Buying vs. Renting: Finding the Perfect Office Space

When it comes to setting up shop, finding the right office space can be tricky. Choosing whether to secure a long-term lease or purchase a property outright to host your business can be a tough choice for many, with lots of variables at play. While renting office space might seem like the quickest and simplest thing to do, buying your own commercial space might be easier than you think.

Which option is best for your business comes down to a few different factors. Below, we cover the pros and cons of renting versus buying and explore how to find the perfect office space for you.

 

Renting vs. Buying Office Space

 

Pros and Cons of Renting

 

Pro: It’s the more flexible option

• The main benefit of renting space is that it’s more flexible should you ever want to move. With a growing business, it’s hard to predict how quickly you will outgrow your space. As you expand you’ll need more space for a larger team including extra desks, break rooms and space for more equipment. 

 

Pro: No upfront costs

• Another pro to renting office space is that you don’t have to fork out upfront costs. You don’t have to make a down payment to purchase the space or take out a commercial property loan. This makes it an easier and more affordable option.

 

Pro: It’s often an easier option

• You also don’t need to pay property taxes or maintenance and repair bills. The office space should be maintained by the landlord who can issue repairs whenever needed without you having to pay out of pocket.

 

Con: You need permission to make changes

• If you decide you want to make big changes to your office space, for example, knock down a wall, you need permission. The owner of the property must approve any changes like this and may decide to reject your request as it could affect future tenants.

 

Con: You have limited control

• When you lease office space you are at the mercy of the owner, and anything can happen after you sign your lease. The owner could increase the rent, they may decide to sell one day, or they may move in noisy tenants next door. They might end up being difficult to contact for maintenance issues. 

Pros and Cons of Owning

 

Pro: You’re building equity

• If you agree that renting is the equivalent of throwing your money away, then buying is the sensible alternative.  When you own property, you build equity and then have an asset to sell later on down the line. You can even leverage that equity to move to a bigger space, expand your business or refinance vital equipment. 

 

Pro: You have control

• You don’t have to rely on a landlord’s approval if you want to make changes to the space. You can go ahead and customize the space, add walls, knock them down, install equipment and decorate however you wish.
  

 

Pro: You can rent the space to supplement income

• A purchased office space that’s bigger than your needs can also be rented out to other businesses. You can keep a floor or a few rooms to rent out as a great way to earn some extra cash from your office space.
  

 

Con: It takes more effort and maintenance

• The time and energy required to own a property doesn't stop with the purchase. There are property taxes, ongoing maintenance and repair bills to think about as well.
  

 

Con: Tying up capital

• While you can access that capital if you sell, it is time-consuming to list and sell a property. If you need the money quickly, you may not get it by selling. 

 

The good news is that National Bank of Arizona can make purchasing office space a simple experience. 

Check out this episode of Financial Cents to learn more about the types of commercial real estate loans.

How to Find the Right Office Space

 

Whether you’re renting or buying, it’s important to choose an office space that meets all your needs. There are two key components to this: doing your research and understanding what you need from the office space.

How to Set Your Budget

 

Renting or buying office space naturally comes with multiple costs that can add up. Make sure you’re considering the following things before setting your budget:

Taking the Leap

Obtaining commercial real estate financing can be easier than most business owners think, making a commercial property purchase a more compelling option than ever. Get in touch with a banker today to learn how we can help you in the next stage of your business journey.