Can’t Decide Whether to Lease or Buy a New Commercial Property? Let us Help!
If your business has seen enough growth to outgrow your current facility, you’ve probably started browsing available commercial properties for lease or sale throughout the Cincinnati-Dayton and Northern Kentucky region. And you’ve likely begun to realize that buying and leasing commercial properties is nothing like the same for residences. Between the zoning, codes, financing, market projections, and myriad other intricacies, the choice of buy vs rent often isn’t simple.
Acquiring and owning a new commercial property, when it starts as empty acreage or simply entails renovating an existing space, has all the perks that come with outright ownership of property of any kind. But in industrial and commercial real estate, you’re often working with many moving parts and a lot of capital. For some growing businesses, leasing a commercial property makes more sense. The Schueler Group is the area’s foremost expert in negotiating the best leasing terms for your new venture.
Buying vs Leasing a Commercial Property: A Comparison
There are several ways in which purchasing a new business location differs from renting:
Necessary Capital
Commercial property transactions require hefty down payments, and then there are associated closing and broker costs to deal with, whereas commercial leases require less paperwork and less capital.
Time Costs
You could be looking at anywhere from 6 months to 2 years if you are purchasing a property. The purchase process itself takes a while. Then, empty land will need developed and constructed on. An existing building will need retrofitted as the business has the sufficient funds. All this before you even move in. With leasing, you are talking 30 to 90 days from the time you choose your new business location to the time you put the keys in the door for the very first time.
Commercial Leases Offers a Quick Exit Strategy
Leasing gives a clear and straightforward exit strategy for your business. When your lease term concludes, you have the option to move, renegotiate the lease terms, or explore other property options. This agility can be especially valuable in dynamic business environments. Changing markets can change your business’s needs on a dime. Property ownership can involve a lengthy sales process or uncertainty about property values. Commercial leasing provides a more predictable path for transitioning to a new location or adjusting your space. This exit strategy flexibility ensures that your business remains adaptable. Leasing a space leaves you with much less problematic exit opportunities than does buying.
Equity Accumulation
One thing you simply don’t get with leasing, financially, is that you don’t own the property. That statement may seem obvious, but the practical meaning is that this commercial space is not your asset; even though its value will appreciate over time, you’re not a part of that appreciation.
Property Management
A huge benefit to leasing over purchasing when it comes to commercial and industrial buildings – which can be massive, multifaceted and complicated – is that maintenance and repairs are not your problem. Once again – this building isn’t yours. So, yes, you miss out on equity, but you also miss out on dealing with a mechanical failure or a nasty plumbing issue – that’s the site manager’s responsibility.
Flexible Properties and Locations
Leasing a commercial property provides your business with a valuable degree of flexibility. This is mainly when it comes to location and property type. As your business evolves and its needs change, leasing allows you to adapt more easily. If your business experiences growth or contraction, you can adjust your space requirements by just moving. You don’t need to deal with the lengthy and potentially costly process of selling or buying property. This flexibility is perfect for startups and businesses in industries with shifting demands. While you can always develop new commercial land, that takes time you may not always have! Commercial property leases help you test new markets, explore locations, and respond to shifting trends. Commercial space leases help your physical space align with your strategic objectives.
Lease Payments Offer Tax Benefits
Leasing a commercial space can offer significant tax benefits for your business. Lease payments are often considered fully deductible business expenses. Leasing your commercial spaces can help reduce your taxable income. This deduction can lead to lower overall tax liability, providing your business with increased cash flow. Leasing also avoids some of the complexities and potential limitations that come with ownership. By leveraging these tax advantages, you can focus resources to other critical areas of your business.
Focus on Core Business
Opting to lease a commercial property allows you to maintain a sharp focus on your core business activities. Property ownership entails a range of responsibilities. Everything from property management, maintenance, repairs, and dealing with regulatory compliance. By choosing to lease, you can offload these time-consuming and sometimes complex tasks to the property management. This enables you and your team to direct your energy and resources toward the activities that drive revenue and growth. The Terms of Your Commercial Lease Can Make or Break Your Business’ Growth
The terms of a commercial leasing arrangement can be a significant factor in the success of a business. All kinds of conditions and details are specified in a business lease; including its term or length; as well as any provisions for transferring or assigning it to another tenant if you need to move out earlier than expected, or for subletting part of the space, among a host of other things.
A commercial lease will also lay out whether or not your rent payment includes operating expenses such as utilities, taxes, insurance and maintenance. In addition, the lease can state any “build-out” provisions allowing for improvements to the space; and even whether a competing business can rent a space near yours.
The lease is also where you set out clearly tenant and landlord commitments and responsibilities. This is when your commercial broker shines; they have the knowledge and experience to think of all the nitty-gritty details – things that could go wrong, relationships that could go sour, issues that could arise with the business or the location. Your lease should be optimized with contingencies for every potentially financially-devastating situation that might arise over the course of your time there. Your commercial real estate agent will be able to deftly guide you through this integral part of the commercial lease process.
We Provide Ongoing Assistance With all Aspects of Renting
The right commercial real estate broker can help in not only finding the right business space to lease, but also in working through the details of a lease and weighing the pluses and minuses of the particular rental agreement you are considering. Our brokers and agents work closely with clients to make sure they get them a lease tailored to their business’ needs.
But we don’t stop there. Our in-house commercial construction and development firms can perform any renovations you need in your new space, and our comprehensive property management firm can provide ongoing site management for the term of the lease.
Whether you’re in the market to lease office, retail, mixed-use or industrial space, Schueler Group can help you find the best location to meet your business growth needs. We list commercial properties available to lease in all property categories. We can also help you analyze the benefits of leasing versus buying and provide tenant/landlord representation.
The Schueler Group can find you the right space to rent for your business needs. Please contact us with any questions and set up a consultation with one of our top agents and brokers to get started on your next company expansion.
