Making the choice between buying an existing commercial location and building one from scratch proves challenging for many growing businesses. There is an undeniable allure to building a custom structure that is tailor-made to boost a company’s productivity and better meet the needs of its customers and employees. However, such an endeavor is costly and time-consuming and may be unnecessarily ambitious for many businesses according to commercial real estate agent Brock Rasmussen of Fort Myers-based Lee & Associates.
Business owners will need to consider the following key issues to help guide them towards the option that makes the most sense for their business both now and in the future.
Location, Location, Location
Location is vitally important for some companies, particularly retail or other customer-facing businesses that rely on foot traffic to drive sales. Depending on the desired location of the business, buying may be the only viable option due to the scarcity of land for new development. This is especially true of many cities’ downtown cores and prime commercial hubs.
For industrial companies, location is generally less important and land to build on is far easier to come by. However, millennials and Generation Z are heavily reliant on public transit while at the same time being less willing to engage in lengthy daily commutes, so while having a warehouse out in the boonies may be cheaper than the alternative, it will also make it harder to staff.
What is the Growth Trajectory for the Business?
If a business is booming and requires rapid expansion, it probably makes a lot more sense to buy than build, especially if the long-term outlook for the business isn’t certain. This is especially true for manufacturers of products that are popular right now but are likely to become obsolete in the not-too-distant future.
On the other hand, companies with long growth runways and sustainable businesses may be better served by building their own location. According to Brock Rasmussen, this will ensure that all of a company’s many technological and regulatory requirements are met from the outset without the need for costly upgrades of older locations.
Furthermore, if the business is a power hog and the new location is likely to be used for years or even decades to come, building a new, highly energy-efficient location could reap substantial long-term savings and could qualify the business for additional tax breaks.
How Important Will Employee Happiness and Retention Be?
Employees are more discerning than ever when it comes to the perks offered by employers. Increasingly, this includes having open concept workplaces that encourage communication and collaboration, as well as access to on-site amenities like exercise equipment and meditation rooms.
Business owners will need to consider whether existing locations will meet the heightened demands of modern employees or if it makes more sense to build from the ground up with millennial and Generation Z workers in mind.
Ultimately, whether to buy or build is an extremely complex issue that will require a deeper examination of the specifics of each case. It’s recommended that prospective buyers/builders consult a professional with expertise on the local real estate market to get a firm grasp of their options.