreciation of the fixed asset.

Reasons to lease

  • Leasing frees up capital for businesses to use toward short- and mid-term expenses.

  • This working capital can be used for growing the business as well, often at a higher ROI than investing in real estate.

  • For companies growing rapidly, leasing allows more flexibility for quick expansion when they need additional space or a new location.

  • When there is instability or fluctuation in the local real estate market, the effects are borne by the landlord instead of the business.

Click here to read the full article.

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