A suitable building with a sufficient number of rooms for carrying out the administrative and routine functions is essential for every office. It should neither be too spacious nor too small. The office space may be either owned or rented. The management has to take a decision whether to own or hire an office building. A suitable building may be constructed or an existing building may be purchased.
An office building owned by the organisation has some advantages. It provides a permanent address and location. This is convenient for outsiders and customers. If the entire building is not required to use a part of the building may be rented out to other organisations. This will bring additional income. An owned building enhances the prestige of the enterprise. The building owned by the organisation can be named after its name. Apart from this, the building can be planned and designed to meet the particular needs of the organisation. However, there are also certain drawbacks of an owned building. It requires huge investment and its upkeep and maintenance and security also may involve heavy expenditure.
Let us now examine the advantages of a rented building. The expenditure on major maintenance is not required to be incurred by the enterprise. There is no heavy investment in construction. Apart from this, the office can be easily shifted to a more suitable location, if necessary. On the other hand, a rented building suffers from certain drawbacks. For example, it may involve additional expenditure on some alterations. Rent is also quite high in urban areas.