Lease, Buy or Build?
Choosing the Right Commercial Space in Memphis
If you're expanding your business, launching a new operation, or moving into Memphis from out of state, you may be asking: Should I lease an existing building, buy a property, or build from scratch?
The answer, like many in commercial real estate, is: it depends. But if you're not at least exploring all three paths — especially in a market like Memphis — you might leave serious value on the table.
The Case for Leasing Existing Space
Leasing can be a faster, more flexible option when:
You need to move quickly
Your needs are fairly standard (e.g., office, warehouse, or retail)
Your business is growing and you want flexibility in term length
Memphis has inventory across key submarkets, including:
East Memphis Class A office
Warehouse/distribution space near the airport corridor
Midtown retail in walkable districts
Leasing allows for quicker occupancy and often lower up-front cost — but it’s important to understand lease types (like Triple Net vs. Modified Gross) and to negotiate tenant improvement (TI) packages that work for your business.
When Buying May Be the Smarter Move
Purchasing an existing commercial property can strike a strategic balance between speed, control, and long-term value. Buying may be ideal when:
You want to build equity over time while avoiding the risks of new construction
You’ve identified a property that suits your needs with minor adjustments
You’re in a position to capitalize on market appreciation
You value ownership and control without waiting for the full development process
In Memphis, you’ll find attractive opportunities to purchase:
Stabilized office or retail buildings with repositioning upside
Flex or warehouse spaces with solid bones in key industrial corridors
Owner-user buildings eligible for SBA 504 or 7(a) financing
Buying also offers important tax advantages, such as depreciation and interest deductions — and can give you greater predictability if you lock in fixed financing.
When Building May Be the Better Option
Surprisingly, building new space isn’t just for national corporations or large institutional users. It may be a smart — even cost-competitive — option when:
You need highly specific space requirements
You plan to occupy long-term and want equity
You’re relocating operations and evaluating multiple markets
You qualify for development incentives
In Memphis, we’ve seen well-executed new construction projects deliver total occupancy costs lower than leasing — thanks to:
Tax incentives (PILOT, TIF, grant or loan programs)
Strategic land acquisition in emerging districts
Considerations for Leasing vs Buying vs Building
| Factor | Lease | Buy | Build |
|---|---|---|---|
| Speed to Occupy | 30–90 days (typical) | 60–120 days (due diligence + closing) | 12–18 months (build) plus pre-construction phase |
| Up-Front Cost | Lower (TI, deposit) | Moderate to High (down payment + improvements) | Higher (land, design, construction) |
| Customization | Limited | Some (depends on property) | Fully customizable |
| Incentive Eligibility | Sometimes (TI offsets) | Sometimes | Frequently (PILOT, TIF, etc.) |
| Equity Building | None | Yes | Yes |
| Tax Benefits | Deductible lease payments | Depreciation, interest deductions | Depreciation, interest deductions |
| Appreciation Potential | None | Yes | Yes |
| Expense Predictability | Often more predictable | Depends on asset condition | Variable (during and post-construction) |
The Bottom Line
Memphis offers flexibility, affordability, and incentives — and that means the lease-buy-build question is genuinely worth asking.
If you're looking at Memphis from the outside, or trying to compare options across markets, having a broker who understands construction pricing, development feasibility, and local incentive programs is essential.
Frequently Asked Questions
Q: What’s cheaper in the long run — leasing or building commercial space?
A: It depends on your needs. Leasing has lower up-front costs, while owning through new construction may offer long-term savings, equity, and tax benefits — especially if incentives apply.
Q: How long does it take to build new commercial property in Memphis?
A: Many ground-up commercial projects require 12–18 months for the construction phase alone. Planning, design, permitting, and incentive approvals can add additional time depending on the project type and location.
Q: What types of incentives are available for new commercial construction in Memphis?
A: Programs like PILOT (Payment in Lieu of Taxes), TIF (Tax Increment Financing), and grants can significantly reduce the cost of new construction depending on project scope, job creation, and location.
Q: When does buying make more financial sense than leasing or building?
A: Buying can be the smart middle ground if you want long-term control, equity, and tax benefits without the delays and complexity of new construction. It's often ideal when you find a well-located building with minimal improvement needs.
Q: How do I know if I qualify for incentives like PILOT or TIF in Memphis?
A: Eligibility depends on several factors — including project location, job creation, investment size, and business type. A qualified broker or development consultant can guide you through the application process.
Q: Is it harder to finance a new build than to buy an existing property?
A: Construction financing is generally more complex, with higher equity requirements, risk assessments, and phased funding. Buying an existing building may offer simpler, faster financing — especially with SBA loan options.
Q: What’s the easiest option to scale with my business growth?
A: Leasing is usually the most flexible short-term, especially for companies that expect rapid changes. Buying offers moderate flexibility, while building gives maximum control but the least scalability without preplanning.
Let’s Talk
We specialize in helping businesses and developers navigate the Memphis market — not just with brokerage services, but with real-world experience in site development, construction management, and incentive strategy.
Want to compare lease rates vs. build costs? Or explore what incentives might apply to your project?
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