Our client is a leading healthcare clinic with more than 10 locations. The client was considering consolidating a few locations into a single space in hopes of reducing doctors’ travel time and expenses. The client also had plans to hire an associate that would help grow the business and its capacity to serve more patients. However, the current rental space they were hoping to consolidate these clinics into was not large enough to accommodate these changes.
The client knew that additional office space would soon become available for rent in their current building which would accommodate their needs and also provide room to grow. However, the client was also entertaining another option — to build an entirely new office building that would provide the needed room for growth while also giving the owners the opportunity to build equity in the business (versus paying rent to an unrelated party).
In order to determine which of these options would be the best choice for their business, the client engaged Baker Tilly Advantage (Advantage) to do an in-depth build versus rent analysis.
Working closely with the client’s real estate advisor, Advantage was able to identify which of the available lots would be best to purchase and build on, while also calculating the costs. Having this valuable data at their fingertips allowed Advantage to provide the client with a detailed build versus rent analysis that presented the projections of each scenario over the life of the building loan (20 years).
The analysis provided the client with the following:
On the surface, the analysis provided the client with exactly what they asked for; an illustration of the differences between building a new office or continuing to rent and taking over the additional space when it becomes available. However, the real value of the analysis came from the additional questions it prompted, compelling the client to look to the future and think about things they otherwise would not have.
Business owners should carefully weigh all financial and non-financial factors of owning or renting a business property based on their own circumstances. However, it is important to have a trusted advisor on your side to help you identify and address these items.
Connect with our dedicated small business advisors to learn more about how they can help you position your business for success.
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