Selling or renting a professional office, what is the right choice?

Renting a professional office: advantages and disadvantages

High profitability is undeniably the major advantage of renting a professional office. Indeed, by opting for rental, you can generate a return of 5% or more depending on the characteristics of your property (location, equipment, accessibility…) while maintaining your real estate assets.

Added to this is the fact that professional offices are highly sought after by small businesses and independent entrepreneurs. Moreover, they rent very quickly. The risk of tenant vacancy is therefore lower compared to residential real estate.

On the flip side, renting also has disadvantages that you should be aware of:

• The risk of unpaid rent;
• The minimum duration of a commercial lease is 9 years, so it is a long-term investment;
• Your rental income is treated as real estate income. It is therefore heavily taxed (up to 50% in some cases).

The advantages and disadvantages of selling a professional office

The major advantage of selling a professional office is being able to realize a capital gain in order to immediately have a good amount of liquid cash. You can then reinvest the sale amount to finance new personal or professional projects.

This option also offers the advantage of avoiding the constraints of rental management: rent, vacancies, maintenance, etc. Furthermore, the sale proves more advantageous from a tax perspective in certain cases.

That said, selling a business office is an irreversible act. By proceeding with the sale, you transfer ownership of your real estate property to another person!

How to find the ideal candidate to sell or rent an office?

The choice between renting or selling your office depends on several factors:

• The rental attractiveness of the geographical area in which the property is located (business center, prestigious district, infrastructure, accessibility…);
• The evolution of rents in the commercial real estate market;
• The state of the real estate market in general and the rental market in particular;
• Your financial and tax situation;
• Your investment strategy: do you want to rent to generate stable and sustainable income or sell to embark on a new entrepreneurial adventure?

Before choosing one real estate strategy or another, you must weigh the advantages and disadvantages of each option according to your short, medium and long-term needs.

Furthermore, whether you are selling or renting your professional office, it is essential to properly prospect for potential candidates. For this, several options are available to you:

• Specialized real estate transaction sites;
• Social networks;
• Your professional network;
• Word of mouth;
• Entrust the task to a professional real estate agency specialized in commercial real estate;

Ideally, to succeed in renting or selling, it is necessary to enhance the value of your office: renovations, home staging (property enhancement), equipment, etc.

Good to know:

Are you still hesitating between selling or renting your professional office? Your commercial real estate agency Allten has all the necessary expertise to analyze your situation and help you make your choice. Don’t hesitate to contact us to make an appointment!