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Making the decision to buy or lease commercial real estate

On Behalf of | Sep 30, 2016 | Commercial Real Estate |

When Florida business owners need to make an important decision, it is vital that they consider all of the advantages and disadvantages that a particular course of action may have. Of course, in order to consider these advantages and disadvantages, business owners need to first be armed with the knowledge necessary to be aware of what consequences a decision will have.

For instance, an important decision that must be made for many businesses concerns commercial real estate matters. Business owners who are trying to grow or relocate their company’s operations may be deciding between leasing or buying commercial real estate. There are a number of advantages and disadvantages to either decision.

First, buying commercial real estate can be beneficial because it is often more cost-effective over the long-term. By purchasing property, business owners can obtain the benefits of property appreciation while eliminating their exposure to market or rent fluctuations. Business owners can also take advantage of tax deductions for interest or annual depreciation. In addition, the business can lease the property to someone else and have more control over the building.

Leasing, on the other hand, allows business owners to maintain capital and deduct lease payments as a business expense. The business is also less tied to the property, so that the business can determine whether to relocate at the end of the term. Leasing also removes other risks that can be associated with property ownership, and it allows the business to be more reactive to the business cycle.

Ultimately, the real estate land use should be considered, as well as other factors like the costs and availability of property. By being fully aware of all of the advantages and disadvantages of buying or leasing, business owners can make the decision that is best for their individual company.

Source: Nashville Business Journal, “Commercial real estate: Should you lease or buy?,” John Foster, Sept. 20, 2016