While this premise can be true, it’s not always the case in commercial real estate. Which is why we often get asked, “Is it better to lease or  buy commercial property?”

The higher the risk, the higher the reward.

Buying a home can turn into a nail-biting affair when you consider having to find the right place, at the right price, get the mortgage approved, make sure there are no latent (and possibly expensive) defects, negotiate the transfer and the moving date, and everything else that goes along with it.

Commercial property comes with a host of considerations – each one with its own price tag. Even expert investors can suffer at the hands of a volatile market, so if you aren’t a professional in this space it’s worthwhile doing your homework.

The decision to lease or to buy commercial property depends largely on the business itself.

Why would a business choose to buy commercial property outright?

Your rental is largely dictated by market demands, and a tight market could see you paying higher costs for your space. Therefore, owning your property lets you take hold of that expense.

From an investment perspective, a business can claim depreciation and maintenance costs which wouldn’t be applicable on a leased property.

The rental returns from good tenants in the commercial space can be excellent, which can make buying a property lucrative.

Why would a business choose to lease their commercial property?

Your choice of location may take a turn, becoming less desirable for any number of reasons. This would immediately dilute the cost of the property and you may not get your money back in terms of rentals or resale.
Commercial property is never cheap – and for a smaller business, tying up their liquidity in property may pose a problem. Property sales are not a quick fix for a business needing cash.

If your property houses other tenants, you can be at their mercy if they suffer cash flow problems and cannot pay their rent.

As you can see, there are many factors which need to be weighed up before you make the decision to buy or lease commercial property. If this is not your area of expertise, then talk to one of our team. We have been assisting businesses for decades to answer this very question. Visit us at The Property-Partnership East Rand.