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Q&A: What Factors Steer Own-Versus-Lease Decisions Today?

It’s an age-old question—to lease or to own—because the right answer can depend on many different factors. Connect Media spoke with Alan Joel, CCIM, Principal at Joel & Granot Real Estate/CORFAC International, Atlanta, who has closed more than 100 owner user sales in his career, to discuss some of the issues in the current environment.

Q: What factors drive a company’s decision to own or lease the real estate they occupy today?
A:
There are often emotional issues involved, but as an advisor we try to avoid these problems and instead focus on breaking down the business and investment factors, as those assets they are looking to buy as to how they relate to each client. For instance, a firm that’s less than five years old, we strongly suggest a lease for the purposes of saving capital and risk aversion reasons. The decision also depends on a company’s expectations for growth and expansion, as well as its management structure—for instance, ownership would be complicated for a law firm where partners join and leave frequently and there are multiple decision makers.

Q: How do current market conditions—rental rates, vacancies, interest rates—affect the lease versus own decision?
A:
When the leasing market tightens and rental rates increase, as we’re seeing in Atlanta now, the value of buying becomes greater. Companies that want or need to own may be in a hurry to get deals done before interest rates rise (interest rates have been at historically low levels for several years, and they will be going up). But one of the biggest factors in any market is that the number of options to purchase is usually very few compared to leasing. As a result, buyers often have to make compromises on terms or features that they could avoid by leasing.

Q: What role do brokers play today, and how do they help companies make the right decision? How has that changed?
A:
 A good broker knows the market and understands the client’s business and their plans for the future. We provide our clients with not just information and advice so they know they’re getting a market deal on space that advances their goals, but we provide out of the box options that are not your everyday type of deals. The pace of change is fast in Atlanta, and if your client doesn’t have all the options or is unsure, then you’ll probably miss out on deals. JGRE has been involved in three successive sales of properties in Atlanta last quarter that were not on the market, so we were able to be a market leader for our clients. With off-market properties you have to think “outside the expected.”

Connect With Joel & Granot Real Estate/CORFAC International’s Joel


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For comments, questions or concerns, please contact Dennis Kaiser

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Inside The Story

About Dennis Kaiser

Dennis Kaiser is Vice President of Content and Public Relations for Connect Commercial Real Estate. Dennis is a communications leader with more than 30 years of experience including as a journalist and in corporate and agency integrated marketing communications roles. He is responsible for Connect’s client content operations and public relations strategy. He is involved in a range of initiatives ranging from content strategy, message development, copywriting, Social Media and content marketing services. Dennis’s communications background in the real estate industry includes working with many of the top real estate firms – from brokerage companies, developers, homebuilders, investors, owners, lawyers, asset advisors, lenders, architects and property management firms. • Marketed more than 1 Billion Square Feet of Office Space • 70,000 Multifamily/Condo Units • 15,000 Single Family Homes • 30 Million Square Feet of Retail Space • Representing Roughly $100 Billion in Investment In his most recent corporate communications roles, he led a regional public relations effort across Southern California for CBRE, played a key marketing role on JLL’s national retail team, and was responsible for directing the global public relations effort at ValleyCrest, the nation’s largest commercial landscape services company. Dennis’s agency background on integrated communications teams at many reputable agencies and has earned an outstanding reputation with organization leaders as a trusted advisor, strategic program implementer, consensus builder and exceptional collaborator. He formerly was President of the Public Relations Society of America’s Los Angeles of public relations professional, and served on the Board of Directors. He also taught a public relations extension course at Loyola Marymount University. Dennis’s has developed and managed national communications programs for Fortune 500 companies to start-ups, both public and private. He’s successfully worked with journalists across the globe representing clients involved in major-breaking news stories, product launches, media tours, and company news announcements.

  • ◦Sale/Acquisition
  • ◦Lease
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