Renting vs. Buying Office Space

Business owners are often faced with the decision to either rent their office space or buy their office space. The vast majority of executives elect to lease however, there is important reasoning and an upside to owning your office space.

The primary reason owners rent space is because it seems to be the traditional way of operating and everybody else leases. However, owning real estate is a way to create wealth for yourself and your company. The key to this successful wealth building strategy is to buy at below market prices or, if you are going to pay a market price for the space, be sure you have ways to increase its value over time.

There are 3 ways to buy your office space. You can buy a separate, or what is commonly referred to as a standalone, commercial building. If the building is large enough you may have other tenants in the building aside from yourself that could offset some of your expenses. The second way is to buy a commercial condo. For example, there may be a 10 story building that is occupied by various companies and you would own one of the floors; the other companies would own their respective floors. The third way is to buy a commercial cooperative which is really owning a share in a corporation that owns the building.

Owning your own office space has some draw backs. You will be responsible for the maintenance and repair of the space. When you lease a space usually the building owner handles these types of issues. You may also incur additional expenses such as property insurance, maintenance expenses, other taxes, etc.

However, since you are a building owner you can deduct these expenses from your company’s income tax filing. Owning your own place will provide you the comfort of knowing you can control your destiny. A landlord may ask you to leave at the end of your lease term. Or the landlord may lease your next door space to a competitor or a tenant you do not admire. Also, when you own your own space you can design it and remodel it the exact way you want to without any restrictions from a landlord.

One of the important steps a building owner should take before he or she decides where move to is to sit down with a real estate professional who can compare and contrast these two big decisions.


Written by: Lindsay Craven