What is the purpose of leasing? The Many Purposes of Leasing in the Real Estate Industry

Welcome to Create Real Estate‘s official blog! As a trusted real estate agency serving Sunshine, Victoria, and various regions in Australia, we aim to provide valuable insights and information about the world of real estate. This article will delve into the multiple purposes of leasing, explicitly focusing on commercial property and commercial leases. Leasing is vital in the real estate industry, benefiting landlords and tenants alike. So, let’s explore why leasing is a preferred option for many businesses.

1. Flexibility and Cost-Effectiveness:
One of the primary purposes of leasing a commercial property is the flexibility it offers. Businesses often need the ability to adapt and grow, and leasing allows them to expand or downsize according to their needs. By opting for a lease instead of purchasing a property outright, businesses can allocate their financial resources more efficiently and avoid the burden of long-term mortgages. This cost-effectiveness allows them to invest in their core operations and achieve their business goals.
Create Real Estate provides a wide range of commercial properties available for lease, catering to the diverse needs of businesses in Sunshine, Victoria, and beyond. You can explore our extensive listings on our website and find the perfect space that aligns with your business objectives.

2. Testing the Market:
Leasing is an excellent way for entrepreneurs to test the waters and determine the viability of their business in a particular location or industry. By leasing commercial property, they can gauge the market demand, assess the competition, and make informed decisions about their long-term investment plans. This approach reduces the risk of starting a new venture and provides valuable insights that can guide strategic growth.
Create Real Estate understands the importance of finding the right location for your business. Our expert team can assist you in identifying suitable commercial properties that align with your target market and industry requirements.

3. Professional Image and Convenience:
For many businesses, establishing a professional image and attracting customers is crucial for success. Leasing a commercial property allows firms to secure a prime location in high-visibility areas, enhancing their brand presence and credibility. These properties often come with essential amenities, such as ample parking space, accessibility, and proximity to other businesses, making it convenient for clients and employees.
Create Real Estate specialises in commercial leases that offer exceptional locations and facilities to elevate your business’s professional image. Visit our website to explore the range of properties we have available for lease.

4. Maintenance and Operational Ease:
Owning a commercial property entails various responsibilities, including maintenance, repairs, and compliance with building codes. However, by opting for a commercial lease, businesses can transfer these burdens to the property owner or management, allowing them to focus on their core operations without the added stress of property maintenance. This convenience saves both time and money and ensures businesses can operate smoothly.
Create Real Estate works closely with property owners to provide well-maintained and compliant commercial properties. We understand the importance of a hassle-free leasing experience for our clients and strive to offer properties that meet their operational needs.

5. Access to Specialized Locations:
Certain industries require specific locations tailored to their unique needs. Leasing allows businesses to access specialised facilities and infrastructure that might otherwise be challenging to acquire. For instance, medical practices may require premises with specific zoning regulations or equipment, while restaurants may require properties with commercial-grade kitchens. Leasing allows finding these specialised locations without the substantial investment needed for ownership.
Create Real Estate has extensive experience catering to diverse industries’ needs. Whether you require a medical suite, a retail space, or a restaurant venue, our team can assist you in finding the perfect commercial property for lease.

Leasing serves various purposes in the real estate industry, offering businesses flexibility, cost-effectiveness, and convenience. Whether you are a startup testing the market or an established company looking for a prime location, leasing provides the freedom to adapt and grow. Create Real Estate understands the significance of leasing and offers a comprehensive range of commercial properties for lease in Sunshine, Victoria, and beyond. Visit our website to explore our listings and embark on a seamless leasing journey. Let us help you find the perfect commercial property to support your business success.

Leasing Commercial Property: Why It Makes Good Business Sense

When starting or expanding a business in Victoria, one of the most important decisions you’ll make is where to set up your physical operations. While buying commercial property might seem attractive, leasing often provides significant financial and operational benefits, making it the smarter choice for many businesses. In this blog post, we’ll explore why companies lease rather than buy commercial real estate with insights from Create Real Estate, one of Victoria’s most respected commercial property agencies.

Lower Upfront Costs

The most apparent advantage of a commercial property lease is that it requires less cash upfront than purchasing a building or land. You may need to put 20-30% or more down with a purchase to secure financing. The upfront capital required makes buying difficult for new businesses or those with limited operating history.

On the other hand, leasing typically only requires the first month’s rent and a security deposit to move in. This frees up operating capital for things like inventory, marketing, hiring, equipment, and other investments that allow you to focus on growth during the critical early stages.

Peter Langtry, director at Create Real Estate, says, “The lower entry costs of leasing make it feasible for businesses to get up and running quickly. Paying hundreds of thousands in a down payment can be a major barrier, especially for younger companies.”

Preserves Capital

Along with lower upfront costs, leasing is more capital efficient long-term. When you purchase property, a large chunk of your capital is tied up indefinitely in a fixed, depreciating asset. Any equity you build can be challenging to access in a pinch.

