Thursday, February 21

To Buy or to Lease a Business Property

Purchasing commercial property is a massive financial undertaking, with the majority of businesses not even being able to attempt the idea. Even if you are in the position of possibly being able to purchase commercial property, it may not necessarily be the right choice for you personally and professionally.

When to Consider Buying Commercial Property

There are a few factors that may indicate you should purchase property rather than rent. Some of these reasons are:

  • You plan on being in the same business location for close to a decade or longer
  • The neighbourhood is close to your target market
  • The neighbourhood is not going to undergo any significant changes
  • You are not planning to grow or downsize your business

Business is never predictable, however, which is why the majority of owners will choose to lease the property.

The Benefits of Leasing Commercial Property

Entrepreneurs and business owners may have dreams of buying their commercial property, but leasing is more often than not the smarter financial decision.

Leasing Means Reduced Move-In Costs

Purchasing a property means usually having a minimum of 10% of the total property mortgage available and paid before you move in. When you lease, all you will likely need is a security deposit and the first month’s rent.

Leasing Means Reduced Month-To-Month Occupancy Costs

For the majority of business owners, leasing a business property means lower occupancy costs each month. Your company’s lease payments are usually deductible too, while if you had a mortgage payment, only the interest portion would be a write-off.

Another benefit is that you will not have the responsibility of maintaining and keeping up that space. If there is a problem with the roof, the plumbing, or the electrical, then the owner of the property will be stuck footing the bill – not you. This frees up a lot of business capital and eliminates the threat of a business owner needing to manage a costly and stressful situation.

Leasing Means Greater Flexibility

Most owners and managers plan on growing their businesses, in which case leasing is the optimal option. Owning a property means needing to sell the building, and unless you have been on the property for a number of years, you will likely end up losing money on the property rather than gaining any. When you lease, you can move to a new property in as little as a month, so you can begin to scale at the pace your business needs to in order to match consumer demand.

Why You Should Lease Using a Commercial Agent

If you have decided that leasing is the best option for your business, the next natural consideration would be:

  1. Do I search for the property and negotiate the contract myself or,
  2. Do I enlist the help of a commercial agent?

One common misconception is that hiring a commercial agent will cost more money than if you were to lease a commercial property on your own. While there is a commission or fee that comes with hiring a commercial agent, that fee can result in significant savings and may not even be your responsibility.

Saving You Time

Finding the right commercial property for your business requires a lot of work. You will need to:

  • Compile a list of relevant listings
  • Review the listings
  • Call up listing agents
  • Schedule and arrange property tours
  • Write offers (LOIs)
  • Review city zoning laws and property compliance
  • Effectively negotiate the best lease for you and the property owner

Entrepreneurs and business owners already wear far too many hats. The last thing most have the time to take on is finding the right commercial property.

A commercial agent will handle everything involved in finding the right commercial property for your company. They will field the phone calls and emails, negotiate on your behalf, and make sure that the property is up to code.

Saving You Money

Another common misconception is that a commercial agent will cost them money. For the most part, a commercial agent will not charge their tenants a fee. Instead, they are paid a commission by the landlord or the property owner.

The negotiation of the lease is where an agent will be able to save you the most money. For example, a local agent who is familiar with the city you are interested in leasing a property in will not only know what the fair price for a property you are interested in is, but they may even know the landlord or property owner and be able to work out a deal with them. Commercial agents may also be able to present you with a number of other perks, including free rent, early occupancy, and more.

Access to the Best Properties

Unlike residential real estate listings, which are quite centralised and easily accessible, commercial properties are listed using several different listing platforms (with only two or so being public to business owners). This means that you may miss out on finding the best property for your business and at the best price. A commercial agent will have complete access to the properties that meet your business requirements.

Should You Consider an Office Refurbishment Company?

There are a handful of highly qualified and reputable office refurbishment companies that often enlist the help of commercial agents to help you find a property that meets your criteria. These companies, like Saracen-interiors, will have a property consultant who will compile what is known as a “Property Specification Brief” (PSB) that will list all of your best property options.

Another reason to use a company like this is because they offer exactly what you need, from the very beginning of your office move to the finishing touches. These companies are often property owners themselves and will be able to offer comprehensive and flexible lease terms at fair prices. They are experts in office fit outs and will be able to help brand your office space through creative and cutting edge techniques, and they can even set up your IT and Telecom so your business does not suffer lengthy downtimes. These companies are the all-in-one solution for every business move.

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