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Why Guy | Why don't more business owners own their buildings?

Kevin Partington, Executive Director with Cushman and Wakefield commercial development in Sacramento, offers tips on buying vs renting.

SACRAMENTO, Calif. — Today's Why Guy inquiry comes to us from Jason Turkovich. 

"Here's a why question for you. Why don't more businesses own their buildings?"

Lately, it seems we've been reporting on businesses closing down due to higher rent or minimum wage increasing. Some of these businesses were long time establishments that have been in the same building for years.

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According to one commercial real estate expert, it could be that the businesses wanted to buy the space, but the owner didn't want to sell or was asking too much for the property. If you do decide to buy, be sure you've considered all options once you own.

Kevin Partington, Executive Director with Cushman and Wakefield commercial development in Sacramento, said a buyer should be aware of all options.

"They'd have to consider its reuse should they ever move out..i.e; what would the value be if they ever retired, went out of business, tried to sell the business or re-lease it," Partington said.

Another consideration Partington shared in the rent versus buy decision is that if you do buy the space, is that the best use of your funds? You may be tapped out financially after buying with no money left to run your business successfully.

One more financial rule of thumb from experts. If you plan to stay at your location for seven years or more, it pencils out best financially to buy the building. If you're going to be there less than seven years, lease it, according to FitSmallBusiness.com.

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