Your office space is much more than a place where you run your business—it can dictate the success of your organization, the type of talent you attract, and the productivity and creativity of those who work for you. Given the importance of deciding on a suitable office, which involves considerations like location, demographics, and everything in between, you should understand that it may take time to find the right office space for your business.
While searching, you might wonder which option is best: leasing or buying an office space? Let’s review the factors you should consider when making this choice.
1. Cost of Leasing vs. Cost of Buying
Naturally, the biggest factor to consider when searching for a new office space is money. Leasing may be the cheaper option upfront, but if you know that you are going to stay put for years at a time—and you have the capital to invest on the down payment—buying could be worth your while.
Of course, money becomes quickly entangled with other factors. Although your business may be able to cover the down payment, you may instead want to invest that amount directly back into your business. In this case, leasing could be the better option. Similarly, if you expect your business to continue to grow—both financially and in terms of physical space—you may want to wait until you can easily invest in a larger building instead of settling for a space that fits you now but doesn’t allow for expansion.
2. State of the Office Market
While an excess of available office spaces may first seem like a blessing in disguise, it’s typically an indicator of a bigger issue within the commercial real estate industry. If the state of the office market is poor, that will manifest in multiple vacancies and high-interest rates. Although you could likely find an office space you want to buy, purchasing could end up costing you more than you had anticipated. In this case, you may want to err on the side of caution and opt to lease—at least until the market begins to improve so you don’t risk spending more than you can afford.
3. Operational & Strategic Factors
In addition to financial factors and the state of the market, your organization should also take operational and strategic factors under consideration. Sometimes, the decision can depend on what your company is going through at the moment. For example, if your organization was recently acquired or experienced a merger, you may not be able to invest in a new office space. Other common operational and strategic considerations include a new product or service rollout, recent restructuring (especially on the management level), the potential for growth, and any alterations to an existing budget.
The enormity of this decision to lease or buy office space can be overwhelming to even the most prepared business owner. Thankfully, you have the option to consult with a commercial real estate expert who can guide you through the decision-making process by helping you evaluate all of your factors and make recommendations based on their years of experience. A good commercial real estate broker will work closely with you to ensure they understand your needs as well as the market as a whole.
At Murphy Commercial Real Estate, a full-service commercial real estate firm located in Annapolis, MD, we take pride in providing a level of personal service above and beyond the services offered by traditional commercial real estate companies. Having served clients since 1999, our goal is to consistently exceed your expectations.
Contact us today for more information on leasing or buying your next office space.