Rent or buy a shopping pavilion? What is profitable?

With the development of business, many entrepreneurs begin to think about purchasing their own commercial real estate, as this simplifies business in many aspects. However, there are pros and cons in both the lease of retail space and the purchase.


Of course, in the early stages of development, buying is not even a question, especially when it comes to small business, since there is a need for many other financial investments. Initially, few people set themselves the goal of buying a commercial space and prefers to rent a shopping pavilion. This decision is also considered reasonable by the majority of specialists in the economic sphere, since it helps to avoid many bureaucratic difficulties, and, with the right approach, also save financial resources.


With the growth of business, virtually every entrepreneur thinks about purchasing real estate. Depending on the field of activity, they choose between the LFA and full-fledged buildings of various layouts, which have a specific purpose (for a store, warehouse, production, offices, etc.).


By purchasing a LFA or other premises, the owner gets rid of the need to look for a reliable landlord or to put up with the consequences of a wrong choice, one of which may be sudden increases in rent, which in some cases directly affects the life of the business.


The decision to buy a shopping pavilion is made not only because of the convenience for the owners themselves. Owning your own real estate raises the company’s rating for lenders and investors, emphasizing the company’s profitability, and therefore its reliability.


Nevertheless, in addition to the advantages, there are also difficulties that commercial real estate tenants are deprived of. First of all, it should be noted that when obtaining a loan for the purchase, the funds issued will cover approximately 70% of the cost. But even this amount will be given to you only if you can convince the bank of the profitability and stability of your business. If we are talking about a large business project (and therefore a large amount), then often the bank asks for a business plan. Of course, in the case of purchasing small retail pavilions, the process is greatly simplified.


The final decision to buy or rent a shopping pavilion remains only with the entrepreneur himself, since each business is unique, and in any situation you can find both pros and cons. The best option would be to calculate all possible expenses for both rent and purchase, and act based on the results obtained.