Commerical Real Estate - Own vs. Rent Analysis

Most recently the sales of commercial real estate have been driven primarily by the very attractive financing and minimal down payment for Owner-Users.  To give you an example, for existing businesses that have shown positive growth in the last 3 years require as little as 10% down and blended financing rates in the low 5%.

So when should a business consider the possibility of owning their own real estate. There are a few reasons, but in the end it’s all about the “Bottom-Line”.  For instance, businesses might consider owning their location when specific type of improvements is required to run their business.   These improvements are not typically transferable and costly to develop. Another reason would be the ability of controlling of your entire surroundings.  As a tenant, you are always at the mercy of the Landlord and their final word.  Time is money and a disagreeing landlord can be very challenging.  Just as residential owners see value in ownership, so do businesses in commercial real estate. Today, many commercial buildings are valued below replacement costs creating opportunity to those able to participate in acquisitions. This being said, as businesses not only have tax advantages and future appreciation of owning their own building, comparing the lease verses buy scenario is the logical next step as seen below. 

For more information or to see if owning might be an option to consider, please feel free to contact me at 818-444-4984 or enishimoto@lee-re.com