Posted by on October 29, 2018

A wide array of businesses, including medical offices, laboratories, storefronts, and factories, work out of a commercial space. Whether you’re a new company looking to set up your first office or an established business seeking expansion, it can be challenging to decide whether you should lease or buy a commercial property. When making the decision between leasing and buying a commercial space, consider cash outflows, recurring costs, tax implications, property value, and business equity.

What to Expect When Buying Commercial Real Estate

If you’re going to be in the same building for several years, buying might be the best option for you. When you pay for the entire property in full or you take out a loan and use a down payment and monthly payments, you can easily build equity; equity helps build value in your company.

Capital appreciation is another component to pay attention to when it comes to commercial real estate. This term simply refers to the increase of your property’s value over time. Capital appreciation is in direct correlation with the inflation rate as well as interest rates and supply and demand conditions.

One of the major benefits of buying a commercial property is the tax breaks. Although you can’t deduct expenses relating to the mortgage, you can deduct depreciation, nonmortgage-related expenses, and interest. Additionally, you have much more control over construction and you don’t have to worry about negotiating a lease.

What to Expect When Leasing Commercial Real Estate

Commercial leases can extend for several years, with most leases ranging from three to 10 years. While there are some benefits when buying a commercial space, there are just as many perks—and maybe more—when leasing.

Although you will likely need to pay some rent upfront and perhaps make a security deposit, you don’t need to make a significant down payment like you would when purchasing property. Also, leasing an office provides you with tax breaks. When doing taxes, you can deduct lease payments, property taxes, property insurance, utilities, and maintenance.

For many businesses that lease office space, the number one benefit is having more time to focus on the company because they don’t need to concentrate on maintenance or repairs. Whether you’re a scientist, attorney, or restaurant owner, facilities management is likely not within your realm of expertise. Leave that job to a property manager and put your time into advancing your business goals.

There’s also much more flexibility when it comes to leasing a commercial property because it’s typically easier to qualify for a lease than a commercial real estate loan. Also, if you decide it’s time to expand or change locations when the lease is up, you can simply move rather than going through the process of selling the property.

If you’re looking to lease a commercial property in Woburn, MA, contact the team at TradeCenter 128. We have first-class offices for lease conveniently located along Route 128 and I-95. Our sister property in Beverly, Dunham Ridge, has land available for purchase.