Buy vs. Lease: Some Important Areas to Consider
Finding the space that’s right for your business is critically important—but that’s not the only decision you have to make. A recent blog post published on Kizer & Bender’s Retail Adventures discusses the topic of buying versus leasing retail space.
Buying – While buying is often a good investment strategy, there are important financial considerations to keep in mind. The author suggests the following:
- Ask yourself if the money you will put into buying the building over and above the investment you’ll need to open and operate the store.
- Meet with local experts to ask their opinion of the building you’re considering purchasing.
Leasing – The benefit of leasing is flexibility. It also likely frees up funds that would be unavailable if you were to buy. The author suggests considering the following:
- Will you be signing a gross lease or a net lease?
- Do your homework—price-compare among spaces available for rent in your market before entering into lease negotiations.
- Pay attention to the lease term and consider the option of adding extension years at a predetermined rental rate, or based on an increase that’s tied to the Consumer Price Index.
- Always have your lease reviewed by an attorney prior to signing it.
- Don’t forget about leasehold improvements—who will pay for them is negotiable during lease discussions.
- During lease negotiations be sure to bring up the right to sublease, the terms of breaking the lease early, if necessary, and the Right of Assignment.
For more details, read the article in full at Kizer & Bender’s Retail Adventures.