Should You Buy or Lease Your Next Commercial Building?

Commercial • January 20, 2022

Are you searching for the ideal space for your business? If so, you may be wondering whether to buy your square footage or lease it. There are benefits and drawbacks associated with both options, and choosing one is a big decision. Fortunately, with a bit of timely information and some careful forethought, you can ensure you take the right next step.

If you’re not sure whether to buy or lease a commercial space, here’s what you should know…

The Pros and Cons of Buying

If you’re lucky enough to have the option of buying, there are some distinct benefits of doing so. To start with, purchasing your space will allow you to secure a great location long term. If you find a place that receives great foot traffic and sits close to your suppliers, you may not ever want to leave.

Next, there’s the freedom that goes along with buying. Renting means you’re beholden to the terms of a lease agreement, and your landlord will have a say in what you can and can’t do. If you want to run your business unencumbered, you may want to consider purchasing.

Buying a space to run your business can also be beneficial from an investment perspective. If executed properly, the right strategy can help you grow your personal wealth. That’s also worth keeping in mind if the idea of making improvements appeals to you. Let’s say you’re a restauranteur who wants a top-of-the-line kitchen. Renovating is bound to make your investment more valuable.

While we’re on the subject of money, owning property can help you free up some extra cash when you need it—since you won’t have rent as a monthly expense.

Of course, there are also some downsides to buying. Interest rates are subject to rise, which could cost you if you have a variable rate mortgage. It’s also a bigger commitment than leasing. As much as every business owner hopes their venture will be a success, it’s important to plan for worst-case scenarios. On that note, purchasing also means doing a lot more due diligence—since issues such as building defects and outstanding taxes can arise.

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The Pros and Cons of Leasing

Just like buying, leasing a space for your business has its advantages. First off, it’s almost always the more affordable option. If you don’t have much capital upfront, going this route could allow you to set up shop earlier.

Of course, it’s not just start-up cash you need to worry about. Ongoing financial stability also matters. If your future needs are uncertain—because your business is growing rapidly, for example—you might be better off renting. In general, it’s also a lot simpler than purchasing a property. It means avoiding the day-to-day hassles and long-term commitment associated with ownership.

On the flip side, for many businesses, having the right to renovate is important, and leases can restrict the improvements you’re able to make. If you want the freedom to convert to an open-concept layout or expand in the future, that’s worth remembering.

You should also be aware that if the terms of your lease are less than ideal, you could wind up spending a lot more money than you think. In some cases, things like maintenance of common areas, insurance, and utilities won’t be included. If you do manage to secure a favourable lease, be aware that your landlord can always refuse to renew it.

Are you searching for the ideal space for your business? Check out our commercial listings right here.

Which Option is Right for You?

When you’re deciding whether to buy or lease a commercial space, weighing your options carefully is key. For example, you’ll want to create a detailed budget that accounts for all of your expected costs. Whether you’re a new or established business, you may find that you don’t have the funds to comfortably purchase.

No matter your circumstances, speaking to a professional with commercial real estate experience can help ensure your success. The right expert can help you decide on the best course of action—and help set you up for business success.

Do you have buying questions? You can ask us anything. Simply get in touch to get the answers you’re seeking.