Hold the operating need constant.
Compare alternatives that can satisfy the same use, size, location, quality, control, flexibility, and timing requirements.
Lease vs. own analysis
Compare leasing and ownership on the same basis.
A lease versus ownership comparison should place viable alternatives on the same time horizon and financial basis. Occupancy costs, acquisition and financing costs, capital improvements, control, flexibility, and exit assumptions are considered together.
Comparison method
Use one operating requirement and one analysis period.
The comparison should identify the properties evaluated, the source of each assumption, the treatment of cash flows, and the variables most likely to change the result.
Treat costs consistently.
Capture relevant occupancy, transaction, financing, improvement, operating, capital, and exit cash flows on a common basis.
Use executable alternatives.
Connect assumptions to available properties, relevant lease and sale evidence, financing conditions, and realistic transaction timing.
Test what could change the answer.
Examine different periods of use, financing terms, escalations, capital work, residual values, and decision dates.
Keep professional boundaries visible.
Use appropriate legal, tax, accounting, financing, appraisal, engineering, and other advice where the decision requires it.
Scope of the comparison
Compare the full cash flows, obligations, rights, and risks of each structure.
Both alternatives must satisfy the same operating requirement and be measured over the same period. The analysis also accounts for the different cash flows, contractual rights, ownership responsibilities, and market exposure attached to each structure.
Period of use
How long the property must serve the requirement and how certain that operating need is.
Commitment and alternatives
Equity, financing, improvements, reserves, and competing business or investment uses of capital.
Rights and responsibility
Authority over occupancy, alteration, operation, future property decisions, and contractual constraints.
Flexibility and exposure
Lease rights, transaction timing, liquidity, disposition costs, and future market conditions.
Lease and ownership considerations
The preferred structure depends on the client’s priorities.
A client focused on near-term flexibility may reach a different conclusion from one seeking long-term control or equity ownership. Review each lens to see how the decision changes.
Contractual options
Term, renewal, expansion, contraction, assignment, sublease, and termination provisions define the available flexibility.
Connect to lease execution →Physical control
Ownership may provide operating and improvement flexibility while retaining capital commitment and market exposure.
Connect to acquisition execution →Occupancy commitments
Rent, operating expenses, security, tenant work, relocation, and other contractual costs enter the lease case.
Examine lease evidence →Asset commitments
Equity, financing, acquisition costs, improvements, reserves, operations, and future capital work enter the ownership case.
Examine the market position →Negotiated rights
Use, access, alterations, signage, building services, operating obligations, and remedies are governed by the lease.
Structure the occupancy rights →Ownership authority
Greater authority over use and improvements remains subject to financing, law, physical constraints, and operating responsibility.
Connect control to asset strategy →Contractual expiration
Term, option notice dates, restoration, assignment, sublease, holdover, and termination provisions influence the exit.
Map the lease event →Market disposition
Liquidity, value, property condition, buyer demand, transaction costs, timing, and market conditions influence the exit.
Connect to sale execution →Regional occupancy structure
Lease and purchase assumptions must reflect the relevant property market.
Availability, occupancy cost, acquisition basis, financing, property alternatives, and transaction conditions change across the DC market area.
From analysis to negotiation
Use the approved lease or ownership case as the basis for property diligence, negotiation, and transaction documentation.
LocationSite Selection
Define the requirement and test viable lease and ownership alternatives.
↗LeaseTenant RepresentationStructure and negotiate the selected lease alternative.
↗OwnershipAcquisition ExecutionAdvance an ownership alternative through diligence, negotiation, and closing.
↗EvidenceComparable AnalysisGround both cases in relevant property and transaction evidence.
↗Lease vs. own analysis
Which lease or ownership alternative best satisfies the operating requirement and financial criteria?
Start with the operating need, decision horizon, available alternatives, and the assumptions that could change the result.