Lease vs Buy Office

When your team is stable, you plan to stay in the same location 7+ years, have capital available, and want to build equity instead of paying rent.

When you are growing rapidly, need flexibility to relocate, prefer lower upfront costs, or want to preserve capital for business operations.

Buy when your business is stable, you plan to stay 10+ years, and you have a 20-30% down payment available. Commercial property appreciates 3-5% annually in the US per NAR Commercial Real Estate data. Below 7 years occupancy, leasing is almost always cheaper after accounting for opportunity cost of capital.

US commercial office rent averages $20-40/sq ft in secondary markets and $50-100+/sq ft in major metros like NYC, SF, and LA. Buying an office requires a 25-35% down payment with commercial mortgage rates at 7-9% (2025). Monthly mortgage payments are typically 20-30% less than equivalent rent, but you also bear maintenance, property insurance, and commercial property taxes, usually 1.5-3% of property value annually.

Capital is locked up (20-30% deposit), you bear all maintenance costs, commercial property is illiquid (average 6-12 months to sell), and if your business needs change, you are stuck with a fixed location and size. Remote work trends have reduced commercial property values by 15-25% since 2020.

Length of planned occupancy (under 7 years = lease), available capital (better deployed in the business?), location stability, growth plans (fast-growing companies need flexibility = lease), and current market conditions.

Leasing is cheaper for occupancy under 7 years while buying saves 15 to 25% over a decade according to CBRE research. US commercial rent averages $20 to $40 per square foot in secondary markets and $50 to $100 in major metros. Buying requires a 25 to 35% down payment but monthly mortgage payments are typically 20 to 30% less than equivalent rent for long term occupants.

It evaluates cash flow forecasting, profit margin tracking, accounts receivable management, tax planning, budget vs actual review, emergency fund, debt management, pricing strategy, financial reporting frequency, and advisor relationships.

It evaluates revenue growth tracking, customer acquisition strategy, retention program, product development, market positioning, competitive awareness, team scaling plan, technology stack, process documentation, and goal setting.

Proven business model, brand recognition, training, and support systems.

A business is exit-ready when it can be sold at a fair market multiple without the owner being required to stay.

When you have predictable revenue, want to retain full ownership, need a specific amount for a defined purpose, and can comfortably service repayments.