Sometimes it Makes Sense to Lease an Office Space Rather than Buy or Build

If you’re aiming to launch a new business or grow an existing commercial operation and you need office space, you have multiple options. You can purchase an office building, obtain land and build a new facility, or rent an existing office space. This last option is sometimes advisable if you want to see how well the business is going to do before investing heavily in buying and/or building on a property.

Leasing a new office space has advantages for small businesses, as well as businesses uncertain about entering a new market. Leasing an office suite or building instead of purchasing or constructing presents distinct differences that make leasing a better option for some businesses:

Going All-in On Your Office Expansion without Actually Going All-in

Renting an office space allows you to kind of “test” out your expansion. Maybe you’re a boutique CPA service opening a new location across town. If the demographic there isn’t as well-suited to your brand as at your current location, leasing that new location for a year or two can let you feel out the possibilities of permanent growth into that new office space. If things go well, go ahead and sign that 10-year lease. It’s convenient and way less involved than a commercial property transaction.

Likewise, if things don’t go well, you have a lease penalty, or you let the lease run out, and then that’s it; it’s over. No dealing with carrying a mortgage until you can sell the place, the risk of getting less than you paid for it, costs associated with buying, etc.

Leasing an Office Suite Allows Growth without Losing Liquidity

The financial processes associated with renting an office space are much simpler, and require much less capital on behalf of the business owner. Instead of a hefty down payment and associated closing costs, renting an office space often only requires a security deposit and perhaps an advance on rent. This leaves you with extra capital you wouldn’t have had you put money into outright purchasing land or a facility. This is important, especially for small businesses that need the flexibility of having cash on hand.

Speed Up the Expansion Process by Choosing to Rent an Office Building

The other disadvantage of purchasing any kind of commercial or industrial property is the amount of time it takes. You’re talking months to years depending on what goes along with the purchase process, like renovations or land development and construction.

Leasing is different. Even if you need the site manager to perform tenant renovations, the time from lease-sign to move-in is mere weeks; it allows you to occupy the new space much quicker than purchasing – as little as 30-90 days.

Bet on Continued Growth by Renting an Office Space Instead of Buying

Leasing an office gives fast-growing businesses flexibility: you don’t have to offload the mortgage of the office space when you outgrow it and move into a new one. Just as much as a business might be unsure of whether or not they’ll grow into a new office location, a business might be unsure if the location they’ve chosen will sustain them for an amount of time. If you’re “worried” about rapid growth at your company, signing a short-term lease on an office suite – maybe 3 or 5 years – can let you gauge your growth rate and plan for future expansions without the wait of a lurking mortgage.

Maintenance Issues are the Property Manager’s Problem

Every company expansion is a delicate time that requires diligence and all eyes forward, but especially so for small businesses, who may have one or two locations and just a few employees to care for. If you own your office building, it’s on you when a pipe bursts and floods the 3rd floor, or the furnace breaks in the dead of February. Those are extra costs, inconveniences and lost productivity you may not be able to afford.

However, if you’re simply leasing your office suite, that busted pipe is the property manager’s problem, and it’s also their responsibility to provide 24/7 services for such emergencies. While any kind of breakdown is inconvenient, at least when you’re renting you don’t have to absorb the costs of repairing the problem and rehabbing any damage.

Some Things to Consider When Choosing an Office Space to Lease

There’s plenty to keep in mind when choosing a rental office property, and the first thing you need to do is find a commercial broker who can help you create a detailed plan. Location, of course, is always a big factor – you want the site to be easily accessible to everyone, whether it’s employees, maintenance staff, clients, suppliers, etc. Likewise, you’ll probably want to take into account what amenities are available nearby, like restaurants and cafes.

Other good questions to ask include:

  • How much square footage do you really need?
  • How much more room might you need in the future if the business grows and has to hire more employees?
  • Is the interior of the offices laid out in a way that’s adaptable to your space needs? If not, will you be allowed to make structural changes?
  • Are there annual rent increases? Can that be negotiated during the leasing process?
  • What site management services does the landlord provide for the property?

The terms of your lease, of course, are another important element to pay attention to – not just its length and how much rent you’ll pay, but what provisions it contains for early move-out or subletting, and whether the rental payment includes things like utilities, taxes, insurance and maintenance.

We Can Lease You an Office Space and Provide Site Management down the Road

One of our experienced commercial real estate brokers can work with you to sort through all these issues. Decades of presence in the Cincinnati-Northern Kentucky CRE market means our agents have extensive knowledge of the commercial property market where you’re shopping for offices to rent, including where the prime locations are and what type of facility might be best for your needs. We’re here to help make the sometimes long and drawn-out process of finding the right location as quick and painless as possible.

The Schueler Group’s commercial property brokerage division, Henkle Schueler & Associates, has a strong listing of office spaces for sale and/or lease around the Southwest Ohio/Northern Kentucky region, and we’re deeply familiar with the area, including what services and amenities are located near a given office property.

We’ll help you clarify just what you’re looking for in an office facility in terms of cost, space, location and more, and then we’ll work tirelessly to find a property that fits the bill. We can also help with understanding lease terms, and provide tenant/landlord representation.

Renting the right office space doesn’t have to be an ordeal. View our current office space listings and get in touch with one of our commercial real estate agents today.

Our Mission

WE ARE ONE TEAM TO BUILD YOUR FUTURE.
Our business is your business. As an established, respected and comprehensive real estate company headquartered in Southwest Ohio, we are a single point of contact designed to make your path to the future easier. Our goal is to deliver seamlessly, on budget and on time.

Residential vs Commercial Real Estate Agents: What’s the Difference?

You might not think that there’s a big difference when it comes to the realtor you choose for your company expansion. Why does it matter if they sell commercial or residential real estate? But there’s actually a couple important differences between the two. Both types need to be licensed, but commercial real estate agents need college degrees in business or finance, and a lot of extra expertise in real estate law and financing. Commercial real estate transactions have a lot of moving parts, so you definitely want to work with a real estate agent who specializes in commercial and industrial real estate.

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