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.