When it comes to searching for commercial real estate, there are several factors that go into deciding whether to lease a space or purchase a property. What is best for your business will largely depend on what stage your business is in, and how much space you need to sufficiently operate it out of now and in the foreseeable future.
If you’re considering leasing a commercial space, there are many pros and cons, whether it be for office, retail or industrial. To assist you throughout this process, we’ve compiled an overview of what you might expect.
Benefits of Leasing:
More options
Lower upfront costs
Less Responsibility
Fixed monthly expenses
Flexibility
More options
When leasing, there is usually a greater variety of spaces available to lease than there are for sale. Leasing also gives you various options of rate, area, lease terms and location which means you get more properties to choose from.
Lower Upfront Costs
Typically, upfront costs are much smaller compared to purchasing costs. These costs can include a security deposit, 1st month's rent, moving costs and any specific improvements that the landlord may not cover.
Less Responsibility
As a tenant, you tend to have less responsibility than an owner does, especially depending on the type of lease you signed. Many times, maintenance and upkeep of the building fall under the responsibility of the landlord. This also allows you to keep your full attention and more of your capital focused on your business and its future.
Fixed Monthly Expenses
Signing a lease allows business owners to better budget their monthly costs. As a tenant, you typically have less worry about building liabilities or risk of major capital expenses such as roof, air conditioning, heating, building repairs, etc.
Ultimately, these expenses can vary depending on the type of lease you signed.
Flexibility
The amount of flexibility leasing provides allows you to relocate your business easily. Once your lease is up, there is no need to worry about remodeling for another tenant or even selling the building. You have no further responsibility and can basically just move to another property that better suits your needs for the time.
There are also some disadvantages to leasing as well.Disadvantages of Leasing:
Hattie – why didn’t we include the other comments (I.e. other items you can’t control, such as maintenance, who leases other suites, etc?)
I added maintenance and who leases other suits under the “No Control” factor. Alone, neither of them sounded strong enough to stand as their own bullet point.-Fluctuating rent prices
-No control
Fluctuating Rent Prices
When leasing, there are many variables that are out of your control. There is always the potential that the landlord may increase your rent when it comes time to renew. If this happens it may force you to renew your lease at a higher rate or find a new location that better fits your financial stability.
In order to assist you in getting the best terms, it is always recommended that you hire a professional tenant representation broker to negotiate your lease and any renewals.
No Control
As the tenant of a building, you also have little control as to who leases the other suites in the building and how the building is maintained and managed overall. And of course, any improvements you make to the building end up staying at the property once you leave.
Considering leasing a commercial space?
If you’re interested in leasing a property, make sure to get in touch with one of our team members who will help to facilitate a seamless process from start to finish. Assessing your own financial status and your business plan will help to guide you as you consider whether to lease or purchase commercial real estate. (hattie – do we link to “benefits of purchase here?) It’s useful to remember that what’s best for other businesses may not necessarily be what’s best for yours.
Yes, once the “benefits of purchasing” CRE blog is published, I would come back and link it in this blog. For any words that are italicized, I plan on adding internal/external links too.
I also spoke with Anna, and she is working on editing your CRE leasing videos from Nano to be used as the media for this blog.
Updated Version After SEO Check:
When it comes to searching for commercial real estate, there are several factors that go into deciding whether to lease a commercial space or purchase a property. What is best for your business will largely depend on what stage your business is in, and how much space you need to sufficiently operate it out of now and in the foreseeable future.
If you’re considering leasing commercial real estate, there are many pros and cons, whether it be for office, retail or industrial. To assist you throughout this process, we’ve compiled an overview of what you might expect.
Benefits of Leasing:
More Options
Lower Upfront Costs
Less Responsibility
Fixed Monthly Expenses
Flexibility
More Options
When leasing, there is usually a greater variety of spaces available to lease than there are for sale. Leasing also gives you various options of rate, lease terms, and location which means you have more properties to choose from.
Lower Upfront Costs
Typically, upfront costs are much smaller compared to purchasing costs. These costs can include a security deposit, 1st month's rent, moving costs, and any specific improvements that the landlord may not cover.
Less Responsibility
As a tenant, you tend to have less responsibility than an owner would, heavily depending on the type of lease you signed. Many times, maintenance and upkeep of the building fall under the responsibility of the landlord or the property management team.
Leasing also allows you to keep your full attention and more of your capital focused on your business and its future.
Fixed Monthly Expenses
Signing a lease allows business owners to better budget their monthly costs. As a tenant, you typically have less worry about building liabilities or risk of major capital expenses. These expenses can include roof, air conditioning, heating, building repairs, etc.
Ultimately, these expenses can vary depending on the type of lease you signed.
Flexibility
The amount of flexibility leasing provides allows you to relocate your business easily. Once your lease is up, there is no need to worry about remodeling for another tenant or even selling the building. You have no further responsibility and can move to another property that better suits your needs.
Disadvantages of Leasing:
Fluctuating Rent Prices
No Control
Fluctuating Rent Prices
When leasing, there are many variables that are out of your control. There is always the potential that the landlord may increase your rent when it comes time to renew. If this happens it may force you to renew your lease at a higher rate or find a new location that better fits your financial position.
In order to assist you in getting the best terms, it is always recommended that you hire a professional tenant representation broker to negotiate your lease and any renewals.
No Control
As the tenant of a building, you also have little control as to who leases the other suites in the building and how the building is maintained and managed overall. And of course, any improvements you make to the building end up staying at the property once you leave.
Considering Leasing a Commercial Space? If you’re interested in leasing commercial real estate, make sure to get in touch with one of our team members who will help to facilitate a seamless process, from start to finish. Assessing your own financial status and your business plan can guide you as you consider whether to lease or purchase a commercial space. It’s beneficial to remember that what’s best for other businesses may not necessarily be what’s best for yours.
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