One of the biggest business decisions a company has to make is whether to buy or rent its premises. Whether it’s an office, factory or warehouse, your premises can be your biggest asset and there is the potential to benefit from an increase in value in the long-term.
However, there are a number of reasons why renting your business premises makes more sense. Firstly, new or growing companies may not have sufficient capital to be able to apply for a commercial mortgage. Instead, you may wish to invest the capital that you do have into expanding your services and growing your client base rather than pumping it all into one big purchase.
Secondly, renting means you can quickly change location if required, plus you have more flexibility to move as your business expands and more space is required. This is especially true if you are renting a factory or warehouse and your business takes off quicker than you expect; relocating is much easier to manage than if you need to go through the wholesale and purchase process.
As the landlord will generally have to foot the bill for any unexpected maintenance, repairs or security costs, you won’t have to suffer any nasty surprises which eat into your profits. Knowing that a set figure and nothing more will come out of the accounts each month can help you plan and confidently invest in other areas.
Joe Williams works for Pearl & Coutts, a specialist agency based in London that helps clients with all their office space and commercial property needs.
He commented that, “If you rent you won’t be hit by a downturn in property prices or rises in interest rates; however you must be prepared in case your rent is increase as a result of the economic climate. So depending on the specific needs of your business, renting your premises may represent a more sensible.”