Buy or lease? Four-question framework puts business strategy before property decision

A commercial real estate advisor argues that companies should not start with the buy-versus-lease question. Instead, they should first ask where the business is heading, with the B.E.S.T. Framework covering business strategy, economics, scalability and timing.

Companies that ask whether to buy or lease their headquarters are asking the wrong question, according to a commercial real estate advisor with 18 years of experience. Instead, leadership teams should first determine the direction of the business over the next five to 10 years before evaluating any building.

The advisor, writing in EdgeProp Malaysia, sets out the B.E.S.T. Framework — a four-part test that covers business strategy, economics, scalability and timing. Under the economics pillar, he notes that every ringgit invested in property is a ringgit that cannot be deployed in expansion, technology, talent or other opportunities. “Rather than asking: ‘Can we afford to buy?’, I encourage leadership teams to ask: ‘Is buying the best use of our capital at this stage of the business?’,” he writes.

The scalability question warns that companies frequently outgrow premises because the business expands faster than forecast. The best headquarters supports the business the company is becoming, not the one it is today. Timing, the fourth element, is described as the most underestimated part of the decision. The advisor recounts a client that was financially able to purchase but whose planned building would have become too small before its strategic expansion was complete. It continued leasing, and later acquired a headquarters that was better aligned with its future.

The author observes that companies rarely ask about buying during difficult periods. They raise the question when revenue is predictable, cash flow is stronger and the workforce has expanded. “In many ways, the question is not really about property. It is a reflection of confidence,” he writes. However, he cautions that financial capability and strategic readiness are not the same thing. The right property at the wrong time is still the wrong decision.

While he encourages ownership in principle, he says the headquarters should never be the goal itself. “It should be the natural outcome of a business that is ready for the next stage of growth,” he writes. The article concludes that property should never define the business; the business should define the property.