Should I Lease Or Buy Office Space: What Is Best Option For Small Business Owners in Mequon, Pewaukee and Other Milwaukee Suburbs?

When small business owners in Mequon, Pewaukee, and other growing Milwaukee suburbs face the decision of leasing versus buying office space, several factors come into play. Both options offer unique advantages and potential drawbacks, making it essential to weigh them carefully based on your specific business needs, financial situation, and long-term goals.

Pros of Leasing Office Space

1. Lower Initial Costs: Leasing typically requires a smaller upfront financial commitment. Instead of a down payment, you might only need to cover a security deposit and the first month’s rent. This makes leasing more accessible, especially for startups and small businesses with limited capital. In fact, Mikkelson Office Space offers single suites starting as low as $200/month, and they do not require a security deposit.
2. Flexibility: Leasing offers flexibility in terms of location and office size. As your business grows, you can easily move to a larger space or a more desirable location without the burden of selling property. This is particularly beneficial in the Milwaukee suburbs, where market trends and business hubs can shift.
3. Less Maintenance Responsibility: When you lease, the property owner is usually responsible for maintenance and repairs. This allows you to focus on running your business without worrying about the upkeep of the building, which can be both time-consuming and costly. This is especially true with Mikkelson Office Space, where we own, lease, and maintain our buildings with onsite staff who is professional, knowledgeable, and prompt in serving our office tenants.
4. Tax Benefits: Lease payments are generally tax-deductible as a business expense, which can provide significant savings. This can be a valuable benefit for small businesses looking to maximize their tax advantages.

Cons of Leasing Office Space

1. No Equity Building: One of the biggest downsides of leasing is that you’re not building any equity. The money you spend on rent doesn’t contribute to ownership, meaning that over time, you may end up spending more than you would have if you had purchased the property.
2. Lack of Control: Leasing means you’re subject to the terms set by the property owner. They can increase rent, sell the property, or change the terms of your lease, all of which can disrupt your business operations. Additionally, you might be limited in how much you can customize the space. We pride ourselves in developing a supporting relationship with our tenants, growing with them, and being flexible to meeting their needs. They appreciate us and it shows in our great Google reviews online.
3. Potential for Higher Costs Over Time: Rent in Mequon, Pewaukee, and other suburban areas around Milwaukee could increase, especially in thriving business districts like Brookfield or Wauwatosa. Over time, escalating rent costs can outpace the benefits of leasing, making it less financially viable in the long run.

Pros of Buying Office Space

1. Equity and Asset Building: When you buy office space, you’re investing in a tangible asset. Over time, as you pay down the mortgage, you build equity, which can be a valuable financial asset for your business. This can also provide a stable, long-term investment as property values in Milwaukee’s suburbs tend to appreciate.
2. Stability and Control: Owning your office space gives you full control over the property. You can make renovations, expansions, or modifications to suit your business needs without needing approval from a landlord. Plus, you won’t have to worry about lease renewals or rent hikes.
3. Potential Rental Income: If you purchase more space than you need, you can lease out the extra space to other businesses, creating an additional revenue stream. This can help offset the cost of ownership and potentially increase your return on investment.

Cons of Buying Office Space

1. High Upfront Costs: Purchasing office space requires a significant initial investment. You’ll need to cover the down payment, closing costs, and potentially renovation expenses. This can strain your finances, particularly if you’re a small business with limited capital.
2. Ongoing Maintenance Responsibilities: As a property owner, you’re responsible for all maintenance and repairs, which can be costly and time-consuming. This includes everything from routine maintenance to major repairs like roofing or HVAC system replacements.
3. Reduced Flexibility: Owning office space ties you to a specific location, which can be a disadvantage if your business needs change or if the area becomes less desirable. Selling commercial property can be a lengthy process, potentially leaving you stuck in an unsuitable space.

Conclusion

Both leasing and buying office space have distinct advantages and disadvantages for small businesses in Mequon, Pewaukee, and other Milwaukee’s suburban areas. Leasing offers flexibility and lower upfront costs, which can be crucial for startups or businesses with limited capital. On the other hand, buying office space allows you to build equity and provides greater stability and control over your business environment.

Ultimately, the best choice depends on your business’s financial health, long-term goals, and the specific needs of your operation. Consider consulting with a real estate professional who understands the Milwaukee suburban market to help guide your decision.