PHASED DESIGN
Design
Construction
Design
Construction
Additional
Design
Time/Cost
Time
Savings
Informed real estate
decisions may help improve
profitability, achieve growth
and manage corporate
assets
Owning Versus Leasing
Commercial Office Space
Strang
When companies lease,
they avoid maintenance
responsibilities and
benefit from shared
amenities.
■
he decision to own or lease commercial
office space is challenging for most
companies. In the past, firms inhabiting a
stand-alone facility had little choice but to
own the property they occupied. With Dane
County’s unprecedented growth in the
number of new lease facilities being built
throughout the area, many more options are
available, underscoring the need for
companies to be savvy players in today’s
real estate market.
With a strong understanding of the advan-
tages and disadvantages of owning versus
leasing, a company can make the real estate
decision that achieves profitability goals,
supports growth and provides assets to
operate the business.
Ownership advantages. In contrast to a
tenant, a building owner has more control
of a facility’s physical aspects, such as its
design image and maintenance. Facility
ownership also allows a company to select
tenants to lease its unused space, or to plan
an addition on the site.
A building owner may benefit somewhat
financially, since the total monthly cost of the
mortgage and utilities generally is less than
rent. Building owners also avoid rent escalation
costs. Depending upon whether the actual
company or a group of individuals owns the
property, there also may be some tax benefits
achieved through ownership.
Ownership disadvantages. Building ownership
requires a down payment of at least 20 percent
of the building cost. This initial outlay, along
with financing and closing costs, inspection
and appraisal fees, legal costs, and any
architectural or construction fees, consume
more of a business’ cash flow than leasing. The
owner’s control of a building also translates
into significant building maintenance and
management