Minneapolis / St Paul Commercial real estate landlord presents their insights into the benefits of businesses adopting a ‘rent office space’ approach instead of buying.

(Newswire.net — April 18, 2013) Minneapolis, MN — J.G.M. Properties, Inc. presents their views on renting office space instead of buying. There are some factors that most businesses need to take into account while making this crucial decision.

Cash Outlay: Businesses that rent office space have a much lower initial expense than when they purchase property. They don’t need to put out as much money upfront when renting as compared to leasing where high initial and upfront investment requires cash flow.

Fixed vs. Variable Cost: The market will dictate what businesses end up paying over the long run when they rent office space. However, there’s no guarantee that the property’s value will appreciate when it is bought. When businesses rent office space, they also get increased flexibility and freedom to change locations later because of growing staff and operations or budget constraints.

Growth: While outgrowing a space doesn’t have to be a financial crisis, if the space requirement grows over the next few years, growing out of an office space that is bought and not rented can involve more upheaval. Businesses can easily avoid the cost and hassle of moving when they rent office space; this is not an option when they own a building.

Property Management: Buying an office space demands good property management for businesses that have long term growth plans. Big businesses usually buy more office space than they need and rent out the expansion space.

Appreciation: Buying office space is akin to real estate investing; it may be profitable or a financial drain in a down market; either way it involves a lot more work and effort than simply renting office space. Recent commercial real estate cycles have come in 10 year periods, so it is a good idea to invest in a healthy market where buying office space to generate long term increase in value (appreciation) is usually successful.

Tax Factor: Routinely, businesses can deduct the full amount when they rent office space and even write off repairs immediately. Buying office space enables owners to take depreciation on the improvement portion of the property; they can also deduct interest on the purchase loan, property taxes, and other qualifying expenses.

A representative of this Minnesota commercial real estate company says cites a recent quote, “At the end of the day, it’s important that businesses understand their needs and requirements. They need to know what is happening in terms of commercial real estate in their location and the potential impact it can have on them. There are a number of factors that contribute to the right decision, so we recommend that you consult with a tax professional and a financial adviser to determine whether renting office space is a better choice than buying. Only businesses that are more established, have the financial resources to take on a significant real estate investment, and plan to be in one location for several years are better off buying office space.”

J.G.M. Properties, Inc., a suburban Minneapolis commercial real estate management company currently headquartered in Bloomington, MN presents the advantages of renting office space instead of buying for businesses. JGM’s primary focus has been on Minnesota office space for lease. JGM has been in the Minneapolis St Paul commercial real estate market for over 30 years.

Cited Sources:

rocketlawyer.com

microsoft.com/business

officefinder.com

openforum.com