Lease or Buy a Modular Building?

Leasing or renting a modular building suits a short or uncertain need that a standard unit can serve; buying suits a building you will use for years, need laid out for a specific job, or want to own and move again. Most of the decision comes down to four things: how long you need it, how well a stock unit fits, how you want to pay, and what happens to the building when the first job ends.

Herauf manufactures commercial buildings to order, so this article is written from the buying side. What drives the price of a building you buy is covered in how much a commercial modular building costs, and the range of buildings is on the commercial modular buildings page.

What do you get when you rent a modular building?

A rental comes out of a fleet of units that already exist. That is its main strength: a standard office, washroom or storage unit that is sitting in a yard can be on your site sooner than one that has not been built yet, and there is no large payment up front. You pay a monthly rate for as long as you keep it, usually along with charges to deliver, set up, and later take down and haul the unit away. When the job ends, it goes back.

The limits come from the same place. You choose from what the fleet holds, so the layout is whatever the stock units offer. The monthly cost keeps running for as long as the need does, and at the end you own nothing.

What does buying from a manufacturer mean?

Buying from a manufacturer means the building is made for your project and is yours once it is paid for. Herauf does not publish commercial prices; it prepares a free, no-obligation written quote for the specific building, usually within one business day. The quote covers the building, manufactured indoors and inspected at every stage of production, then trucked to your site complete, craned onto the foundation and connected. You or your contractor prepare the foundation to the plan Herauf supplies, along with power, water and sewer or septic.

Because it is built to order, the layout is yours to set. The published commercial layouts, from a 30' × 14' safety office to an 80' × 36' wellness centre, are a starting point that gets changed to suit, as explained in what you can change on a custom prefab building. Every unit meets or exceeds CSA A277 and the National Building Code.

The trade-off is time. A building that does not exist yet has to be made: most Herauf builds are manufactured and delivered in about 16 weeks, with your site work running at the same time, and installation takes days once the building arrives.

How do you compare the cost?

With the two quotes side by side. Add the monthly rate over the number of months you realistically expect to need the building, then the delivery, set-up and return charges. Set that against the purchase quote, less what the building is still worth to you afterward: another project, another site, or a sale. A short need tends to favour renting; a long one, or one likely to run longer than planned, tends to favour owning. Where exactly the line falls depends on the numbers for your building, so be wary of any general rule that claims to know.

How are leasing and buying treated in the books?

Differently, and it depends on how your organisation reports. Under IFRS 16, which Canadian publicly accountable enterprises follow, most leases longer than 12 months are recorded on the balance sheet much like an owned asset. Private enterprises reporting under ASPE still separate capital leases from operating leases. For tax, the Canada Revenue Agency generally lets a business deduct lease payments on property it uses, while a purchased building is written off over time through capital cost allowance. Which treatment helps you is a question for your accountant, and it is worth asking before you choose.

What if the building has to move?

Owning a building does not mean it stays put. A Herauf building specified on a steel skid, with self-contained plumbing, electrical and HVAC, can be lifted and moved to the next lease, camp or project, which is why site offices and safety offices are usually built that way. Decide at the start, because a building is relocatable when it is specified that way from the beginning. How the skid model works is covered in relocatable workforce housing and on the workforce camp and site buildings page.

Which buildings are usually bought rather than rented?

The ones built around a use that a stock unit cannot match. A daycare sized for its licensed capacity, a washroom building for a public park, or a clinic with exam rooms is laid out for the people who will use it, and it stays in service for years. The sector pages cover each: daycares and schools, washroom buildings and northern and remote buildings.

How to get a quote

Send the use, the rough size, the site and how long you need the building through the commercial quote form, or call 1.639.382.4106. Herauf does not publish lease or rental terms, so if you are weighing a lease against buying, say so, and the team will answer for your project.