Why do businesses rent instead of owning their real estate?

Cash poor

Most businesses' cash flow is of vital importance. Particularly in the early years, a lease may be better than a purchase from a cash flow perspective. With a purchase, a business will have to have the lump-sum purchase price, or at least a down payment on a mortgage.

Any excess capital is better used in the core business.

Most non-real estate businesses are good at generating better returns from their core businesses rather than through the ownership of commercial properties.

Flexibility to scale up or down

Scaling isn’t just about increasing or expanding. You also might need to scale down to meet lower demands. This could be as a result of natural peaks and troughs in your business cycle, or as a consequence of a recession or a fundamental change in your industry that is out of your control. Either way there are lots of factors that can make or break a business so it’s important to be ready for whatever comes your way.

Mobility to follow the workforce or the industry trend

Businesses may want to retain their mobility. Maybe they are not sure that the facility that they will select now will serve their needs several years in the future. They may need more or less space, their target market may have moved elsewhere, or better-suited properties may later be built.