Buying vs. Leasing a Business Location in Palm Beach County: How to Decide

Sooner or later, almost every growing business in Palm Beach County asks the same question: should we keep leasing, or should we buy our own building? There is no universal right answer. It depends on your cash, your timeline, how sure you are about your space needs, and how much of your attention you want tied up in real estate. Here is how we walk business owners through it.

The case for leasing

• Cash stays in the business. A lease typically needs a security deposit and first month's rent, plus whatever build-out the landlord's allowance doesn't cover. A purchase needs a down payment, closing costs and often renovation money up front. For a business that is still scaling, that cash usually works harder in inventory, hiring or marketing.

• Flexibility. If you outgrow the space, shrink, or want a better location in three years, a lease has an end date. A building you own has to be sold or leased out before you can move without carrying two locations.

• The landlord carries the big-ticket risks. Depending on how the lease is written, roof, structure and parking lot replacement may stay with the landlord. In a NNN lease you still pay your share of taxes, insurance and maintenance, so read the repair and replacement clauses closely.

• Negotiating power on new deals. Free rent, tenant improvement allowances and renewal options are all part of the leasing toolkit. A good tenant representative can often secure concessions that offset a meaningful part of your move-in costs.

The case for buying

• You build equity instead of paying someone else's mortgage. Every principal payment and every dollar of appreciation is yours. Over a long hold, that can turn your occupancy cost into one of your largest assets.

• Predictable occupancy costs. A fixed-rate loan locks in the biggest piece of your cost. Leases usually come with annual rent increases and renewal negotiations you don't control.

• Control. You decide on the build-out, signage, hours and future changes, within zoning and code.

• Tax considerations. Owners can generally depreciate a commercial building (not the land) over 39 years under federal tax rules, and mortgage interest is typically deductible as a business expense. Talk to your CPA about how this applies to you.

• A second business. Many owners hold the building in a separate entity and lease it to their operating company. When the business is eventually sold, the real estate can stay with you as an income-producing asset.

Financing: SBA 504 and 7(a) loans

Owner-users don't always need the larger down payment that conventional commercial lenders often ask for. The SBA 504 program can finance an owner-occupied building with as little as 10% down, and the SBA 7(a) program can also be used for real estate. The key condition is occupancy: for an existing building, your business generally needs to occupy at least 51% of the space. Expect a personal guarantee from the major owners either way, which is worth weighing against the personal guarantee a landlord may ask for on a lease.

Florida-specific points to know

• Sales tax on commercial rent is gone. Florida repealed its sales tax on commercial rent effective October 1, 2025, which lowered the cost of leasing compared to a few years ago.

• Documentary stamp tax on deeds. Buyers and sellers should budget for Florida's documentary stamp tax when a property changes hands. Who pays it is negotiable in the contract.

• Property taxes hit both sides. Owners pay them directly; most NNN tenants pay their share through operating expenses. Either way, the assessed value of commercial property matters to your bottom line. Amendment 3 on the November 3 ballot would cut the annual assessment increase cap on non-homestead property, including commercial, from 10% to 5% if it passes.

• Insurance. Windstorm coverage is a real line item in South Florida. Get a quote on any building you are considering before you make an offer, not after.

A simple way to frame the decision

Leasing usually makes more sense when:

• Your space needs may change in the next three to five years.

• Your cash is better used growing the business.

• You need a specific location where nothing is for sale.

Buying usually makes more sense when:

• You plan to stay in one location for seven to ten years or more.

• You have the down payment and reserves without starving the business.

• Your use requires a specialized build-out you don't want to leave behind for a landlord.

The best answer comes from running both scenarios side by side with real numbers: actual asking rents and lease terms for spaces you would consider, and actual purchase prices, loan terms, taxes and insurance for buildings that fit. That comparison usually makes the decision obvious.

Thinking about leasing or buying your next location in Palm Beach County? Talk to RH Realty and we will build that comparison for you.