Buying vs. renting warehouse space. It’s the age-old debate, right behind the chicken and the egg. For many business owners, this decision is a tough one, based on your particular company’s unique needs and resources. In this blog, we will discuss the pros and cons of both renting and buying warehouse space and give critical insight into why the decision is based on your business’s individual needs.
To evaluate what is the best option for your business, owners need to think about the following:
- Will the space fit your long-term business needs?
- Do you plan on expanding?
- Do you have the financial capital to invest in real estate?
- Will smaller upfront costs give your business more capital to invest back into the operation?
These questions are critical to answering the question of leasing vs. buying. Though once answered, there are still many factors that go into this decision that will have a great impact on the potential for growth and revenue.
RENTING WAREHOUSE SPACE
When it comes to renting warehouse space, there are many factors to consider, but one of the most important considerations is cost. Leasing a warehouse space requires significantly less money upfront than purchasing. The monthly lease cost is spaced out over the course of the contract and doesn’t require a large down payment. In addition to low upfront costs, maintenance is typically included in the lease, so repairs to the facility don’t impact your cash flow.
There are also, generally speaking, more commercial rentals available. This allows businesses more options and the ability to focus on size, location, and other key factors.
The pandemic has had a significant impact on commercial space, but luckily for supply chain companies, space is always needed. From small manufacturers to huge shipment facilities, fulfillment centers and warehouse space escaped the aftermath of work from home initiatives. According to Deloitte, industrial commercial real estate expects a 25% growth in rental space in the next 12 months.