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Leased vs. Purchased vs. Co-Working Office Space

Highlights

  • Smartphones have accelerated the entire real estate process as it provides a channel between the buyer,seller and the agent.

  • Big data is playing a role in creating better communities, designing real estate that suits the end user, providing useful and easy-to-understand information to home buyers and insights to real estate companies about who is buying what, where when and what tools they require to reach out to the target audience.

  • Smart home devices are changing the way we live and interact with our homes.

Comparison Wednesday, 21st December 2016   Editor: Sachin

All the businesses whether they are growing, small businesses or start-ups may someday come up with the question of leasing versus buying versus co-working office space. As everything has pros and cons, this question has many pros and cons and a small business owner needs to carefully look at the pros and cons of leasing or buying or co-working office space. To make your decision easier, here are few key facts of leasing versus buying office versus co-working space:-

The Pros of Buying Office Space

1) Fixed Costs: Fixing in your commercial long-term debt can give your business clear, fixed costs. You don’t have to give the rent as per the decided terms whatsoever. It will be a onetime investment.

2) Tax Deductions: The costs of owning and running an office space can provide tax reductions in the form of debt interest, property taxes and other items.

3) Additional Source of Income: Renting out extra office space from your office can offer the advantage of another source of income.

4)  Retirement Fund: Another benefit of owning commercial space and having the property appreciate every time, allows the owner to sell out and fund their retirement.

Cons

1) Lack of Flexibility: A new or growing business may experience unexpected needs in the future. If your business continues growing, your owned office space may become inadequate forcing a sale of the property.

2) Upfront Costs:  Buying commercial space will initially be a large cost far more upfront. Property appraisal and maintenance costs and a big down payment in the starting and possible property improvement cost are really heavy on the pocket.

The Pros of Leasing Office Space

1) Prime Location Property: Leasing the office space provides an option of business to rent in an area with a good location and high image. If the business is dependent on location and image like it does in retail or restaurants, the leasing option is much more suitable.

2) More Working Capital: You can invest the money you would be having in your hand for the market opportunities and to be precise you would be having more working capital.

3) More Time: Any type of ownership comes with problems like maintaining the space and all the other facilities should be arranged by you only but in leasing you just pay the rent and continue with the work. A leasing option affords the time to focus solely on running your business.

 

The Cons of Leasing Office Space

1) Variable Costs:  Annual rent increases and higher costs at the time when your lease expires are the main problems one faces in the rental situations.

Pros of co-working office space

1) Low cost:- In a co-working office you don’t have to pay that much as you have to in case of leasing or don’t have to make big investment. Its cost would be far more less than a private office. Freedom from signing long leases and complete flexibility would be there.

2) Networking: - What would be a better place to build network than the place where people are working around each other? You may get a new colleague or a financer or may get a new idea while having a tea in the cafeteria.

Cons of co-working office space

1) Distractions: - Working in a place where so many people are around you sometimes becomes a distraction. Socializing with new people and talking about something new apart from work is always tempting but a big distraction too.

2) Conflicts: - Well it’s totally natural that conflicts will happen while sharing the space with others. People working for different firms and doing different work in the same space sometimes leads to conflict.

So these were few facts about leased, purchased and co-working office space  and the reality of realty is that no one can tell you that which one option is best for you , it’s you and you alone who have to choose according to your objective.