Leasing vs. Buying Office Space: Which One Is the Right Choice for Your Small Business?

As an entrepreneur and small business owner, you have a lot of important decisions to make regarding the growth and future of your business. From collecting sufficient growth capital to hiring new talent to choosing the ideal location from which to run your business, the endless responsibilities can be overwhelming and sometimes time-consuming. One of the main things you have to worry about is whether it’s in the best interest of your business to lease vs. buy commercial real estate. Obviously, this mostly depends on the type of business you own and the nature of your operations. With that said, there are some general factors that are relevant to a broader professional spectrum that you can apply to your decision-making process. For your consideration, we’ve compiled a pros and cons list for buying vs. leasing commercial office space.



Pros and Cons of Buying Office Space

Advantages of Purchasing Office Space

  • You don’t have to worry about monthly or annual rental increases
  • You have the autonomy to make any structural changes as you see fit to accommodate your growing business
  • Flexibility to sublet additional unused office or warehouse space to bring in more capital
  • Considerable tax deductions
  • Property appreciation over time increases business revenue
  • You don’t have to answer to or rely on a landlord
  • Greater potential for expanding or modifying infrastructure as needed

Disadvantages of Purchasing Office Space

  • You’re responsible for implementing regular infrastructural maintenance and repairs
  • You need a substantial working capital to purchase your own office
  • High upfront costs due to maintenance, commercial property taxes, appraisal, real estate agent fees, closing costs, etc.
  • You need to be prepared to spend money on commercial real estate that could go toward growing your business and collecting more working capital. Make sure you’re financially prepared to do this.

Business Who Can Benefit from Buying Office Space

  • If you have a well-established business with plenty of working capital
  • If your business operations are largely dependent on the location and infrastructure of your business (i.e. manufacturing, distribution, construction, etc.)

Pros and Cons of Leasing Office Space

Advantages of Leasing Office Space

  • Cost-effective for small businesses
  • Flexibility to grow your business
  • No obligation to work from the same location all the time
  • Access to numerous resources and services such as IT support, professional receptionist and administrative staff, fully furnished office spaces, and spacious boardrooms, meeting rooms, and conference areas
  • Fully loaded kitchenettes/break rooms for your employees
  • Flexibility to work remotely from anywhere in the world
  • Flexibility to travel frequently for business
  • Access to a professional mailing address
  • Centrally located offices in major cities like Toronto and Ottawa
  • No obligation to extend lease or rental agreement
  • Option to rent office space on a need-be basis
  • Maintenance is usually included in most rental or lease agreements
  • Leased office spaces can accommodate growing businesses with a small or medium-sized employee base

Disadvantages of Leasing Office Space

  • No control over increasing rental costs in major cities
  • No equity earned from property management
  • Your landlord may deny your lease renewal, at which point you’ll be forced to find a new rental office space
  • You’re at the mercy of your landlord for all maintenance including installations, repairs, and cleaning
  • No authority or flexibility in terms of office modifications or renovations that could directly disturb your business

Business Who Can Benefit from Leasing Office Space

  • Small businesses and start-up companies
  • Marketing agencies because leasing office space offers businesses the flexibility to expand their business, as well as your customer and employee base.

There are just a few of the considerations you’ll need to make note of when it comes to deciding whether renting or purchasing an office space is the right decision for your business. At the end of the day, no one knows your business better than you and your employees.

Why Leasing Is Better Than Buying for Small Businesses

In business, size matters. That’s why you need to take the size of your business into account when making this pivotal decision. Leasing an office space is an excellent solution for small- or medium-sized businesses because it gives you the flexibility to curate the future of your company and its overall operations. The best part is that you don’t necessarily have to commit to one location. Entering into a short-term lease agreement means that you can take certain locations for a test drive to see how well they gel with the nuances of your business.

If certain locations make more sense for your business, then you have the flexibility to relocate to those areas as long as it’ll help your company expand and get its footing. Before you can make that decision, though, you need to have a set business plan and goal in mind and then decide on a location that’ll ultimately help you get there.

Innovative Professional Offices is one of Canada’s most renowned office space rental companies. With locations in Mississauga and Ottawa, we offer a wide range of office space rental options including 24-hour access to our fully furnished suites, boardrooms, and meeting rooms. We also provide full-service IT support, a reliable receptionist and administrative staff, a fully stocked break room, and mailbox receiving, sending, and forwarding services. To learn more about our office space rental packages or book a tour of one of our many fine locations, please contact us today!

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Pat Fernandes

Using all the skills, experience and knowledge gained in my work life, it gives me great joy to help professional business owners to find a comfortable office space to carry out their day to day work. At Innovative Professional Offices we provide executive office space for solo-preneurs and small companies. We provide virtual office services for those who work from home, but need a business address and telephone. We provide board rooms for meetings and small seminars.
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