What is more profitable: buying or renting a commercial space for an office?

Choosing the right office space is one of the key challenges entrepreneurs face. Deciding whether purchasing or renting a commercial property is more advantageous isn’t straightforward, as the best option depends on various factors such as company size, financial capacity, and growth plans. In this article, we examine the pros and cons of both options, providing the necessary information to make an informed decision. Discover what to consider to make the best choice for your business.

Buying or renting an office: Current possibilities for businesses

The real estate market has undergone significant changes in recent years due to unpredictable factors such as the COVID-19 pandemic, inflation, and the war in Ukraine, which disrupted supply chains. These events have destabilized economic and geopolitical conditions, making business decisions, including choosing the right office space, much more cautious and strategic.

Buying an office

While buying an office may seem like the obvious choice, it is also the most expensive. As the Polish Central Statistical Office reports, in 2022, the average price of purchasing an office space was nearly 840,000 PLN, with an average price of 7,883 PLN per square meter. Companies that opt to purchase are often those with stable market positions, willing to make a long-term investment. However, economic instability has decreased the willingness of many businesses to make such investments.

Renting an office space

Renting office space offers businesses the advantage of immediate access to fully furnished, professional workspaces without the need for significant upfront investment. This is particularly attractive for startups or companies working in a hybrid or remote model that only occasionally require office space for meetings. Renting provides flexibility without the long-term financial commitment of buying.

Buying vs. renting: What’s the better choice?

The decision between buying and renting office space depends on the specific needs and financial situation of a company. Consulting with financial advisors and real estate agents can help evaluate the best option based on current market conditions and long-term goals. For companies seeking flexibility and lower upfront costs, renting might be the better option, whereas more established companies with long-term stability may benefit from buying.

Why is short-term office rental profitable?

Every business needs professional office space. Even organizations that usually work remotely may occasionally require a traditional office for key client meetings, team training, or corporate events. In such cases, purchasing and maintaining a permanent office is not cost-effective. Renting an office offers much more flexibility without the need for a long-term lease agreement.

Flexible rental terms are particularly important for fast-growing companies or those that may need to change locations quickly. This solution allows businesses to rent offices for periods tailored to their current needs, making it easy to scale the space according to ongoing projects and the number of employees. This is an ideal option for startups or companies testing new markets.

A clear advantage of renting a ready-to-use office is also the financial savings. This option is particularly beneficial for companies focused on maintaining financial liquidity and avoiding large investments in real estate. By renting an office, companies can get a prestigious business address and adapt the space to their changing needs, all while keeping much lower fixed costs. In short-term rentals, businesses find it much easier to control and optimize operational expenses. They can adjust the size of the office to suit their needs, avoiding unnecessary costs for unused space.

One possible downside of renting an office is the limited ability to customize the space according to personal preferences. However, even when using services like **Idea Place**, companies can still make key decisions, such as desk layout and office arrangement, to meet their team’s specific needs.

The benefits of subletting office space

Subletting office spaces allows companies to rent offices in prime locations that may be hard to access through direct rentals. By choosing this option, businesses can secure space in prestigious business districts or city centers, which is particularly important for those seeking to increase visibility and accessibility for clients.

However, subletting is not without its drawbacks. One main disadvantage is the uncertainty regarding future rent costs, which may increase over time. Another risk is that the property manager may decide not to renew the rental agreement.

Buying commercial property – a long-term asset

Purchasing commercial property for an office is a long-term investment that offers full freedom in designing and using the space. Owning your office eliminates the risk of the lease being terminated by the landlord.

This option is most often chosen by companies with stable, secure financial situations and plans to remain in one location long-term. A significant benefit of buying is that properties tend to increase in value over time, making them attractive investment assets. If the property is well-maintained and located in a prime area, finding potential buyers is usually not difficult, with return rates for commercial properties reaching around 8% in cities like Wrocław and Warsaw. Additionally, the property can serve as collateral for loans, facilitating further business development.

However, purchasing office space has its downsides. For example, adapting the property for use can be time-consuming, delaying the start of operations. In contrast, renting a ready-to-use office provides immediate access to a fully equipped workspace without the hassle of interior design.

Is it worth buying or renting a commercial space for an office? Matching the property to the company

As shown, deciding between buying and renting an office space is not straightforward—it requires a thorough analysis of the company’s financial health, the current office market in the city, and future projections. Smaller companies and startups, which value flexibility, often choose to rent a ready-to-use office. Larger, more stable companies with long-term plans tend to benefit from owning their own commercial property.

Regardless of your company’s situation, it’s essential that the decision be well-thought-out and based on a solid financial analysis and strategic business goals.

Jutta Hutsch-Kasprzyk

Jutta Hutsch-Kasprzyk is an experienced Chief Operation Officer who has focused on optimizing business processes and reducing operational costs throughout her career. She is a talented negotiator, building strong relationships with key contractors and customers. Her skills in managing company affairs, organizing team work, and developing strategies have contributed to the success of IdeaPlace on the business map of Wrocław.