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Buy or rent your business space in France ?

When you are looking for premises for your business, a crucial decision is required: should you buy or rent? This question deserves careful consideration because it has a direct impact on your company's financial and operational strategy. In this article, we'll explore the pros and cons of each of these options, as well as alternative solutions like leasing.
Written on
26.2.24

When you start or expand your business, one of the crucial decisions to make is the choice between buying or renting your business premises. This strategic choice is not only a question of cost, but also of long-term vision and operational flexibility. Let's explore the nuances of each option in depth to help you make an informed decision that will support the growth and adaptability of your business.

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The Benefits of Buying Business Premises

Buying space for your business can be a strategic investment, with tangible long-term benefits.

  • Establishment of assets: By choosing to buy, you are investing in an asset that can not only appreciate over time but also strengthen the financial base of your business. This asset can be used as a lever in financial negotiations and contribute to capital accumulation.
  • Full control and stability: Owning your premises gives you complete control over the space and eliminates the uncertainties associated with rent fluctuations or changes in ownership. This allows you to plan for the long term without the fear of being displaced or experiencing unexpected rent increases.

Possible purchasing mechanisms

  1. Direct Purchase by the Company : Strengthens your business assets.
  2. Purchase by Executives : Allows personal assets to be separated from business risks, while building personal wealth.
  3. Real Estate Civil Society (SCI) : Often used for asset management and transfer, this structure makes it possible to separate real estate assets from business risk and to protect personal assets in the event of financial difficulties for the company.

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The Benefits of Renting Professional Premises

Leasing offers flexibility and less financial responsibility that can be crucial for businesses that are just starting up or expanding.

  • Operational flexibility: Renting allows your business to remain agile; you can change premises to adapt to business growth or changing markets without the constraints of selling real estate.‍
  • Preservation of debt capacity : Leasing reduces initial capital requirements, allowing valuable resources to be invested in other critical areas of the business, such as product development, marketing, or market expansion.‍
  • Financial risk reduction : By renting, you avoid risks associated with ownership, such as asset depreciation or unexpected maintenance and repair costs.

Lease Vigilance Points

  1. ‍Rent conditions : The rent is freely fixed between the parties when the lease is signed, but it is crucial to understand how to review the rent. Make sure these terms are clear and beneficial to avoid unexpected increases.‍
  2. Description of the premises : An exhaustive and accurate description of the premises is essential. This includes not only the area and layout, but also the condition of the facilities and equipment. A good practice is to carry out a detailed inventory to avoid any dispute over the conditions for maintaining or returning the premises.
  3. ‍Flexibility of Use : The destination clause for the premises, which specifies the authorized activities, must be reasonable. A restrictive clause may limit your ability to adapt the use of premises to the evolution of your business.
  4. Distribution of Burdens and Works : Since the Pinel law, charges, taxes, and conditions for carrying out the work must be clearly divided between the lessor and the tenant. Make sure these items are detailed in the lease to avoid unexpected costs.‍

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Leasing: a pragmatic alternative

Leasing represents an attractive compromise between buying and renting. This system allows a company to have real estate, financed by a third party (generally a bank), with an option to purchase at the end of the contract. This allows the company to maintain its financial flexibility while benefiting from the advantages of a real estate asset.

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Conclusion

The decision to buy or rent business premises depends on multiple factors, including financial stability, business growth expectations, and long-term strategies. It is advisable to consult with experts in commercial real estate to assess all the options available and choose the solution that best suits the specific needs of your business.

At IPGS Immobilier, we support companies in the development of their short-term and long-term real estate strategies. Do not hesitate to make an appointment!

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