Should I Own or Lease My Office Space?

Think carefully before you answer this vital question.

As I continue to tread a path in my commercial real estate career, the biggest piece of advice that my clients always seem to want to know is:

Should I purchase my office space or lease it?

The question seems straightforward – if you can afford to do so, wouldn’t you rather own your office space instead of sending some landlord a check every month? The answer, however, is more complicated.

Below, I’ve weighed the pros and cons of both leasing office space and owning it.

Ownership Pros:

• Tax benefits
• Lower long-term costs (for companies occupying a space for an extended time)
• Control over property management decisions
• Property value appreciation and potential investment

Ownership Cons:

• Less flexibility for your company to move, expand, reduce size, etc.
• Changing, and potentially value-damaging, market conditions
• More capital required upfront
• Potential for the property to require attention that could instead be spent on your business

Leasing Pros:

• Little to no upfront capital requirements
• Flexibility to expand or reduce the size of footprint (square feet consumed)
• Ability to “walk away” after lease term
• Term flexibility

Leasing Cons:

• Potential for takeover by new owners with new rules
• Expensive and challenging to leave or break lease
• Fluctuating market rates over time
• Potential to misunderstand lease terms

Although the above points provide a snapshot and are meant to simplify the process, deciding to own or lease is a big decision; thankfully, a knowledgeable broker can help ease the decision-making process.