Owning your office space… why it makes business sense in the long run
By Neil Bernberg
In the world of business, decisions should be driven by both short-term gains and long-term sustainability. When it comes to choosing a workspace, business owners are increasingly recognising the financial and strategic advantages of owning their office space. Investing in your own business premises, such as the office spaces available at The Pinnacle (part of the Investicore portfolio) in Cape Town’s City Bowl, not only reduces monthly overheads but also provides a range of benefits that can contribute to your financial future and overall success.
It just makes financial sense
One way to own office space is the concept of sectional title office property. By purchasing your own office space, you are building equity which could be an opportunity to invest in your retirement as a business owner. Unlike renting, where your monthly payment is essentially an expense, owning property allows you to allocate your funds towards an asset that will appreciate over time. The value of your investment will likely increase, providing a financial cushion for your future.
While rent is subject to increases, purchasing office space ensures that your monthly instalment remains constant. As landlords often raise rental costs over time, owning your office space provides stability and control over your business environment.
Traditionally skyscrapers are owned by listed funds and investors. The sale of floors at The Pinnacle allows individual investors and owner occupiers an opportunity to partake in this typically exclusive market. The Pinnacle also offers the unique opportunity for potential income generation. With large floor plates ranging from 400m2 to 800m2, you can choose to subdivide and rent out any unused space. This additional income stream can further contribute to the growth and success of your business.
Brass tacks and better tax
From a tax perspective, you can claim an income tax deduction on your monthly bond interest payments. When renting, you would claim the monthly rental amount. While claiming the whole rent may be a larger amount than the interest portion of your bond, you can usually customise an office space you own far better than a rental property, and get better value from the same, or less, floor area. When making improvements to your property, such as custom meeting rooms, call pods, recreational and work areas, these improvements can be capitalised and provide an additional annual deduction, at 5% of the value of the improvements, and possible further reductions in tax if you sell depending how much has already been claimed. When renting, however, even if your landlord does allow the construction as part of the lease, the improvements themselves are harder to claim, falling under “leasehold improvements” which is a more nuanced area of tax law to apply.
Making the move
Another factor that makes owning office space at The Pinnacle an attractive proposition is the phenomenon of semigration to Cape Town from other parts of South Africa. The Western Cape’s governance and lifestyle factors have set it on a different trajectory than the rest of the country making relocating a particularly attractive option to business owners. As more businesses and professionals migrate to Cape Town, a trend which is set to continue for the foreseeable future, demand for office space is on the increase meaning that the capital appreciation of your asset is assured. Owning an office space in this flourishing region positions you at the forefront of economic opportunities and growth by making a sound property investment.
Location, location, location
As cliche as this may sound, location really has a meaningful impact on any business from an accessibility perspective. The Pinnacle’s prime location is a standout feature that cannot be overstated. Situated on the hospital grid, the office spaces at The Pinnacle benefit from uninterrupted power supply. With no loadshedding, your business can operate seamlessly without the disruptions faced by many others who are grappling with the staggering costs associated with keeping their business operational during the daily planned power shutdowns. This reliability is crucial for maintaining productivity and client satisfaction – and can also positively impact staff morale.
The Pinnacle’s proximity to key institutions such as the Courts, the Masters’ Office (which is located in the adjacent building), and the Deeds Office (a 5-minute drive or 10-minute walk) provides unparalleled convenience. Being within a few minutes of the High Court, Labour Court, and Magistrates Court, streamlines administrative processes and saves valuable time for legal practices. The location is further enhanced by its accessibility to Cape Town station (a 4-minute walk away) and just 6-minutes on foot to the nearest myCiti Bus stop, making it an ideal choice for businesses reliant on efficient transportation such as call centres.
Owning office space at The Pinnacle offers freedom and flexibility to personalise it according to your brand and identity. This not only enhances your company’s image but also provides a sense of ownership and pride for employees to work in an environment that reflects the company culture.
The Pinnacle prioritizes security and access control, providing a safe and protected environment for your business. With 24/7 security, you can have peace of mind knowing that your assets are safeguarded.
In addition to office spaces, The Pinnacle also offers on-site storage space that can be purchased. This convenient feature allows you to optimize your space utilization and store essential business items without the need for external storage solutions.
Owning office space at The Pinnacle is a strategic decision that provides long-term benefits for your business. From financial advantages and the potential for additional income generation to the unique location advantages and freedom of personalisation, the advantages of ownership are numerous. Take the leap towards stability, control, and future growth by investing in your own office space at The Pinnacle. Discover the power of owning your business environment and unlock your potential for success