It has always been a debatable topic and quite a difficult decision for most of the entrepreneurs whether they rent a warehouse or buy their own as there are numerous pros and cons in each case and could play a major part in their business success too.

The decision between leasing or buying ultimately depends on the available capital, inventory management, objectives of the business, and projected future growth.

The Pros of Buying A Warehouse:

1.Flexibility in Design:
Buying a warehouse has many advantages and one key advantage of buying rather than renting is the flexibility that comes with ownership of the property. When you’re the owner you can design the warehouse as per your product needs without permission so it ease inventory management and is free to set to facilitate the growth of your business such as renovations, layout adjustment, building extensions, increase or decrease the storage space for the products.

2. Safe and Valuable Investment Decision
Apart from the flexibility and stability, buying a commercial property is also a safe investment that mostly grows in value. You can take a loan on your property or can sell anytime whenever you need to inject extra capital.

3. Stability and Control
Another advantage of buying your own warehouse is stability. You would not be at risk or get affected by the increase in rents annually or no need to relocate as the landlord requires you to do so if he does not renew the lease due to any reason.

The Cons of Buying A Warehouse

1. Time Consuming Activity
Buying a warehouse requires many pressing issues especially when you’re constructing a new one or restructuring: buying the right plot, design the factory, obtaining the license and finding the right constructor all will be on your shoulder so it’s a highly decisive and time-consuming activity.

2. High Initial Cost
To buy a warehouse a heavy deposit requires 20-30% of total value so if the business is running slow or at start-up phase then putting all this capital would not be a wise decision.

3. Repairs and Maintenance Costs
As an owner you are responsible for any building maintenance which can be additional expense and time-consuming activity.

Pros of Leasing a Warehouse

1. Less Upfront Cost
Renting a warehouse is a cheaper option as compared to buying as you need to pay just monthly rent with some security deposits and can utilize the rest of capital in the business expansion.

2. More Options/Flexibility to Relocate
Leasing a warehouse comes with business flexibility and relocation options as you are free to move to a larger facility as your business grows. Through renting you can cope with the business demands and relocate to a better place as per your nosiness needs.

3. Free Building Maintenance
There are no responsibilities that lie on you to pay for general or annual building maintenance as it is the responsibility of the landlord so there will be no additional expense you will suffer.

4. Immediate Start of the business and less paperwork-
Just search on Google, find the best place as per your capital and business goals and simply shift there so renting is also a better option than buying as it gives you an immediate start and just a lease agreement needed to sign so no hassle of approval and further paperwork.

The Disadvantages of Leasing A Warehouse

1. Fluctuating Annual Rates:
Rents are increasing annually so every year additional expenses will be added.

2. Less Control:
In case the landlord would not renew the lease, you need to relocate which not only causes additional cost but also not in your business favour.

3. No Equity:
Renting a space will just be an expense at the end, you pay a substantial amount every year but unable to make your asset so cannot use it against any bank loan, funding, or other business deals.

4. Limited growth:
Also, you can prefer bonded warehouse that help to manage your business to store your goods. If your business grows faster and you need to modify the current facility, then it might not be allowed by the landlord so you need to relocate that would add more cost which was not planned and have a direct effect on profitability and revenue.

To be A Tenant or Owner: The decision is Yours
Hope the above pros and cons would help you in deciding which option is more suitable for your business current and projected growth.