Whether it is a start-up or a growing business or an established firm, the decision on where

and how to setup the business makes a significant impact on the businesses’ future. The
choice to lease or own a property can vary on different factors such as cost, location,
availability of the property. Each option however can have its own pros and cons and the
decision to either purchase or lease the space for the business should be based on the nature
of the business, its expansion plans and competitive strategy.

Buying a commercial property is should be considered over leasing one if you want to

 Have control over the business: If you want virtually limitless control how you want
to setup the business and make changes that are necessary anytime then you should
definitely consider buying the property.
 Build Equity: If you pay the whole sum upfront then you own the property, it’s an
asset, it will increase the overall value of the business. It can also be used as collateral
to support the financial requirements of the business.
 Stability: Owing a business provides stability for the business. You do not have to
deal with change in the rent or facilities and such. You can also be free from the
hassle of moving the business to a new location if the lease is not renewed.
 Sublet for additional revenue: As an owner of the location of the business you can
make use the space required for the business and rent any unused space. This
generates an additional stream of revenue for the business.
 Resale the property: You can sell the property if you no longer need to use it. If the
business is growing and needs a bigger space of there is a more suitable place to
relocate to then you can simply sell the property and make money.

Leasing a commercial property can be a choice is you want to

 Retain liquidity and capital: You lose opportunities for expansion or investment when
your money is tied up in the property. The initial spending is huge compared to
leasing, which could have been used to grow the business instead.
 Retain Mobility: Leasing a space provides business with mobility i.e. they can move
the business to a more suitable location easily. If the facility no longer supports the
operations or if the target market is in another area, then it makes sense to move.
 Have a wider range to choose from: Mostly the space in prime location are only up for
lease and not for sale. Having the office as the right place can get you competitive
 advantage, so it is better to lease space at the right place than to buy one at a cheaper
area.
 Focus on your business: leasing the property will provide you freedom to only focus o
the core strategy of your business. You can all the responsibility of utilities, parking
and maintenance to your landlord.
 Build business relations: Usually the real estate properties in cities are held by big
companies. Leasing a business space can help create a relationship with the
companies which can be used to grow the business

Because of the upfront cost people feel that renting property is a cheaper option and provides
more value for money than actually owing the property.[ CITATION Cla98 \l 1033 ] When I start
my business I would want to lease the property as it will save a lot of money that can be used
to increase the productivity. I can use the capital to promote my business and use to purchase
equipment or hire able manpower that are essential for the core operations. There is also the
question of availability, most properties in business locations are only up for lease and it is
important that you choose a location where your business will flourish. Landlords and
property managers are well versed in property management and can provide better facilities
and qualities required for an office space. [CITATION Ben \l 1033 ]

Bibliography
Benjamin, J., De la Torre, C., & Musumeci, J. (1998). Rationales for Real Estate Leasing Versus
Owning. Journal of Real Estate Research, 223-238.

Mulder, C. H., & Wagner, M. (1998). First-time Home-ownership in the Family Life Course: A West
German-Dutch Comparison . Urban Studies,, 687-713.