Lease VS Buy Analysis
Choosing Between Leasing and Buying Commercial Real Estate: A Pivotal Decision for Businesses.
For businesses that are expanding, one of the most critical decisions they are faced with is whether to lease or buy commercial real estate. Understanding the factors involved in making this decision is essential to maximizing market opportunities and safeguarding financial interests. In Canada, these implications are constantly evolving, making it important to stay informed. Seeking guidance from a Certified Commercial Investment Manager (CCIM) can provide entrepreneurs with a comprehensive market analysis and strategic risk assessment to ensure confident and informed decisions.
Here are a few additional factors to consider when deciding between leasing and buying commercial real estate:
Financial Flexibility: Leasing provides more financial flexibility, requiring less upfront capital and offering the ability to relocate more easily if business requirements change. Buying, however, requires a significant financial investment upfront but can provide long-term financial benefits such as equity and tax deductions.
Maintenance and Ownership Responsibilities: When leasing, the landlord is typically responsible for maintenance and repairs, whereas buying puts the responsibility on the owner. It's important to consider the cost and time commitment of maintaining and repairing the property when deciding.
Location and Market Conditions: The location of the property and the current market conditions should also be taken into account. Is the property in a desirable location for your business, and is the market favorable for buying or leasing? These factors can impact the price and availability of properties.
Future Business Goals: When deciding whether to lease or buy, it's important to consider your long-term business goals. Will your business need to expand in the future, and will the property be able to accommodate that growth?
With the help of a Certified Commercial Investment Manager (CCIM), entrepreneurs can gain a deeper understanding of all these factors and make an informed decision that will benefit their business in the long run.
CASE STUDY: TECH OFFICE
The client was constrained to limited growth in their operations at the time. We analyzed their lease options and surprised them with some purchase options within their comfort zone. They were paying a premium at WeWork and the market had suddenly softened due to Covid-19. We took advantage and this company now owns an entire floor with exclusive access in a gorgeous brick and beam building in super prime Yaletown, Vancouver. Please call to discuss in further detail.