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Singapore Exclusive: Should you rent or buy an office space? Here’s the guide to the pros and cons.

Office spaces are aplenty. But is it wiser for you to buy or rent?

Ideas

Acquiring a new office space or even a hot desk — whether for startups or established firms — can be an exciting but daunting process. As with all businesses, the only constant is change, which means that there is always a need to adapt — fast.

Lease terms or a change in the size of one’s practice can indeed galvanise the desire for a new office space, but besides thinking about size, location, and amenities, one of the biggest decisions to make first is whether you should buy or rent the office space.

Office spaces are, after all, a key investment for any business, especially since it forms a core part of its day-to-day operations. To make an informed decision that best fits your practice, as well as your financial goals both in the long and short term, we’ve helped you weigh the pros and cons for renting versus buying an office space. Read on for our comprehensive guide.

Renting an office space

Pros 

Flexibility 

One of the biggest perks of renting an office — like the ones at a co-working space — is the unprecedented flexibility it offers.

Because you’re not tied to one location, bound by long-term leases, or required to make monthly payments for longer than your lease, you’re able to adapt to the changing needs of your company with little or no downtime. This is especially useful for businesses that 1) do not plan to stay in one location for more than two years, or 2) expect to see significant changes in the coming months or years.

This flexibility can save you hundreds and thousands of dollars over the long run — a significant amount that can make or break businesses.

Low maintenance 

Another great perk to renting is how low maintenance it can be. Because the office is mostly maintained by its landlord or office space provider, you won’t need to allocate a sizeable budget nor worry about its upkeep, giving you more time to focus on the one thing that truly matters: your business.

The same peace of mind can’t be said for buying an office space, where owners will have to spend time and money in ensuring that their big investment is properly maintained in the long run.

Prime locations 

With great location comes very expensive investments. It’s no secret that office spaces right smack in the middle of Singapore’s CBD are costly, so much so that they can chew off a big chunk of your capital before you’ve even started.

Choose to rent, however, and you’ll find yourself privy to many amazing office spaces in the heart of the country’s bustling city centre. Renting in a prime location is possible for all businesses — including start-ups — because it requires neither a hefty downpayment nor monthly payments to upkeep.

Besides more financial freedom, you’ll also get to enjoy the convenience and prestige of having a prime office address, in turn boosting your employee’s welfare and the company’s reputation.

Networking Opportunities

Another big benefit of renting an office — especially in co-working spaces and hot desk providers — is the opportunity to meet like-minded individuals. Being in proximity to these people can make it much easier for you to reach out and forge new relationships that might help you grow and develop your business to new heights.

Cons

Landlord troubles 

A good landlord can make renting an office space an effortless affair, but a difficult or unreliable one might inhibit the operations of your business. Without the ability to choose your property’s facilities or its reception team, you may not be satisfied with your decision in the long run. Take the time to get to know your landlord as a person, as this might mitigate these potential issues and help steer you towards finding the right office space. It’s best to choose a reliable and experienced office operator to rent from in the long run.

Rising rents 

Like everything else, rental prices are likely to increase over time, no thanks to inflation and rising operational costs. If you’re looking to expand your team, the cost for a larger office space might also put a bigger dent in your pockets on top of other overhead costs.

Buying an office Space

Pros

Customisation 

Designing your firm to look and feel a certain way can be very important for branding and employee engagement. Unfortunately, renting some office spaces can be quite limiting in that aspect due to restrictions on decorating, upgrading, and remodeling. Owning a space will take away most of these limitations because you’re now your own landlord.

However, there is an uptrend created by office solution providers which has made customization possible for rental office suites and this could be a gamechanger for anyone who has been aspiring to have a fully customized office sustainable through paying monthly rental fees.

Investment 

Buying an office space, especially one in a central location, is a great way to invest because its value might increase over time.

These areas are constantly undergoing upgrades, and being further developed — a spanking new MRT station, multi-storey carpark, or shopping mall can cause a general shift in the demand and supply in the area, driving more value to your investment. If you have sufficient capital, purchasing an office space that has the potential of becoming a valuable asset can be a smart decision.

Passive income 

Purchased an office space that’s too big for your company’s current needs? Subletting the additional space to other businesses can be an excellent way of generating income while you grow your own. Besides, the rent you collect can contribute towards the monthly mortgages of the office space.

Cons

Taxes 

Buying an office space will subject you to significantly more tax than if you rented one. Paying these taxes and stamp duties can eat into profits and hinder business growth, especially if your company is new and still trying to find its footing. Be sure to take note of all these additional costs before committing to your purchase.

Maintenance 

Remember how we mentioned that a benefit of renting an office space was that it was low maintenance? Well, being an owner of the office space means that you’re now on the other side of the fence, where the responsibility of its upkeep falls in your hands. Expect to set aside finances for maintaining and repairing problems and faults that you’ll likely encounter throughout your time there.

Property value

It’s all good if the property market looks positive, but it’s equally important to note that the reverse may happen too. Even a slight dip in property value can greatly affect your returns during the selling process, all while burning valuable resources such as time and money. This might be a considerable obstacle to the growth of your business.

Still unsure of whether you should buy or rent an office space? Based on the pros and cons mentioned above, if you’re ready to rent an office space that best fits the needs of your growing business, check out Arcc Spaces. Speak to one of our consultants today to find out how renting can be the smarter choice for you and your business.

 

Singapore: https://www.arccspaces.com/sg-en/locations/singapore/

Kuala Lumpur: https://www.arccspaces.com/my-en/locations/kuala-lumpur/

Beijing: https://www.arccspaces.com/locations/beijing/

Shanghai: https://www.arccspaces.com/locations/shanghai/

Hong Kong: https://www.arccspaces.com/locations/hong-kong/