Planning for Growth – How to Decide Between Leasing and Buying Space – Effective Realty Advisors

Planning for Growth – How to Decide Between Leasing and Buying Space

By Michael Staskiewicz | Uncategorized

When evaluating their space requirements, every business owner and corporate office user ponders whether they should purchase a space or building or continue to lease, especially during this time in the commercial real estate cycle.

We are seeing interest rates at historic lows, and property values have been trading well below their replacement cost, which makes owning real estate more and more attractive. That said, you want to have your business or corporate strategy in mind as you evaluate this decision, not the conditions of the current cycle (which reminds me of the psychology parallel, “look inward, not outward”)

The question of whether you should own or lease your office needs to be more than just a financial decision, and it’s very important to have a keen sense of the best use of your company’s capital as you enter the process.

Then, with your corporate strategy guiding the process and your business’ investment returns at the forefront in your mind, let’s look closely at the first factor that could impact your decision — the growth factor.

Ask yourself the important questions: How do you expect your company to grow over the next three, five, or 10 years? What spatial flexibility is required to meet your projections? These critical questions will impact your decision significantly as you consider purchasing or leasing. For example, a health care provider may strongly consider purchasing for the ability to convert the asset to a state-of-the-art medical facility, whereas a technology company that sees their headcount growing by 20 percent over a year will likely lean toward leasing.

Whatever your industry, it’s vital to look at your expected growth before making the decision to buy or lease your next corporate space.


About the Author

Michael Staskiewicz, CCIM, Managing Principal of Effective Realty Advisors and a team of strategic partners, help financial decision makers of mid-size companies perfectly align their real estate with their business needs, so that they increase profits and improve operational and financial performance.