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Should I buy or lease a commercial space?

On Behalf of | Nov 2, 2023 | Real Estate Law

Choosing between buying and leasing a commercial space is a significant decision for any business owner.

Several factors should guide this choice, ensuring a wise investment that aligns with your business objectives.

Financial flexibility

Leasing offers lower upfront costs, requiring a security deposit and monthly rent. This can be ideal for startups and businesses with limited capital. In contrast, buying property demands a substantial down payment and ongoing mortgage payments.

Long-term vs. short-term goals

Your business’s long-term and short-term goals will influence your choice. Leasing provides flexibility, enabling you to relocate if needed without the hassle of selling a property. Buying is also advantageous if you plan to establish a permanent presence, providing stability and potential property appreciation over time.

Total cost of ownership

Carefully evaluate the total cost of ownership. Leasing generally covers maintenance, property taxes and insurance, which simplifies budgeting. When purchasing, you assume these costs. Take into account property appreciation, interest rates and potential tax benefits.

Location and accessibility

Analyze the accessibility of the property for customers, employees and suppliers. Consider its proximity to major transportation routes and its alignment with your target market. Leasing may offer more options in prime locations, but owning can give you control over the property’s features and layout.

Growth prospects

Leasing provides flexibility to accommodate growth or contraction. Buying, on the other hand, might limit your options and require you to sell or lease out additional space. Assess your business’s growth prospects and whether owning a property aligns with your expansion plans.

Considering that Denver has had high commercial vacancy rates – approximately 13% to 15% – the market is ideal for both buyers and lessees. By considering these factors carefully, you can make an informed choice that best serves your business interests.