How to choose the right financing for your business property

Every growing business eventually faces the same question: Should we keep leasing, or buy our own space?

Leasing offers flexibility and lowers upfront costs, making it an attractive option for businesses looking to preserve capital or avoid long-term commitments. But over time, those monthly payments add up, building someone else’s equity instead of your own.

That’s why, for many business owners, buying the space they operate in becomes the next strategic move. It’s a way to gain control, stabilize long-term costs and invest in the future.

In this guide, we’ll walk through the strategic benefits of ownership, how owner-occupied commercial real estate (OOCRE) financing works, what alternatives to consider and how Comerica helps business owners navigate this decision with confidence.

Why more businesses are choosing to buy, not lease

Despite recently elevated interest rates, businesses continue to pursue ownership. In fact, 68% of real estate leaders surveyed by Deloitte expect commercial real estate fundamentals to improve in 2025, including greater access to capital, stronger transaction activity, and more favorable financing conditions. This is a sharp increase from just 27% last year.

Here’s why more companies are making the move:

• Build long-term equity. Each mortgage payment increases your ownership stake in a valuable asset, turning a monthly cost into a balance-sheet advantage.
  
• Gain control of your space. Make decisions on renovations, expansions and usage without landlord approval or restrictive lease terms.
  
• Stabilize your occupancy costs. Lock in predictable monthly payments with fixed-rate financing, protecting against rising rents and inflation.
  
• Capture tax advantages. Take advantage of potential deductions on mortgage interest, depreciation and property taxes to improve after-tax cash flow.
  
• Generate additional income. Lease unused portions of the space or develop underutilized areas to create new revenue streams.
  
• Improve your financial profile. Owned real estate can enhance your balance sheet, increase borrowing power and support future growth strategies.

How owner-occupied commercial real estate (OOCRE) financing works

OOCRE financing is designed for businesses purchasing property they’ll operate out of as the primary tenants. Unlike investor loans, which focus on rental income and return metrics, OOCRE financing is typically underwritten based on your business’s cash flow and financial performance.

Most businesses use a commercial term loan to fund the purchase, often with fixed or variable rates and terms ranging from 5 to 25 years. The property serves as collateral, and down payments typically range from 10–25%, though SBA programs may lower that threshold.

Because repayment is tied to your business performance, not investment returns, OOCRE financing tends to suit companies with reliable revenue and plans to stay in the space long term. Some loans also include funding for renovations or build-outs.

When structured thoughtfully, OOCRE is a financing solution that supports today’s operational needs and tomorrow’s business value.

Alternative ways to finance commercial property

OOCRE financing isn’t the only path to ownership. Depending on your business model, growth timeline or liquidity needs, one of these options may be a better fit:

• SBA 504 and 7(a) Loans. Government-backed loans that often offer lower down payments and longer terms. A popular choice for small businesses with limited upfront capital.
  
• Commercial Real Estate Lines of Credit. Flexible financing that allows you to draw funds when needed. This is useful for renovations, expansions or phased property investments.
  
• Sale-Leaseback Arrangements. If you already own property, this strategy lets you sell the building to generate capital, then lease it back from the buyer. It can improve liquidity without relocating your operations.
  
• Construction Loans. Short-term financing used to fund new builds or major renovations. These often convert to permanent loans once construction is complete.
  
• Bridge Loans. Designed for short-term gaps in financing. For example, if you need to act quickly on a property before permanent funding is secured.
  
• Owner Financing. In some transactions, the seller may agree to finance the purchase directly, offering more flexible terms than a traditional lender.

How RPI invested in its future with Comerica

Replacement Parts Industries (RPI), a long-standing provider in the healthcare sector, had been banking with Comerica for over two decades when its leadership made a strategic decision: purchase the building that housed its operations.

With guidance from Comerica, RPI’s owners formed an LLC and secured financing to buy the property. This move stabilized long-term occupancy costs and allowed the business to build equity while staying in full control of its space.

“We were expanding the business significantly and needed help with financing,” said Ira Lapides, President of RPI. “Comerica was incredibly accommodating.”

To learn more about how RPI partnered with Comerica to finance its growth, including the purchase of its owner-occupied property, watch the full video here.

Financing with a banking partner you can trust

As the Leading Bank for Business, Comerica partners with leaders across industries to find the right financing solution. Planning to purchase property or expand your space? We’re here to help. Contact a Comerica advisor today.