Case Detail

Case Summary

Office Space, A Company's Frontier: The Corporate Decision to Buy or Lease

Case Number: 5-315-500, Year Published: 2016, Revision Date: December 13, 2017

HBS Number: KEL983

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Authors: Craig Furfine

Key Concepts

Cash Flow Analysis, Financial Analysis, Financial Planning, Organizational Design, Real Estate, Strategic Planning


Markus Steuer, director of real estate at Drechtal Pharmaceuticals, must decide where his firm should locate in the immediate future. Drechtal was currently leasing space in seven different buildings, yet the company anticipated a dramatic increase in headcount should its first oncology drug, Trianoline, be approved by Swissmedic. The potential increased demand for space initiated Steuer's investigation of whether it was optimal to continue to lease space or whether or not it should invest in its own corporate headquarters. With its current leases set to expire over the coming 24 months, it was an opportune time to consider Drechtal's options.

Learning Objectives

After students have analyzed the case they will be able to understand how a company evaluates its occupancy costs; estimate the key financial and strategic criteria to weigh in evaluating a company's real estate needs; consider the value of flexibility when analyzing the buy vs. lease decision; and appreciate the different operating efficiencies likely during corporate vs. professional real estate ownership.

Number of Pages: 12

Extended Case Information

Teaching Areas: Finance

Teaching Note Available: Yes

Geographic: Basel, Switzerland

Industry: Pharmaceuticals, Biotech

Organization Name: Fictional

Organization Size: Large

Decision Maker Position: Director of Real Estate

Decision Maker Gender: Male

Year of Case: 2015