The pros and cons of buying and leasing office space.
If your business in Albany, NY is considering upgrading, downsizing, relocating or expanding office space, you’ll decide whether to purchase an office building or to lease an office space. How do you know which better suits your needs?
The decision essentially boils down to your business’s finances and long-term growth plan. Here are a few pros and cons to consider:
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Advantages of Leasing
- Tax deductions.You can save money by leasing commercial office space and deducting lease payments from your taxes.
- Repairs and maintenance.Typically, the landlord (as opposed to the tenant) is responsible for maintaining your building when you lease. Be sure to clarify who is responsible for repairs and maintenance when you enter lease negotiations.
- Location is everything.Leasing in prime business corridors can be a lot less costly than buying in these areas.
Disadvantages of Leasing
- Lease increases. You may be subject to lease increases that are out of your control. Discuss the matter of lease increases with your landlord when entering lease negotiations.
- Lack of control. Tenants often do not have a say in property improvements or décor. This may cause your surroundings to reflect your brand’s style.
- Growth concerns. It is important to discuss potential business growth with your landlord. Many building owners are more than happy to accommodate and plan for future growth and changing space needs.
Advantages of Buying
- Tax deductions.You won’t be able to deduct full mortgage payments on your taxes, but you can deduct your mortgage interest payments. Even small amounts help!
- Build equity.Buying your own building will build equity, which can be beneficial when growing your business in the future.
- Income potential.If your building has extra space that you aren’t using, you’ll have the option to rent it out yourself to pay your mortgage more quickly.
Disadvantages of Buying
- Loss of flexibility.Your business will undoubtedly face changes over the next decade, from fluctuations in staffing and client loads to course corrections in business strategy. Owning a property can tie you to a location and decrease your flexibility.
- Building Maintenance.On top of maintaining your business, you will also endure the added stress of keeping your building in working order.
- Financial commitment.Purchasing real estate is a major financial commitment requiring a hefty down payment. If your business will take a hit due to a shift in resources, you may want to consider other purchasing options.
If you’re considering buying your leasing office space throughout New York’s Capital Region, contact The Anderson Group. We provide full-service commercial property management and office space leasing to all of our tenants – from general facility management and maintenance to housekeeping, landscaping and office space planning. Find your place in Albany and Colonie, NY today!