Buy or Lease Your Office Space: Which is a Better Option?

The question facing companies or individuals setting up a business is whether to lease or buy an office. There are various reasons for and against taking either path.

A major advantage of buying commercial property is that you can have equity that can appreciate – grow in value over time. You also have equity that can be used as collateral if and when required. You should also factor in the property’s rental potential if it is located in a prime business area. The drawbacks, of course, are that you have to make an upfront investment that eats into your capital – money that should really be plowed into the business to ensure growth. Owning your office space also means no flexibility as you have to be tied down to one place.

On the other hand, let’s look at the option of leasing office space. Office spaces in Navi Mumbai or Vashi are good examples. This option is becoming very attractive because there is no upfront payment required for buying the property so funds can be kept liquid for use in other areas. Upkeep costs are lower as the landlord is liable for repairs and maintenance. As office spaces on lease in Mumbai show, you can generally afford to have an office in a more prestigious and upmarket location than you would if you were buying the property outright at generally exorbitant city rates. The capital available for investment would just not be enough or not easy to spare especially in the early phases of business growth. When you lease, you have more money to play around with and so could probably get property in a place of your choosing. Office spaces for rent in Mumbai would be more within reach for most people than having to put all you have, and even sell some assets, and buy office space.

More important than all this is the flexibility leasing affords to choose to stay in the same place or move out as circumstances dictate. You are not locked into a mortgage. Leasing can also give you attractive tax breaks. You can probably deduct the entire monthly lease payment as well as ongoing costs like utilities.

Ultimately, the decision of whether to buy or lease office space comes down to a matter of preference. Buying is a sound option if building equity and resale value are important considerations for you. Leasing is a good option if you don’t want to commit to one location or property and also want to cut down on property maintenance and other costs.

To buy or lease is a vexing question and no one answer fits all. What cannot be quantified but is nevertheless important is how you feel emotionally about the matter. Would you rather be the owner of your office space, be the monarch of all you survey? You would then, of course, have to be willing to pay the price. Or would you rather keep your options open and be a free bird, be more flexible with the ability to move out with fewer liabilities to hold you down.

As trends show, modern businesses seem to be more inclined towards leasing which accounts for the mushrooming of leased office spaces, especially in urban centers.

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