Business owners are faced with the common question of deciding whether or not to buy, or lease Office Space. There are both advantages and disadvantages to each option, and while every business is different, there are a few common factors that should be taken into consideration when making your decision.

The first thing to consider when comparing the benefits of leasing versus buying are the financial aspects of it, mainly, "Can I afford to buy?"  Then, as a business owner you have to look long and hard at both your current and future business needs.  Some questions to ask yourself are, 1. What are the long-term space requirements of my business? 2.  Is this location convenient for my existing customers? 3. Will this location allow me to attract new customers?

For most new business owners leasing is often the more appealing option.  Cash flow, and decreased risk are the main reasons. When purchasing commercial real estate there is a much larger financial investment up front, typically 20% of the purchase price as a cash down payment, depending on the lender and credit, plus closing costs. The thought of this sort of investment can be daunting to most new business owners, not to mention the additional responsibilities of maintaining the property.

However, purchasing commercial real estate does have its advantages. Building equity in commercial real estate can be a very practical and sound way to increase your business, or personal wealth portfolio, and you afford yourself the added benefit of having complete control over the property.

Before making any decisions have a look at the common advantages and disadvantages listed below:

LEASING BENEFITS:

• Your business or personal credit score is not as much of a factor when leasing vs. buying.
• You do not have to wait to sell before being able to move to a new location, and you have the freedom to move at the expiration of the lease without explanation
• The monthly rent is a tax deduction as a business expense.
• Your Landlord maintains the majority of the property
• No financial risk should the commercial real estate market decline in value.

LEASING DISADVANTAGES:

• Rental rates can have steep annual escalations, based on current and local market conditions.
• No control as to how the Landlord maintains the property 
• You are not building equity for yourself.
• Tenant may HAVE to move at the end of the lease should the Landlord ask you to

BUYING BENEFITS

• Interest on the mortgage loan is tax deductible
• Changes can be made to the building to accommodate your business
• You can take annual depreciation deductions on taxes
• No rent increases
• You can benefit financially if you sell when the market is on the rise
• If you end up with too much space, you can always lease out the surplus
• No set hours of business (applicable to office buildings)
• You can stay at that location as long as you wish

BUYING DISADVANTAGES:

• Typically requires more initial capital to secure financing
• Property values may decline
• Owning commercial real estate beholds you to various local, city and state regulations
• Requires owners to invest time and energy in matters that are not its business, unless you hire a commercial property manager
• Inexperienced owners operate their real estate property inefficiently and often increase their operating costs.

While the decision to buy or lease may seem overwhelming, the Julia Shildkret Real Estate Group can help! The first step is to receive advice from a commercial real estate professional who knows the business and the market. Getting advice and assistance from a commercial real estate professional that is involved in the business day-in, and day-out can significantly improve the chances that you will end up in the perfect space, at the right price.

Here are some additional pearls of wisdom about Commercial Real Estate in North Eastern Queens:

• Know the demographics for the surrounding area:  What are the average household incomes in a 5 mile radius?  Is the property near a highway, or other main road?  How many cars pass the property in question per day?  What is the average age of the community?
  
• Study the absorption rate:  Know how long the leases are for the current tenants, and determine if they are paying above or below market price.