When it comes to the decision of leasing or buying industrial real estate, there are a number of factors at play. There are many, many reasons that a business might choose to lease instead of opting to buy. And as it happens, there can be advantages to the tenant life. Here are four benefits to leasing industrial real estate.
Lower Move-In Costs
Generally speaking, it costs less to move into space that’s been leased. There are no hefty down payments, loan fees, or those multiple miscelleanous charges that are so often part of the purchase package. When you lease industrial space, you’ll likely put down a security deposit and the first month’s rent. If tenant improvements were part of your negotiations – and you had an experienced agent representing your interests – they were likely built into your agreement.
Simpler Balance Sheets
Owning the property will increase your businesses’ assets and liabilities. You should also factor for the impact of depreciation as time passes, which could open you to the possibility of capital gains or recapture tax liability in the event of a sale.
Flexibility & Freedom
Leasing a space gives you the freedom to jump ship when your term length ends. As businesses evolve, property needs may change. Lessees have the freedom and flexibility to find spaces that suit, or to negotiate with landlords on upgrades or repairs. Just make sure you bring in a professional to negotiate that lease renewal.
The Right Decision
It’s not always easy to decide whether leasing or buying industrial real estate is the wisest course of action. An experienced agent is worth his weight in gold at this point, pointing out details you may have missed and offering advice and recommendations as you need them. Be direct about your needs with agent, and trust his judgement.
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