In deciding a building or space for office, the top management should consider all the advantages and disadvantages of having own office building or rented one. This articles explains the merits and demerits of having owned and rented building for office.
Advantages of Owned Building for Office
1. Rooms are planned and designed to fit the exact requirements of the organization.
2. Own building can be altered and adopted if there is any need arises. Thus, best possible use can be made of office space.
3. If the entire space is not necessary, the surplus space can be rented out to other offices which will give a stable income.
4. The building is constructed according to one’s will and pleasure.
5. If bigger area is constructed than actually required for immediate needs, the extra space is used for future expansion.
6. Own building leads prestige to the organization and enhances its reputation with staff among the customers in particular and the public in general.
7. Own building lends permanent address to the organization. There is no need of changing the address again and again.
8. The construction of own building is a sound investment to the organization.
For small and medium scale business unit, buying or constructions of own building may not be worthwhile. The reason is that they can not afford the financial constraints involved in it.
Disadvantages of using own building for office
1. All types of business unit cannot afford the money involved in construction or uneconomic compared to the advantages to be derived.
2. Own building involves high cost of maintenance which may be beyond the capacity of small firms.
3. Municipal taxes have to be met.
4. If part of own building is rented, there may be a problem of dispute with tenants.
5. If own building is altered to suit the requirements, the alteration expenses is an additional expenses.
6. The office premises can not be shifted very easily anywhere as they are permanently fixed.
The land for the construction or buying of the office building may not be available in designed place. In such cases, the only alternative is to rent or lease of an office building.
Advantages of rented building for office
1. The management can select the office space in accordance with the financial capacity of the organization.
2. There is no capital investment involved in the construction or buying of office building.
3. There is no maintenance expenses incurred to the organization.
4. If the business is not stable, rented building is mostly stable.
5. The available finance can be used for the improvement of business.
6. Whenever, a more suitable location is available or found, the office can be shifted very easily.
7. The organization is free from problems like payment of municipal taxes, disputes with tenants etc.
8. A large building may be hired or another office may be selected at a new or nearby location in the event of expansion.
9. Rented or lease building is convenient for medium and small offices and newly started business units.
Disadvantages of rented building for office
The main disadvantages of a rented or leased building are listed below.
1. Rented building may not satisfy the particular requirements of the organization.
2. A rented building does not add any prestige to the organization.
3. The plan of building can not be modified or altered according to the requirements of an organization if needed.
4. Some area or space may go waste in the process of layout.
5. Unnecessary space or extra space cannot be Sublet to anybody.
6. There is a lack of permanent address of the organization.
7. Rent is generally high in the urban locations.
Suitability of owned building for office
Out of the analysis of advantages and disadvantages of own building and rented or leased building, an own building is highly suitable to the following organizations.
1. Large and well established business concern.
2. The company’s products or services have stable demand in the long run.
3. An organization has the need of specially designed building.
4. There is a possibility of cost saving in the construction of office premises.