Office Space Purchase – a new trend or the future?

Companies are often faced with the dilemma whether to buy or rent office space. Theoretically, there are two groups of companies: the first cares about the balance sheet, the second cares about the profit and loss account. If the company wants to increase the office space surface, buying an office space is a logical solution, but if the company does not want to invest a large amount of money in buying its own space, rental office space is the wise solution.

However, although the decision seems simple in theory, in practice it is often more complicated. Many companies, especially international ones with great potential and rapid growth, usually rent office space, because it is much more flexible and easier for them to rent offices, due to smaller initial investments. In addition to this, renting allows companies to choose a location and office building for their business headquarters. It also facilitates the increase or decrease of the leased area or change of address in accordance with the business strategy. Also, in markets where there is a large offer of office space for rent, it is easier to find it and adapt it to one’s needs in terms of spatial arrangement of offices, as well as desired interior design. Being a tenant in a business complex means that the investor provides reception services, security, cleaning, maintenance of common areas and greenery, which allows companies to have no obligations regarding the maintenance of the facility, apart from paying costs.

On the other hand, owning an office space can stabilize costs. Fixed costs facilitate long-term planning and lessen cash flow problems that can be caused by the increase in rent due to annual indexation or lease renewals. Another advantage of owning the space is capital, that is, the value of real estate, which can increase over time and be used as collateral for new investments. Market practice has shown that companies that plan to stay at one location for a long time, that do not anticipate significant changes in business and reside in offices that can fulfill the company’s growth plans for the next 5-10 years, are considering purchasing office space as a better solution.

On Belgrade market, the general trend is for companies to rent office space, especially companies that are developing and that plan to grow in the number of employees, while investing free funds in their core business, in order to improve business and adapt to new challenges in the business environment. However, in the last two years, the trend of buying office space is becoming more and more present. Previously, the common buyers of office space in Belgrade were banks and insurance companies, while in recent years large institutional funds and international investors interested in purchasing large business complexes have appeared on the market. In addition, local investors and companies are increasingly interested in purchasing office space, not only as a form of investment, but also for their business and personal needs.