Lease vs Buy Office
Office leases cost 15 to 25% more than buying over a decade according to CBRE commercial real estate research. Enter your space needs, budget, and planned occupancy length to compare leasing versus buying side by side. See the total cost, equity buildup, and flexibility trade offs for each option.
Last updated: May 2026
A lease vs buy analysis compares total costs of leasing versus purchasing office space over 5-15 years including maintenance, tax, and capital appreciation. Lease TCO = Annual Rent × Years + Service Charges. Stable Business (10+ years) typically target Buy (equity building).
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What is Office Space Cost Comparison?
A lease vs buy analysis compares total costs of leasing versus purchasing office space over 5-15 years including maintenance, tax, and capital appreciation.
The Formula
Lease TCO = Annual Rent × Years + Service Charges Buy TCO = Purchase + Maintenance − Appreciation
Worked Example
A 2,000 sqft office: lease at $35/sqft/year or buy at $500,000 with 65% commercial mortgage.
- Lease 10-year: $70,000 × 10 + $60,000 CAM/taxes = $760,000
- Buy 10-year: $500,000 + $175,000 interest + $100,000 maintenance = $775,000
- Property appreciation (3%/yr): $500,000 → $672,000
- Buy net cost: $775,000 − $172,000 gain = $603,000
📌 Buying saves $157,000 over 10 years through equity building, but requires $175,000 down payment and long-term commitment.
Why This Matters
Capital building
Monthly mortgage payments build equity worth $75,000-250,000 over a decade. Rent builds nothing.
Flexibility trade-off
Leasing allows relocation as the business grows. Buying locks capital and location for 10+ years.
Tax implications
Lease payments are fully deductible as business expenses. Ownership uses depreciation (including Section 179 and bonus depreciation) and capital gains rules differently.
Common Mistakes
❌ Comparing rent to mortgage only
Ownership includes maintenance, insurance, and property taxes on top of mortgage. Compare total occupancy costs.
❌ Ignoring flexibility needs
Fast-growing companies may outgrow premises in 2-3 years. A 10-year buy commitment becomes an anchor.
❌ Not modeling scenarios
Property values can decline. Model flat and declining scenarios alongside growth to understand downside risk.
Industry Benchmarks
| Category | Good | Average | Poor |
|---|---|---|---|
| Stable Business (10+ years) | Buy (equity building) | Long lease | Short lease |
| Growing Business | Flexible lease | Serviced office | Buy (limits growth) |
| Break-even Period | 5-7 years | 7-10 years | Above 12 years |
Source: NAR Commercial Real Estate Market Survey 2025
Benchmark data sourced from NAR Commercial Real Estate Market Survey 2025.
From analyzing thousands of financial calculator interactions, the businesses that embed these on their pricing or services page see the highest conversion — visitors who calculate their own numbers trust the result more than any sales pitch.
One of the most common mistakes we see when working with clients: comparing rent to mortgage only. Ownership includes maintenance, insurance, and property taxes on top of mortgage. Compare total occupancy costs.
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