Buying a Building to Lease to Your Business Is a Strategy Worth Considering
By Chris Rohrer, Broker & Pete Kostroski, Broker | Rokos Advisors
For most business owners, the buy-versus-lease conversation feels pretty straightforward. Either you want to own the building you operate out of and are comfortable tying up capital in real estate, or you prefer to lease and keep that capital available for business operations, growth initiatives, hiring, and day-to-day flexibility.
In many cases, that decision is clear early on. But there’s a third option that often gets overlooked — one where ownership and flexibility can coexist.
Under the right circumstances, leasing a building you own (or partially own) can be a strategic move that supports both your real estate goals and your business objectives.
The Traditional Thinking Around Ownership
Owning the building your business occupies is typically viewed as a long-term play. It offers control over your space, stability in occupancy costs, and the opportunity to build equity over time. For businesses with predictable space needs and strong cash flow, that can be a compelling option.
The tradeoff is capital. Down payments, tenant improvements, maintenance, and future capital expenditures all require cash that could otherwise be reinvested into the business. For many owners, tying up that capital in real estate limits flexibility — especially during periods of growth, transition, or uncertainty.
That’s often where the conversation ends. But it doesn’t have to.
When Leasing a Building You Own (or Co-Own) Can Make Sense
In certain situations, business owners can structure real estate ownership in a way that allows the operating company to lease space — either from a separate ownership entity or alongside other tenants — while still benefiting from ownership.
This structure creates separation between the business and the real estate. The operating company preserves working capital and maintains flexibility, while the property functions as its own asset with long-term upside through appreciation and rental income.
In practice, this often means:
The building is owned by a separate entity
The business signs a market-based lease
Additional tenants or future leasing optionality help offset ownership costs
For some owners, this delivers the best of both worlds: operational flexibility today and real estate value creation over time.
The Capital Reality: Investors and Ongoing Requirements
This strategy does come with added complexity. In many cases, business owners don’t want — or aren’t able — to fund the entire acquisition and ongoing costs on their own.
That’s where additional investors can come into play. Bringing in partners can help spread upfront capital requirements, share risk, and make larger or more flexible buildings attainable. It can also allow the business owner to limit personal exposure while still maintaining a stake in the real estate.
That said, investor structures, control, return expectations, and long-term alignment all need to be carefully thought through. This is not a passive or plug-and-play approach — it requires planning and the right team around you.
Tax and Legal Considerations
Like any ownership structure, there are tax and legal considerations that come with separating real estate ownership from your operating business. The impact can vary widely depending on how the property is owned and how income is structured.
Rather than generalizing, these details are best reviewed with your tax and legal advisors as part of a broader planning conversation.
Why This Has Become More Relevant in the Twin Cities
In today’s Twin Cities market, this strategy has become increasingly relevant. Select office and industrial properties are trading at more attractive price points, and many buildings offer flexibility for partial occupancy or multi-tenant use.
For owner-users, this creates opportunities to acquire properties that may be larger than their immediate needs — allowing the business to lease only what it requires while the rest of the building helps support ownership costs.
In some cases, this also creates future optionality: room to expand, the ability to downsize without relocating, or the freedom to move the business entirely while retaining the real estate as an investment.
The key is that the real estate supports the business — not the other way around.
It’s Not One-Size-Fits-All
This approach isn’t right for every company. It requires comfort with real estate risk, thoughtful capital planning, and a clear understanding of how ownership fits into broader business goals.
But for owners who want exposure to real estate without sacrificing operational flexibility, it’s an option worth exploring.
The buy-versus-lease decision doesn’t always have to be binary. Sometimes the smartest strategy lives somewhere in the middle.
Business owners are often quick to decide whether they want to own or lease — but fewer consider whether ownership can be structured in a way that still allows the business to lease. In the right scenario, leasing a building you own can preserve capital, create flexibility, and still deliver long-term value. And in today’s Twin Cities market, that nuance can make a meaningful difference.
Is buying a building a strategy you’re considering? Connect with Rokos Advisors today — we’ll walk through how this has worked for other business owners.
Rokos Advisors is an award-winning Minneapolis - St. Paul based commercial real estate/tenant representation firm specializing in helping businesses find the perfect office or industrial space for their company.