Conversely, leasing means paying for the space you need each month rather than tying up vast sums. You can invest excess capital into higher-returning assets like additional inventory, marketing, technology, skilled employees, and other growth drivers.

Langtry notes that this flexibility and access to capital can be a lifeline for businesses facing volatility or disruptions. “In times of uncertainty, leasing means your capital isn’t trapped in illiquid assets. The ability to pivot financially is invaluable.”

Predictable Costs

Unlike owning commercial property, leasing comes with predictable, consistent monthly expenses. This allows you to budget for the space each month accurately and avoids surprises that can strain finances.

Maintenance, repairs, renovations, property taxes, insurance—these unpredictable costs are all handled by the landlord with a lease. You pay the set monthly rent without significant fluctuations.

For Tim Cole, director at Create Real Estate, predictable costs are a key benefit of leasing. “Unexpected bills put pressure on businesses, especially in the early days. Knowing your monthly occupancy costs allows better financial planning and frees up mental bandwidth to focus on operations.”

Location Flexibility

Leasing also provides more flexibility when it comes to location. You can move to a new space that suits your needs as the business grows and changes. Locations can be evaluated based on customer proximity, access to transportation routes, workforce demographics, and other data unavailable when you first launched.

You’re locked into that location with owned property until you can sell and buy a replacement building. This reduces your ability to adapt as market conditions and business needs evolve.

“We see many clients leverage short-term leases initially to test markets and locations before committing long-term through purchasing property,” says Langtry. “Leasing allows that experimentation which is invaluable for new and growing companies.”

Access to More Property Types

The range of available properties also factors into leasing’s location flexibility. Not all buildings or land are for sale at any given time. Leasing opens up a more comprehensive range of property types, from new Class A spaces to older industrial buildings. This allows you to better match your space requirements without buying and selling property.

Specific properties like industrial warehouses, large office spaces, and retail outlets are rarely available for purchase but are commonly listed for lease. You can secure these spaces without buying more property than you need.

Customisable Spaces

Leasing also provides more freedom to customise the space to your unique needs, primarily through negotiated lease terms. You can recoup investments into renovations and buildouts through reduced rent or lease incentives that may provide a different ROI in an owned building.

Remodeling, expansions, facility upgrades, technology infrastructure, and other leasehold improvements can help you maximise productivity and efficiency when the landlord shares in those costs.

Cole emphasises the importance of custom spaces, noting that “having the flexibility to tailor the environment to how you operate has a huge, though often overlooked, impact.”

Less Responsibility

While ownership provides more control, leasing offloads significant property responsibilities onto the landlord. You avoid the stress and cost of maintenance, repairs, capital improvements, insurance, and other obligations that aren’t core to your actual business.

Instead, you can stay focused on daily operations while leaving property management to experienced real estate professionals. This helps avoid disruptive crises and diverts less attention from revenue-generating activities.

“We’ve seen owners get bogged down in property issues that pull them away from the business itself,” Langtry explains. “Those responsibilities can become burdensome surprises if you’re not prepared.”

Tax Advantages

The tax treatment of leases provides additional advantages in some cases. Lease payments are fully tax-deductible as business expenses in most jurisdictions. This can give deductions to offset revenue each year and reduce tax liability.

With purchased property, deductions are limited to mortgage interest and depreciation over decades. The deduction benefits generally are less favorable and immediate with ownership.

“The tax incentives around leasing vary based on location and industry, but can certainly be an added benefit, especially in early years,” says Cole.

Future Flexibility

Finally, leasing preserves future flexibility as your business needs change. You can relocate or right-size to a larger or smaller space when your lease ends. This ability to scale up or down is difficult when you own real estate.

Ending a lease and moving is also significantly more accessible than selling property, which can take months or longer, depending on market conditions. The flexibility to walk away freely in the future provides options as the business grows and evolves.

“We’ve seen clients leverage short-term leases to start, then purchase property once they have a better handle on long-term space needs,” Langtry notes. “Leasing reduces risk until you’re ready for a long-term real estate investment.”

Key Takeaways

Leasing offers compelling financial, operational, and strategic benefits for many businesses compared to commercial property ownership. The pros of leasing include:

• Lower upfront costs
• Preserved capital for higher returning assets
• Predictable occupancy expenses
• Location flexibility to adapt over time
• Access to more property types
• Ability to customise spaces efficiently
• Less property management responsibilities
• Potential tax advantages
• Future flexibility to scale, relocate, or exit
For both new and established businesses in Victoria, leasing commercial property often provides strategic advantages over buying. Work with the experts at Create Real Estate to evaluate your situation and optimise your real estate decisions.

Ready to find the ideal commercial space to lease in Victoria? Reach out to Create Real Estate at 1300 27 33 32 or visit our website to get started and leverage their decades of leasing expertise.