Every business is going to need a business space, but the question is often whether to buy or rent the space needed for your business. The real estate market is on an upward swing, but real estate costs are still relatively low compared to a few years ago. Renting can seem like a bad idea with low-interest rates available; no one wants to waste money when they could be gaining equity.
Let’s not move so fast because there are reasons to consider each side of this question. Most small businesses are going to face this decision, but with potential growth in the future. We are going to take a look at some reasons why you might want to rent a co-working space instead of purchasing a building.
Reasons to Lease an Office Space
- Significant Growth or Downsizing is in the Future
When you purchase an office space, you are making a huge commitment. While it is an investment, it may not be the best decision if you expect your company to grow rapidly in the next few years. You may find you have outgrown the space sooner than you realized, causing you have to go through the headache of finding a larger building, purchasing it and selling the existing building. Having an understanding of your future space needs is important before you purchase.
- Maintenance is Included
If you are leasing a building, the manager is typically in charge of cleaning, and there is likely to be a maintenance crew on hand to empty trashes and any fixes that need to be completed. This is not to be taken for granted. If you purchase your office space, you will need to hire a company to complete all of these tasks.
- Invest in Your Business
When capital is limited, it may be the wisest decision to invest into your business rather than a building. Taking the time to work and to invest in any changes or equipment needed is better off before making such an enormous purchase.
- Access to Great Location
Leasing a space may give you the opportunity to access some of the best locations your town has to offer. This is especially important for businesses that depend on location and style, such as retailers.
Reasons to Buy an Office Space
- No Significant Size Changes
If you feel as if the size of your company will stay the same, purchasing a space may be a good idea. It is important to understand what space you need, so you don’t risk purchasing a building too large.
- Potential Income
You could make some income off an office building if you don’t use all of the space. It could be a great space to rent out to an upcoming business, or a small business who only needs a small area. Additional capital is always a great thing.
- Fixed Costs
Purchasing an office space gives you a clear idea of what your costs are as you head into the future. This helps with projections and plans for the future. However, there are some maintenance costs to take into consideration. That can be solved by saving a set amount each month to handle any issues that may arise.
- Making an Investment
Real estate is an investment, and it is a good way to save money for later in life. You could move later or sell the building later in life, leaving yourself a nice profit to enjoy as you retire.
Making the decision to rent or to buy an office building is not a clear cut decision. Upcoming businesses may benefit best from leasing until your growth has reached a level spot. However, if you are an established business ready to make a serious investment, purchasing will benefit your business in the long run and provide you access to equity.