Buying brings stability while leases offer flexibility - bizjournals:

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Buying a property represents amuch longer-ter financial commitment than leasing and, as requires a realistic assessment by the potential purchaseer of the company’s future prospects. Companies anticipatinfg significant growth must decide whether to purchase propertyu large enough to accommodate that growth over time. If the space is initiallgy too large, they might want to leas e the excess space to a tenantfor now.
The potentiall rental income that leasing surplusz space might generate for the purchasere also should be part of the Space is much less of an issue when leasing an since if it becomes too small or toolarge — the company has the option of not renewinf its lease and movinyg elsewhere. That flexibility also can be usefu if market changes over time indicate that a move to a differenyt location wouldbe advantageous.
On the othe hand, renters can be faced with unwelcome disruptionn should the landlord decide to terminate the Deciding to purchase also commits business owners to a much larged upfront cash outlay than the leasing The initial outlay when purchasing will include not only a substantiapdown payment, but also the cost of inspectionws and appraisals, loan-related fees and otherf closing costs. The upside is that, in contrasft with a firm thatleases space, the purchaserr will, in time, own an asseft that can be sold — hopefullg at a profit.
According to online office space referrapl and information networkOfficeFinder LLC, business owners purchasing officse space can expect to make a down payment of between 10 perceny and 25 percent of the purchaswe price. By comparison, the upfront cost involved in leasinhg a space usually is limited to just a couplrof months’ rent. Potential buyers should also consider the effect of the down paymenty on working capital available to financethe company’s Other issues include taxes, maintenance costs and potentiak interest and rental rate changes.
Renters, for usually don’t have to worry about regular maintenance as these normally are the responsibility of theproperty However, should they wish to make significant alterationzs to the leased space, they can do so only with the landlord’d consent. Property owners, on the other are free to make whatever changes they Purchasers also have the advantage of knowinyg in advance what their future monthly loan paymentswill be, especiallhy when they have negotiated a fixed-rate Tenants, on the other are likely to face regulae increases in rental ratees and need to budget Leasing initially may look like the cheaper option, says Tim president of the Certified Commercial Investmentt Member Institute, but to help reach a decision, business owners should carry out an after-tacx analysis to determine what can be written off, as renting and buying offe r different benefits.
“If everything else were equal, then you have to look at the optionzsafter taxes,” Hatlestad says. “The after-tasx analysis, through a number of measures, will tell you what costd less.” Property owners, for example, are eligible for deductionas ofproperty taxes, mortgage interest and depreciatioj among other things, while those who lease office spacw usually can deduct the full amountf of the rent as a business expense.
Jim Osgood, CEO of says the stage a businese is at in its life cycle can be an importan factor in determining whether to buy or A more established business should consider buyingofficwe space, he says, since anticipated growth is easief to predict accurately. A startup, on the othe r hand, would probably be better to leasean office, as it wouldf provide greater flexibility and fewer constraintw to growth.