The US Commercial Property Price Index has grown by 26.2% over the last 10 years, according to the Green Street Commercial Property Price Index . That’s how much your company’s equity would have risen if you had owned a space that matched that percentage change.
Fixed Costs
You lock in a cost on your loan over a period of time. When you lease, there can be annual or biannual escalations. Having a fixed cost can help you steer your long-term business plan by knowing exactly what you will be paying. If the market goes up dramatically and you’re in a lease, you may pay an amount of that rise in your escalation. This could set back your budget for that year or a few months. When owning, that possibility never exists. You have a set loan. Avoiding rental increases are the best part of having your own space. If there is a 3% rental increase each year, by year four that goes up to 12%.
Tax Benefits
When you own real estate you can deduct some things from your yearly taxes. Interest expenses, depreciation expenses, and non- mortgage-related expenses can be deducted. You can multiply them by the average corporate tax rate, 35%, to see what you might save.
The full monthly loan payments can be deducted, however.
Full Control Over Your Property
When you lease, the landlord has all the rights for the space. They can negotiate rental increases, change the exterior, and mess with
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