I meet a lot of business owners who are rightly proud they own their building — it usually represents years of disciplined work. But pride isn't a return. And when we actually sit down and run the numbers, the same conclusion surfaces again and again: for a growing business, the building it owns is often the lowest-returning asset on the books. Not because property is a poor asset — but because of what that same capital could be doing instead.
The maths nobody runs
Every dollar of capital has an opportunity cost — what it could earn in its next-best use. A dollar locked in your warehouse earns roughly a property yield: a few per cent, plus whatever capital growth the market happens to deliver over time. The same dollar working inside a healthy, growing business — funding stock, plant, people, marketing, an acquisition — typically earns a multiple of that.
That gap is the real cost of owning. The rent you feel you're 'saving' by owning is almost always less than what the trapped capital could have generated in the business. And the faster your business compounds, the wider that gap grows — which means the more successful you are, the more quietly expensive owning becomes.
The costs that never show up as a number
Opportunity cost is the big one, but it isn't the only one. Owning concentrates risk: your operating business and your single largest asset are now tied to the same site, often cross-secured to the same lender, so trouble in one can quickly threaten the other. Property is also illiquid — when you need capital at speed, a building is the slowest thing on the balance sheet to turn into cash.
And ownership quietly consumes attention. Capex calls, maintenance, rates, insurance, compliance, the occasional dispute — all of it is management time and mental load pointed at the building rather than the business. None of these appear on a line in the accounts called 'cost of owning,' which is precisely why they're so easy to miss.
When owning genuinely makes sense
I'm not against owning — for some businesses it's clearly the right call. If your premises are highly specialised, if your business is mature and stable rather than capital-hungry, if real estate is a deliberate and funded part of your wealth strategy, or if you simply have surplus capital with no higher-returning use, then owning can be entirely correct.
The point isn't that owning is a mistake. It's that most owners never actually run the comparison. They own by default — because buying once felt safer than leasing — rather than by a decision they'd make again today with the numbers in front of them.
The third path
If you already own and the maths says the capital should be working harder, you're not stuck choosing between owning and uprooting the business. A sale and leaseback lets you sell the building to a long-term owner and lease it straight back — you release the full value tied up in the property and keep operating from exactly the same site, with the same staff, the same address, the same everything.
Operationally, nothing changes. Financially, a large, illiquid, low-returning asset becomes working capital — with no new debt, no lender covenants, and no LVR ceiling on how much you release. You convert ownership into cash and keep the building.
Why the partner matters more than the price
The counterparty matters more than almost anything. A trader who buys to add value and sell on gives you tenure only as long as their hold. A fund managing to an exit date has a clock running from day one. A permanent-hold owner buys to keep — and that changes the whole relationship: long, secure tenure, fair and transparent rent reviews, and reinvestment in the building rather than deferral.
That's the model we run at Walter Taylor. Whether you come to us directly or through your own agent or adviser, the structure is the same — done well, you give up little except the property risk, and the capital goes back to doing what it does best.
How to actually test it
You don't need to commit to anything to find out where you stand. Commission an independent valuation so you know what the building is genuinely worth today. Put your business's return on capital next to the property yield — that gap, in a single number, is your answer. Then take it to your accountant and adviser, because the tax treatment of the proceeds and the balance-sheet effects are specific to your situation and they matter.
None of this is financial advice — get your own. But run the comparison. Most owners are quietly surprised by what their building is really costing them.