Every business needs space for employees to work. However, the pandemic of 2020 forced businesses to move some employees to remote positions, and made companies rethink the need for commercial space. As places reopen and people get back to work, business owners are asking if it is better to purchase or lease office space.

Purchasing Office Space

There are quite a few advantages businesses gain by purchasing office space. First, the property becomes an asset when it is purchased, so the value can be leveraged for financing or lines of credit down the line. Second, a commercial mortgage is a fixed expense, which makes it easier for businesses to budget. Third, there are tax deductions that come with purchasing office space, such as interest, repairs, build-outs, and more. Fourth, businesses can sublet office space to another business and offset mortgage and utility expenses, or if the property is paid in-full, the business can generate additional revenue from subletting.

Leasing Office Space

While leasing office space does not have the equity value of purchasing, it does offer businesses a few benefits. Businesses can lease office space in a very visible location, giving a prominent “face” to visitors and clients. Additionally, the property owner is responsible for insurance, maintenance, and cleaning, which is an expense the business does not have to worry about when leasing office space. If there is ever another situation like a pandemic, businesses can negotiate reduced rates on rent to compensate for a reduced in-office workforce, or even terminate the lease early if they decide to permanently move everyone to remote positions. Lastly, there are some tax advantages to claiming payments on leased property. The IRS offers deductions on leased equipment and property, allowing businesses to recoup some or all of those expenses every year.

What to Look for in Office Space

When looking at office space to lease or purchase, it is wise to look beyond what you need right now. Businesses should allow room for growth and where they are projected to be in a year or so, and then use those figures to find an intersection of office size and budget.

Financing for Office Space

Whether you are looking to purchase office space, or if you need additional capital to secure a lease, Golden Century Lending can help. Contact our offices today to start exploring your options.