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Leasing v. owning commercial space: making the choice requires many considerations.

Publication: Mississippi Business Journal
Publication Date: 25-AUG-08 		Format: Online
Delivery: Immediate Online Access

Article Excerpt
"The major fortunes in America have been made in land."

--John D. Rockefeller

Even though Rockefeller had a point, institutional investors might disagree. For them, immediate cash flow may be more important than holding a long-term capital asset.

For instance, a restaurant owner who builds two restaurants for $1 million each may see one site accrue revenues of $1 million after a year, while the other site may achieve sales of $1.5 million. Yet, real estate values will have changed little while the value of the business will have changed a lot, and cash flow value will exceed real estate appreciation value. So, is leasing the obvious choice?

"Half the world wishes to lease and take the lease costs as a business expense deduction while...

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