Mar
02
why do retail companies typically lease properties rather than buy it?
By
What’s the diference between “retail lease” and “retail finance” to buy a car? I’m 15 and I’m confused about terms like retail finance and retail lease,could you please explain me? actually I just know in many cases the retail lease payments are lower than retail finance.Sell and Rent Back ...
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where can i find retail locations and properties up for lease in colorado? need to find business location in colorado springs for wireless storeRepossession ...
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how do i get a person or firm to buy a (retail/business)property thats for sale so that i can lease from them? in orlando area, orlando area, just a land/building lease, (real estate firms do that, right?)Quick House Sale ...
3 Comments
March 4th, 2010 at 5:48 am
Back to Location, Location, Location is one of the prime reasons. There are several others.
You must of noticed when a Shopping Mall is replaced by a bigger better version and now enjoying better demographics & traffic flows than the older Mall, many of the key names abandon and trade on up to the new & exciting location.
In order to do this they need the flexibility of a lease, not ownership. That said, some organisations do own their properties and work a different and just as successful philosophy. It’s options and corporate strategy which leads…
March 5th, 2010 at 2:50 am
Partly for the very liquidity you acknowledge a company like Walmart has.
Most companies focus on their core competencies. That’s where they invest their money. Their core competency generally is not real estate.
Second, why tie up a huge chunk of money in property when you can lease it? Considering the time value of money, it often makes more sense to lease something (property, equipment, etc.) than to purchase it.
Third, it allows companies to shift focus more quickly. If you’re burdened by high capital investment (property, equipment, etc.) and you need to downsize or refocus, you can do so in a matter of months with leases. It takes much longer if you’re the actual owner.
Fourth, there are a variety of tax strategies that companies use to maximize the immediate tax benefits of leasing, versus purchasing.
Hope that helps.
March 7th, 2010 at 12:55 pm
operating capital; it is ideal for the beginning retailer to
lease but not the very profitable one. YOU are on the
money…….all wealthy retail chains should buy their
pads. {called condoizing]
My peers have forgotten the component
in accounting called equity.
ONE builds no equity without ownership.
and when one can own or rent
for the same price=+ or - 5%, it makes
no sense to lease.
The May Company entered ch 11
35 yrs ago and floundered for
months and I pointed out to them that
they owned hundreds of mil in
RE that they could re-fi. They did and
came out of 11 clean and happy.
Too bad their merchandising
policies stayed archaic.